This week, I wanted to share something very special with you. In this article, I am going to show you the exact steps that I use to budget our money, and how you can get the same system that I use. If you have read The Budget Mom for a while, then you know that I budget our money by paycheck. I have budgeted by paycheck since 2011, and honestly, I wouldn't do it any other way.
Five months ago, my husband decided to leave his job of over seven years to pursue more opportunities at another company. When he left, so did his bi-weekly pay schedule. He now gets paid every week. That means every month we get a total of six paychecks. When creating our budgeting plan for 2017, I wanted to make sure that we set up a system that still allowed use to watch our money every paycheck, but also gave us the ability to look at our finances monthly.
Are you wondering why my family budgets our money by paycheck? Make sure to read this article to find out. Trust me; this method isn't just for poor people.
Even though my husband and I are no longer getting paid bi-weekly, we still use the same system. Today, I am giving you an in-depth look at our 2017 “Budget-by-Paycheck” Binder. This system is perfect for people who have limited income or have a hard time with overspending. I am a true believer in zero-based budgeting, and I know this system was the most important tool that I used to pay off over $20,000 worth of debt.
This system will allow you to track every dollar, make sure that every dollar of income has a job, and keeps you on track with your savings goals. It allows you to track and monitor debt payoff and gives you a monthly overview of your financial plans.
You can find all the Budget-by-Paycheck printables HERE.
The budget values that I used in this post are examples only.
WHAT YOU NEED
Our budget binder includes:
- Budget printables
- 1.5 inch binder (I use this one)
- Monthly or blank tabs to organize your printables by month (I use blank ones like this)
All of our budget printables are organized by month. The first page for each month in our budget binder is the monthly calendar. All of the printables are undated, which allows you to start using them right away. You can also reprint them and use them over and over every year.
For the monthly calendar, I write down our paychecks (in green), and then I write down when all of our bills are due. I highlight all the bills that are pulled out of our checking account automatically in yellow. Highlighting allows me to see what bills I have to worry about paying and which ones I don't. The monthly calendar also lets me plan for events, and adjust our budget for each paycheck accordingly.
For example, if I know I have a birthday party to attend on the 15th of the month, I will make sure to allocate extra money to the “personal” category of our budget. Using the calendar above as an example, I would make sure I have enough money from our paycheck on the 13th to cover a birthday gift or extra money in our food budget to bring a birthday treat or snack.
PAYCHECK BILL TRACKER
The second page for each month in our budget binder is the paycheck bill tracker. Now, this is where my budget is unique.
Not only do I look at our budget on a monthly basis, but I also look at it according to paycheck. Looking at your money by paycheck allows you to make sure that all of your bills are getting paid, and are actually clearing your checking account.
Have you ever paid a bill online, and forget that you paid it the next day? The payment didn't post to your checking account yet, and you went and had lunch with a girlfriend. You check your checking account to see if you have enough money to pay for lunch. Since the payment you made the day before didn't post yet, the money was still showing in your checking account. The day after having lunch with your girlfriend, you receive a notice from your bank that you over-drafted your account. Has this ever happened? If you don't have a lot of money in your checking account, one mistake can cause you an overdraft fee.
For the paycheck bill tracker, I write down every paycheck that we will receive during the month. I label it with who is getting paid, the amount, and the date we are getting paid. I then list every bill that I will pay for each paycheck. I decide what bill I am paying for each paycheck by looking at our monthly calendar.
When I pay a bill, I highlight it in yellow. When the money clears my checking account, I put a pink check mark next to it.
If you plan on using the same budgeting method, it's important to spend at least 5-10 minutes every evening working on your budget. I spend most of this time making sure that payments cleared my checking account and entering my daily spending on the expense tracker (you will see this later in the article).
I then total the amount that we plan on spending for each paycheck and subtract it from our paycheck income. The money we have left over to allocate towards other things in our budget gets highlighted in green.
As you can see from the example above, with Tony's paycheck on the 5th, we have $544 left over after paying all of our bills. We decide what we spend that money on by looking at our finances on a monthly basis.
