I mentioned in one of my first posts that I keep my monthly budget fairly simple.
Why a simple budget? So I’ll actually stick to it. Anything that feels too rigid (even if it’s self-imposed) makes me want to rebel against it, so keeping my budget really basic is the best. Essentially the system I use is a simple mathematical formula.
Income – Expenses = Surplus
Well hopefully a surplus. This money isn’t just for spending on whatever I want. I still buy necessities out of this, and this is where any savings come from, I’m just not all for categorizing every dollar that I have. Again, it gets too rigid.
Some of the links below are affiliates. So if you make a purchase using my link, I’ll receive a small commission at no cost to you.
Here’s what I do
First thing I write out all of my expenses for the month. What I’m considering expenses for this is any kind of bill that is due to someone else on a specific day each month. This is really the only time I use my planner as I use the monthly overview page to write out when all of my bills are due. I like to see this in calendar form because I also write the days I’m paid. It makes it easier to see which bills come from which check.
I then figure out my income. My job doesn’t pay every two weeks like many employers do. Instead we are paid twice monthly, so that can actually create a little bit of variance in the amount of each paycheck. So I figure out how much each paycheck will be and subtract what bills are coming out of each paycheck.
I only have a few of my bills on auto payment (basically because I had to) because I prefer to pay my expenses as soon as my paycheck comes in.
I don’t budget a specific number for food or gas (which I know isn’t what you’re supposed to do) but I think as long as you spend responsibly (so no spending $500 a week on groceries for one person) you’ll be okay. If you do want to add a number in for these expenses, you can add it in at the same time as you’re taking out your bills.
I try to put about 10% of my paychecks into my savings. I know people say to “pay yourself first”, but I’m not going to slap myself with a late fee, so I pay my bills first and then make sure I have that 10% amount to go into my savings.
If I receive any “windfall” money during the month (Ebates checks, mileage checks from work), I’ll put most, if not all, into my savings.
[bctt tweet=”Income – Expenses = Surplus ” username=”polkadot213″]
Let’s do an example
We’ll say we have a single person who makes $2000 a month after taxes.
Their expenses look like this
Car Insurance: $100
Netflix/Hulu/Cable Substitute: $50
Expenses Total: $1200 (Side Note: don’t spend $50 on the gym or streaming services. I used 50 because it was a nice even number but you can easily get these services for $20 or less.)
Total Left: $800
Savings: $200 (10% of the person’s monthly salary)
Like I said before I don’t account for things like food and gas into my regular budgeting. I take these out of my remainder money.
Some people like to have every dollar assigned to something, so if you wanted to include food and gas in with your bills just add additional categories…
So the remainder now would be $200 a month. This person could use this money however they see fit: for clothes, entertainment, more toward savings, whatever.
Obviously this person doesn’t have a huge surplus so I would suggest they see if they could cut something somewhere, or take up a side hustle (say blogging?) so they can put extra money towards debt or savings, or so they just feel less like they’re living paycheck to paycheck.
So that’s my fairly simple budgeting system.
Funny enough, as I was planning this post I realized I hadn’t actually added up my numbers in a while. I always pay my bills, and I know I have enough money each month to cover them, but I hadn’t deducted all of the costs in a while to see what my remainder amount was. And you know what? It’s more than I thought it was! I’m thinking I may need to increase my savings to 15 or 20% so that money doesn’t go to adding tons more to my clothing rack that seriously needs to be decluttered.
How do you budget? Do you use a simple system like this or something else entirely? Let me know in the comments!