This is a really good blog post from the folks over at Christian Personal Finance, please take a read and see what you can take away from it. I think there is some very valuable information for those striving to more conscientious of their spending/budgeting!
No matter which one you choose, you’ll find they both are solid tools in helping you consider all the monthly expenses you might encounter.
Organizing a budget using these forms also helps you budget every dollar and ensures your budget is in balance (income equaling expenses).
Budgeting by category is a proven method that works well. You can also layer envelope budgeting on top of it which turns each category into an envelope funded each month with your planned amount. You know the envelope budgeting process, so I won’t bore you with further details.
All this being said, do you think planning by category and envelope budgeting techniques are sufficient to proactively managing your money each month? Are you better off if you can layer on yet another technique or two to help you manage your money, as long as you don’t over complicate matters? Let me offer you a couple of other practical tips.
1Budget With Three Main Budget Categories
I’ve recently reviewed our budget and reorganized it. The traditional categories have helped us stay on track with our spending plan each month because we’ve captured all of our expenses and use envelope budgeting. However, we now group all expenses into three main categories.
Here are the categories:
- Giving and Saving
- Bills
- Other Expenses
For example, there is no longer a housing category that contains the following: yard maintenance (fertilizer, etc.), electric, water, mortgage, etc. The bills such as mortgage, electric and water are grouped under Bills. Yard maintenance is in the other expenses spending group.
Why does this work? Each month we budget Giving and Saving andBills per paycheck. This is the easy part of budgeting. These are set amounts we know we can’t deviate from or we’re going to be in trouble.
The hard part is figuring out how we’re going to budget the remaining Other Expenses. These are all the expenses that we know we could encounter during the month and we have a long list of them based on past experience. We review the list and decide how we’re going to use our remaining money after we’ve given, saved, and paid the bills. Sometimes those are tough decisions as what we once felt were important expenses are sacrificed so that we only spend the money we have available to us and remaining in our budget.
2Budget By Time
There is yet another way you can organize your budget that is helpful. When you create a monthly budget you’re budgeting by time. You decide how much money you can spend for the given month.
But you can take this one step further.
You can do as I described above with the three categories, grouping your budgeting by Giving and Saving, Bills, and Other Expenses. Of the remaining Other Expenses you then decide how much you’re going to spend each week.
For example, you might decide you have $500 available for the family food budget. You can then divide this $500 by week so you manage approximately $125 per week. Overall, you should have a weekly budget which you may find to not be as overwhelming as a monthly budget with a larger balance which can be more tempting to spend. If you’re married, you may also find it stimulates more conversation between you and your spouse because you’re both working to stay on track of the weekly goal. After the week is over you can take a few minutes to review your plan for the next week.
Hopefully, these budgeting techniques will help you manage your money better each month and ensure you don’t overspend. I’ve used a couple of good money management software programs that help make this job easier. Both Mvelopes and YNAB (You Need a Budget) are great products to use. My wife and I currently use YNAB which makes it easy for us to decide how we’re going to spend money after Giving and Saving and Bills each paycheck. We can then hold each other accountable to our spending goals.
What do you think about these budgeting techniques? Leave a comment!
Blog originally found at ChristianPF.com
Blog originally found at ChristianPF.com
