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Wednesday, June 3, 2015

Budgeting 101: Breaking Down Your Expenses

STOP: If this is your first visit to my blog you probably want to back-track and read Part 1 and 2 of my budgeting series! See the links below...

Budgeting 101: Getting Started
Budgeting 101: My Secret Weapon

Now that that's out of the way! On to breaking down your expenses. It's important to note that every person and/or family is going to be different. We all have different needs so this is going to be a basic overview of breaking down your expenses. I will go in to detail about how ours are broken down in order to hopefully give you a general idea of how yours should be broken down.

So if you've read Parts 1 and 2 you've got an idea of your monthly expenses in total and you have downloaded the Goodbudget app in order to track your spending and balance your bank account. The first thing you need to do is look at your monthly expenses and get an idea of how you can group those transactions. A lot of times we are spending money on little things here and there and then turn around and wonder where the money went?!

Side Note: Depending on your religious beliefs you may be tithing at least 10% of your income. You've only got 10 envelopes on the free version of Goodbudget. If you are tithing you may want to just take that off the top every month so it isn't taking up an envelope. Or you can include it in your Grocery/Household Misc. envelope. That's up to you!

Ok so this is what our envelopes look like:

Groceries/Household Misc. Expenses

Not to be Captain Obvious or anything, but this envelope is reserved for our grocery budget as well as any miscellaneous household expenses. A couple examples of miscellaneous expenses for us would be our ADT security services and our pest control service.

Gas/Car Insurance

Netflix/Internet/Cell Phone

Childcare....that's a big fat check nobody enjoys writing!

Eating Out



Mini D Misc/Diapes/Wipes

Misti Misc.

Daddy D Misc.

The miscellaneous envelopes are really like our free money. This is where the holding each other and ourselves accountable part really comes in!

Once you've got your envelopes set-up and your bank account balance updated you are ready to "fill" your envelopes for the month!

Important Tip: When you run out of money you are just OUT OF MONEY. Don't go in and add to your envelopes throughout the month. This is setting yourself up for failure. Thus, too much month and not enough money.

As you purchase something or pay a bill make sure you are recording it, and you will watch your available balances in each envelope change throughout the month. There are A LOT of free reports you can generate from Goodbudget that give you a more visible view of your money and how you are spending it. My favorite report is the Income vs. Spending report. This really needs to be your go-to report. Make sure you don't have more going out than you have coming in!

At this point you should be set to start budgeting, and hopefully prioritizing your spending! It's amazing how much we don't realize we spend until we are recording it and looking at it daily. Good Luck and Much Love, Misti

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