There are a lot of things that, as an Adult, I wish I would have been taught before being thrown out into the large world we live in. Thankfully, Budgeting was not one of these things. Unfortunately, others are not always so lucky and many will find themselves over budgeted and far too heavily strapped for cash within the first few months on their own.
Budgeting, however, is one of the easiest things I have found about running a Household. Programs like Microsoft Excel (and other equivalents) make it even easier by allowing you to input Formulas that do all of the math for you. In addition to using a program like Excel, though, there are several other tips that can help to ensure you stay within a safe budget.
For this post, I’ll be using my Husband and I’s own monthly budget to explain these tips.
As you can see, our Budget is pretty clear cut. It includes all of our monthly expenses plus their total, our average monthly incomes individually and their total, and even a plan for stashing money in savings each week; it’s organized, easy to follow, and everything is color coded for easy reading.
But if you look closely at it, you will notice that there are a few interesting points about our budget. The most notable is that all of the expenses are averaged to a whole amount- and I feel this is very important to point out.
Tip 1: Always assume higher for Bills and lower for Income.
This is a bit of wisdom that my Mother taught me growing up when she would take us shopping. The basic gist of it is that if you have $25 to spend, then act like you only have $15 or $20- and when picking items, round them to the nearest whole dollar to account for tax. If you do this, then in the end there will be very few cases where you do not have all the money you need for the items you want to get, and you can stash whatever you have leftover for something else, later.
This is a piece of wisdom that I have kept with me well into my adult years. Whatever income I bring into the house is rounded down, and whatever bills I spend are rounded up. You can see this at play in our budget pretty easily- though it may not be evident if you do not know our true expenses.
As an example on the Utilities end, take a look at our City Utilities. We don’t actually pay $150 a month, we pay roughly $120. But since Utilities are a sliding cost based on usage I want to account for that in the budgeting- and I know from the last year that our highest bill has been around the $150 mark. As a result, in order to make sure that I am prepared for higher-than-average utility use (and the associated cost), I have budgeted for that amount as opposed to our true average. The same trend is applied to all other bills that we have, with those expenses being averaged higher according to how much the price changes (if ever).
For income, I have also rounded down what we actually bring in by a rather significant portion dependent on whose income it is. This is congruent with the “higher for bills, lower for income” wisdom of my Mother… There is a slight catch to the income portion, however.
Tip 2: Exclude unreliable income and focus only on the reliable
I’ll use my own income as an example: Listed here, I bring in roughly $400 a month. This income, however, is strictly from my part time Employment working for my mother- and I actually bring in roughly $500 from that a month. I’ve chosen to exclude my Book Royalties and other income from this amount, however, for one important reason: That income is unreliable and changes from month to month. By including it in the rough budget, I would actually risk assuming that we had more money that we actually do in any given month.
What this does overall is ensures I am never caught off guard or under-prepared for any bill. As a result, we always have extra money available to us, even if it isn’t technically there on the budgeting paper… But this is just the rough monthly budget. In addition to this, I keep a true budget which accurately reflects our income and expenses for each individual month. Using this true budget in conjunction with the rough “overbudget” system means that I know exactly how much I am spending each month and allows me to account for that accordingly, see patterns in our expenditures, and more accurately predict later budgeting needs.