Archive for Budget

Closing Out The Monthly Budget

It’s Finance Friday and I thought I’d talk about closing out my monthly budget. I usually do it on the last Sunday of each month because I usually have some time on that day (if not, I do it across a few weekdays). I want to share a bit about my process. For the record, I use an Excel spreadsheet so that I can customize everything any way I want.

First, I make sure that all receipts have been entered. I go through my bank statement online and all of my credit cards to make sure I got everything. I try to log them as I get them during the month, but do sometimes miss something–usually something I’ve bought at Amazon (infrequent) and forgot to enter.

Second, I compare my monthly result to previous months and look for areas where I can cut back. I would love perfection, but have to settle for progress. If I could get the medical bills to slow down, that would be really helpful (I need to get a root canal and crown as well as a few other things done).

Third, and this is something that I’ve only recently started doing, is tracking credit card purchases on another spreadsheet within that workbook. I track all credit cards on the same page and enter each individual purchase I’ve made and a general category (eg. gas, household, etc.). That makes it easier for me to see what I want to pay to where. For example, I use my Costco credit card to get gas since it has a 4% rebate on gas. I want to make sure that I pay for the gas I put on there. I had medical bills and some purchases for the goats over the summer and all three of my cards are fairly full. I track each purchase to make sure that I’m paying off new purchases as well as trying to make a dent in the old ones.

I then go through all of my envelopes, put in the monthly allowance for the new month, and make sure that what’s in there is what’s supposed to be in there if I had any left over from last month. Since I’m putting gas on my rebate credit card, it’s usually not too much. If you don’t already know, the envelopes are based on Dave Ramsey’s advice. It is based on the idea that it hurts more to spend cash than to use a credit card, so you’re more likely to spend less if you force yourself to use cash.

It’s kind of involved and takes a while to do at the end of each month, but I feel like I have a much better picture of where I stand when I do all of the steps.

Do you close out your monthly budget at the end of the month? Tell me how in the comments!

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Put Your Savings On Autopilot

Putting a little money away for a rainy day isn’t always easy. You may have some good intentions, but at the end of the day, there just isn’t any money left. Somehow whatever you make is spent before you make it to the next paycheck. Guilty as charged.

Start by making a personal budget. Take a look at what you bring in each month. Next, write down your fixed expenses. These are things like rent, car payments, utilities, etc. Figure out how much you need each month for groceries and other essentials. This is your bare-bones budget. It’s good to know what you need to get by each month.

Next it’s time for a little bit of math. Start with what you bring in each month and subtract all your core expenses. What you’re left with is your discretionary income. This will pay for entertainment, clothes, getting your nails done, etc. And from here on out, part of that discretionary income will go into a savings account. I decided to use an online account at Capital One 360. I’m currently working on getting my Dave Ramsey $1000 emergency fund. I have so little wiggle room right now that it’s taking me a while to get there! Though I’m working on increasing that!

Pick a number you’re comfortable with. Maybe that’s just $5 per month to start with, maybe it’s $500. Put it in your budget and treat it like any other bill. It won’t take you long to get into the habit of setting aside that money for savings.

It can help maintain motivation if there’s a goal behind the savings. For me, my current goal is to finish my $1000 Dave Ramsey baby step 1. I started by getting to $500 as quickly as possible, plateaued there for a while, and I’m now pushing for $1000. It may take a while, but I’ll make it! My reason for upping the amount is that my heat pump has stopped working and I’m afraid of what it might be. It’s still under warranty so I hope my portion won’t be too bad! Luckily, the furnace still works and we have a fireplace so I’m not in a panic to get someone out immediately.

To make it even more hands-off, talk to your bank about setting up a separate savings account. Then set up an auto-deposit to have the savings transferred to the new account as soon as your pay check comes in each month. If you don’t see it, you’ll never miss it and your savings will run on autopilot.

Don’t forget to audit your savings from time to time. Take another look at your budget. Can you increase your savings a little more? Another great way to boost that savings account is to take any extra money – thinks like birthday cash, tax refund, bonuses, etc. – and put them straight into the savings account. Again, you likely won’t even miss the money, but it will help you build up your savings quickly.

Make sure your savings are sitting in an interest-bearing account. Since you won’t be touching this money unless it’s a dire emergency, you should be able to earn at least a little interest. Talk to your banker about your best options and start putting your savings on autopilot.

One last tip: Talk to your employer about matching 401K funds, if offered. You may be able to get a contribution from the company you work for towards your retirement savings account.

What’s your savings goal? Why? Let me know in the comments; we can commiserate!

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