Our monthly budget is made up of three pages. I use our bill tracker to help fill in our monthly budget. Once all our bills are listed on our monthly budget, I use the leftover money listed on our bill tracker to allocate it into other categories of our budget. Our “left over” money gets used for things like gas, food, eating out, household items, maintenance for cars, etc. These things are called variable expenses. Your bills usually stay the same from month-to-month, but your variable costs can change drastically.
This allows me to customize our spending for events that we have coming up for each month, extra gas if we plan on taking a road trip, and extra food money if we plan on hosting a party.
The most important thing to remember when allocating your “left over” money in your monthly budget is to make sure you never exceed your monthly income. You never want to be in the red at the end of the month. Looking at the bill tracker, such as, if I add up all the “left over” money (highlighted in green for each paycheck), I have a total of $2,825 left to use for variable expenses this month. I start with adding money in food and gas categories first. After our necessities are taken care of, I use whatever is left to budget for things like house supplies or extra savings.
My family uses the cash envelope method for our spending, so after I figure out how we are using our “left-over” money for each paycheck, I the money in cash and add it to our categorized envelopes.
For example, using the bill tracker above, I would pull out $544 in cash for my cash envelopes. I might put $200 in the grocery envelope, $100 in the gas envelope, $100 in the house supply envelope, etc. Since my husband also needs money, I usually split the cash for each envelope in half, so he has some cash as well.
MONTHLY DEBT PAYMENT PLAN
After our budget is completed, I use the monthly debt payment plan worksheet to track our debt repayment spending. I love this worksheet because it allows me to show my husband that we are making progress. Making a $20 payment towards your credit card doesn't seem like much, but if you make 5 of them during the month and can see those added up at the end of each month makes a huge difference. This worksheet does a great job of keeping us on track and lets us visualize the big picture.
The first thing you need to do is figure out what debts you want to pay off first. We use the avalanche method to pay off our debts, and if you are all about saving money on interest payments, then this is the method I recommend.
MONTHLY SAVINGS TRACKER
After I am finished listing out our debts, the next page in our monthly budget binder is the savings worksheet. Nothing is more important than having a goal when it comes to saving money. A goal gives you a reason to save and reminds you why you are saving money in the first place. It feels amazing to pay for a big goal in cash, and that's what this printable is used for.
Start by deciding on a goal you want to save for. Write down the amount you need and give yourself a due date. Putting a due date on your savings goals makes it a little easier to figure out how much you need to set aside every paycheck (or month) to obtain your savings goal.
In this example, I want to save $1,000.00 for emergencies. Since my due date is December 2017, I only have one year to save money. That means that every month I need to save at least $84 if I want $1,000 by the end of the year. I can then take that $84 and divide it by how many paychecks I am going to receive to come up with the amount that I need to save from each paycheck. $1,000 seems like a lot, but if you break it down into a savings goal and steps, it seems more attainable.
MONTHLY EXPENSE TRACKER
The last page for every month in our budget binder is our expense tracker. Since my family uses the envelope method, it's important that we still track where our money is going. Most people track their spending to make sure they are not going over budget, but with the cash envelope method, the cash does that for you. Once you run out of cash in your envelopes, you know that you can't spend any more money for the category.
I like to know where every dollar is going for the month. This not only allows you to make changes to future spending, but it can help you identify problems areas in your budget.
After figuring out where our money is actually going every month, I look for areas where we can cut back. I am always trying to push myself harder when it comes to spending. If I see that we spent $300 last month just at Albertsons, I might set up a personal challenge for myself to cut that cost 10% for next month.
To track our expenses, and to make sure every dollar is accounted for, my husband and I save our receipts throughout the day. If you have a hard time getting your spouse on board with a budgeting plan, asking them to save their receipts can make a huge difference. I then spend about 5-10 minutes a night entering those expenses on our expense tracker.
Make sure to head over to the shop and grab over 70 Budget-by-Paycheck printables and the custom budget binder cover for only $14.99. Start using the exact system I use to budget my money and create a plan for every dollar.