As I wrote about in How We Bought Our House on One Income a huge part of being able to buy our house was sticking to a budget.
Today I wanted to give an in-depth look at how I set up and track our budget throughout the month.
Before we start it’s important to note a few things:
- our income fluctuates each paycheck
- we live on one income plus money from the Canada Child Benefit
- to maintain our privacy I won’t be providing our actual finances. The concept is still the same, apply it to your family.
- All our bills are automatically drafted from our bank.
- If you follow Dave Ramsey’s baby steps we are on Baby Step 2
- From each paycheck, money is drafted into saving, retirement, an education fund and activities saving account for Lyla
1. Write down monthly expenses (fixed and variable)
Before you start your budget you need to know what you are paying for each month to live. If you are not sure what bills you are paying look over your bank and credit card statements from the last few months.
Write down all bills that are automatically drafted or that you pay each month.
I like to divide expenses into two categories. First is fixed which is costs that must be paid and the amount doesn’t change much. Next is variable which is expenses like grocery and gas which can fluctuate each month.
When I’m budgeting I make sure our income can cover our fixed expenses first. That way we can live each month. Then I use the leftover amount to cover our variable expenses.
For variable expenses, I can make our money stretch a bit further. For groceries, I like to price match and schedule pickup. That way I’m not impulse buying and I’m getting all the best deals.
I also try to meal plan with ingredients we have on hand to avoid buying unnecessary food.
- water (every 3 months)
- cell phones
- insurance on two cars
- house insurance
- car payment
- transfer to savings
- the money we give to our church
- eating out
- miscellaneous (clothing for Lyla, personal items)
- credit card payment
2. Open Google Sheets to Create and Track the Budget
Next open a new Google Sheets spreadsheet to record your expenses and income.
Making your budget into a visual you can refer to is so helpful for staying on track.
I also like to share this document with my hubby so we both can check the budget throughout the month.
In the first column list:
- Fixed expenses
- Amount payable
- Date payable
Next, I write down:
- the dates we get paid (every two weeks)
- how much we will minimum get paid (it varies each week).
Then I add up all the bills that will get paid on that first paycheck.
I use the formula =SUM(C2:C3) to add up the bills
In the next column, I add up the rest of the bills using the formula =SUM(C4:C10) to be paid using the next paycheck.
I calculate the leftover amount by using the formula =SUM(F2-F3). Then I hover my mouse on the bottom right corner of the cell until a + appears and drag that formula into the cell on the right.
By doing that I am subtracting our fixed expenses from our income. This ensures we have enough to cover our bills and I know how much money is coming out of our account.
3. Only use debit for groceries, gas and other minor expenses
With the leftover money, we use our debit to pay for gas, eating out, clothing or any other expenses. This part of our budget is not very organized. But we know that if our chequing is above a certain amount it’s okay to spend.
To be honest this is an area of our budget I would like to work on. I know other people who suggest setting aside an amount each month for Christmas or vacation. In the future, I would like to incorporate that.
4. Buy Groceries Once a Week to Avoid Impulse Buying
I only get groceries or any household items once a week when I do the pickup. That way I’m not impulse buying during the week. I know exactly how much groceries cost before checking out.
Groceries are paid by credit card because I use Walmart grocery pickup. I then transfer the amount from our chequing onto the credit card.
5. Schedule Bills on Google Calendar
Next, I schedule each bill on Google Calendar and make it a recurring event. I also add the days we get paid. Then I print off each month and put it on the fridge to provide a visual reminder of what bills are coming out.
Me and my husband also have a shared calendar on our phones with this information.
Since I know exactly what bills are coming out and when each month I can budget ahead a couple of months.
6. Communicate About Spending
Other than paying our bills we try not to spend. Living on one income is tight. If we do want to buy something we discuss it first as a couple.
For example, if Lyla needs clothes I’ll tell my hubby I’m going to be buying her a few things. If he needs something for the house he’ll tell me before ordering from Amazon. This doesn’t always happen perfectly but for the most part, we try to keep each other in the loop.