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Money can be stressful… VERY stressful. It is actually one of the main sources for arguments in relationships.
I know that for us it was, and sometimes still is.
People say that money doesn’t make you happy, and I agree with this statement, but I would also add that money can stress you out.
It took us years and a lot of failures to finally figure out a budgeting system that was working for us, and more importantly that we could stick to.
My husband and I have a different relationship with money. I have a tendency to save as much as I can for a few months and then go on a spending spree because I would remind myself that we only live once. While my husband is not good at saving money.
So you see where the problem is.
Today, I am going to share with you how we create a new budget every month.
How Many Budgets do you need?
Most people create only one budget, but we do 3.
I think this will depend on how you manage your money.
If you only have one common account in which you receive all of your paychecks and make all of your payments, you should only have one.
But, if like us, you are married and both receive paychecks on a personal account but make all of your payments from a common account then you will need 3 budgets.
It just depends on how you decided to set up your accounts.
Basically, a monthly budget helps you plan the flow of money from and to your bank accounts.
So let’s get started!
1. Calculate your monthly income
When I start my budget, I first consider if there are any days I won’t be paid for that month. I am a contractor working full-time, and I am paid hourly, so every time I take time off or when there’s a public holiday, I am not paid.
My husband, however, is having a different schedule every week, so he cannot know exactly how many hours he will work the next month. All we can do is an estimate and take into consideration any time off he might need to take.
Then I write down the date of my paychecks and how much they should be.
You will be able to do it in the first table of the monthly budget calculator.
Without knowing how much money is coming in, it will be hard to know how much you can spend.
2. Calculate your total monthly bills due
The first step is to write down all of your recurring bills in the first tab of the free monthly budget calculator.
It will help you to have everything in one place: the website of the company, the payment frequency, and its amount. For variable amounts, you can leave it empty, put an average or add the highest amount.
Then, download the application Prism by clicking here. This app will help you to pay most of your bills from your phone.
I added all of my bills in Prism:
- Automatically paid bills
- The ones I can pay within the app
- Bills that I can pay online but are not available on Prism (I added a reminder)
Prism will also help you to keep track of your monthly payments with nice graphs.
Once you have all of it set up, all you have to do is look at the app at the beginning of the month and write the amount of each bill in part 2 of the monthly budget calculator.
Sometimes, bills are not showing until later in the month so I look at the bills tracker to know which one I should expect to pay and their amount. The bills that I pay at the end of the month all have a set amount so I know exactly how much I need to pay.
The last step is to add any exceptional bills that you need to pay, such as, medical bills.
3. Budget your variables
In this part you will think about your variables like groceries, gas, going out … Basically, everything that you know you will have to spend money on but don’t have a bill for.
Don’t worry, it will get easier every month.
For the first time, I would recommend calculating what you think you will need and then update the budget the next month accordingly.
4. Budget Personal Accounts
If you only have one account, you can skip this part.
If you are like us and have one common account but receive your paycheck on a different account, you will need to create a budget for each account you have.
On the free monthly budget calculator, you will need to use the tab budget for several accounts.
The goal of a budget is to know exactly where to put your money when you are paid.
So the first line is for savings, but we will fill it out later.
The second line is to budget the amount of money you will have to transfer from each account to the common account. It will be automatically calculated once you fill out the bills and variable budget sections.
The total of the line needs to be equal to the sum of your budgeted expenses for the month.
Then you can add any personal expenses you are expecting to have within the month, don’t forget to add credit card payments.
5. Find out how much you can save
When you have everything filled out, it will automatically calculate how much you will be able to save.
If the number is negative, it means that you are spending more than you are earning. You might need to tweak your budget to stay in the positive.
If you are using the tab for several accounts, it’s the moment to complete the line for budgeting how much you will transfer to savings from your accounts!
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Over to you
How do you calculate your monthly budget? Do you use specific tools?
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