Our Budget

One of the best choices we made when we were first married was sitting down with an older couple who helped us set up a budget.  We have done our best to follow this sample since then.  It has been a huge help when unexpected expenses (and lay-offs!) have popped up.

The main idea is that we ‘pay ourselves’ each month by setting aside money for upcoming expenses.  The amount of money that we set aside each month is the total annual amount needed, divided by 12.

For example, let’s say that we know that we need to pay $600 annually for car insurance.  If we divide $600 by 12 months, that equals $50 a month that we need to set aside so that it is available when car insurance comes due.  By setting it aside monthly, we know that the money will be there when it is needed. (For an idea of how much should be spent annually in each category, you can download Crown.org’s free percentage guides and other helpful budgeting tools here.)

The method that we use to set this money aside is a mixture of the envelope system and our own system.  We’ve discovered that envelopes work well for groceries and our own personal allowances.  The rest of our budgeting is done through online banking.

How about you?  What’s your method of budgeting?  What has and has not worked for you?

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{ 5 comments… read them below or add one }

Barb April 20, 2009 at 11:48 am

Dave Ramsey’s Financial Peace is fabulous!
http://www.daveramsey.com/fpu/home/

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Sarah April 21, 2009 at 9:43 pm

Kaley, this is GREAT!!! Chris and I did sit down and wrote out a budget right after we were married…and then we strayed from it…or I guess just weren’t as DELIBERATE about it. Anyway, we have been talking about getting back on to that so YOU are helping ot keep us accountable!! I am excited for any and all tips…thanks again! love you!

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Patty April 29, 2009 at 7:18 pm

We will definitely plug Financial Peace University as well. “Live like no one else now, so later you can live like no one else” ~ Dave Ramsey

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MgMama March 2, 2012 at 12:31 am

I love this idea, but can I ask where you “keep” the separate money? So, if I’m saving $100 a month for my annual homeowner’s insurance premium, is it sitting in my account, with the assumption that I will not spend it, or do you have several accounts for these types of things?

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kaleyehret March 2, 2012 at 7:09 pm

Good question! I utilize my bank’s online banking service. I set up individual accounts for each area that I need to set aside money (car, insurance, retirement, gift giving, etc….the list changes from time to time based on our current need.)

Then at the beginning of each month, I simply move the money that I need to set aside from checking to each of the individual accounts.

It has been a great system for us and it helps me not to see all the money lumped into one account. I know what is ours to spend and what is not!

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