Our new budget system isn't anything new and exciting to most of you. It involves C-A-S-H. Technically, a combination of cash and debit (and on-line bill pay). All of this is a work in progress. The main purpose of all of this is
to be more aware of some of our spending, and to start saving for things
that have been lacking in our previous budgets.
The main bills (household, utilities, etc) are still paid by on-line bill pay. Gas is using the debit card (which is linked to the checking account where the main bills draw from. And the rest is cash (groceries, kid stuff, personal care...).
One of the first things I did was accept that a monthly budget wasn't working. I have tried, but it just doesn't work for us. I think because I would "rob Peter to pay Paul" and tell myself "well, that can come from next paycheck" became to easy. So I switched it up to a 2-week system.
I get paid every other Wednesday; G-man gets paid every other Monday (on the opposite week from me), and his part time job is weekly on Wednesday. In my head, the 2 week cycle always started with G-man's pay (maybe because it was a Monday?). But when I decided to do this, I started with my paycheck. I mean, it is all the same money.
Or so I thought. While there are only 5 days from my paycheck to G-man's (Wed to Mon), there are 9 days from G-man's to my next one. Figuring out how much needs to come from each of out checks is still a work in progress. G-man's checks are already disbursed into different accounts, so the amount we have in the checking account is roughly half of what my paycheck is. So more stuff comes from my check. But accounting for when things are due, it various. Like I said...it is a work in progress.
It seemed to work on paper. I had my lovely Excel sheet, with our total projected income at the top. All the expenses listed. Balanced within a dollar. But somehow it didn't work this time. I forgot a couple of expenses (prescriptions, Halloween). Our paycheck total was about $66 less than the projected amount. These few things added up to almost a $150 variance. But I didn't realize this until AFTER I paid things.
When the cash was available, it worked great. But there were several times I had to stop to get something, and the cash was home. I didn't plan to stop, but G-man texted we were out of milk, or needed XYZ. So I had to swipe my card, then take the cash from the envelope, and deposit it to cover the swipe. Many more steps. I don't want to carry that much cash on me, but not sure how to handle the things that we have money for, but spend it at a different time than expected.
Then there is the "Making up for something". Somehow I was off 2 weeks in some of the bills, so my balanced budget didn't balance (more to the point, my balanced budget worked only if everything was caught up and nothing needed to be paid NOW). I needed more in some categories to make up for the mess up. I didn't realize some of this until AFTER I had paid other things, so I didn't have that money available.
I also am not counting change. When we use cash, the change just goes into a jar. I am sure we are losing a few bucks here and there in the accounting, but the jar can be used for whatever. It looks like we went $0.50 over in food budget, but considering I probably put $3 in change in the jar, we are fine.
I didn't expect that in 2 weeks it would be perfect. I am sure I will get better at this as we go on. For those of you who use cash on a regular basis....any tips? How long did it take to adjust? Any words of wisdome.
We tried cash years ago, and it didn't work because like you said the money was at home.
ReplyDeleteRecently, we started again, and this time I have a locking drawer in my car so I just keep the cash there. That way I always have my cash when I need it.
Also, we had all of our utilities moved to level pay, and that has helped a ton! Knowing exactly what will come out for utilities instead of wondering each month what it will be is so nice.
Best of luck!! Give yourself some patience as you work out the kinks. :)
That's funny I was thinking about my budget last night as well! I think that going into a 2-week one will really help you make a difference. And since there are 5 days between you and your husband's pay, could you just ignore your check until G-man's posts? It will get some extra funds to get that started, but after that, you can just do your budgetting every Monday after his check posts. It's just 3 business days, really, so it hopefully should not affect you a lot.
ReplyDeleteWhat I've found to be really good is to pay things not during their duedates, but before. For example, I get paid every other Friday. In Nov, that date will be Fri 23th. I have bills that arent due until the 30th or the 1st of the month, but they get paid on that Friday regardless (including a rent check). So take all of your bills and dues, and split them right across the middle; half with duedates before the first of the month, half with duedates after the 15th. Shuffle them around and see what best works.
Also, as far as your variables, look back at the past 3-4 months of these variable expenses (food, misc, gas, surprises) and average them out. That's how I came up with my 60 (food)/40 (misc-personal)/50 (gas) discretionary budget. It has worked fantastic so far!
We are lucky dh gets paid on a weekly basis. I split the month up so certain things are paid certain weeks of the month. I also take out a set amount of cash every week and that is it. I do try and keep an extra $50 in the chequing account just in case I need something and have no cash on me, but try not to spend it.
ReplyDeleteI always keep a $100"float" in the chequing account that I never touch so I don't get over drawn.
Gill
Oh Mysti I am right there with you and I don't even know how to help myself!
ReplyDeleteI SUCK at Cash. Right now, I suck at all of it. Carla might have lots of info for this. She's good with cash.
ReplyDeleteI just keep a basic amount in my wallet for calls like that and then the rest stays at home. I usually just have a $20 in a special compartment in my wallet and if I break it, all the change goes back to the regular cash holding place at home and then I put a fresh $20 in my wallet. Anything that I need more than $20 unplanned probably deserves a trip home and thought anyways so it works.
ReplyDeleteI have a cash flow spreadsheet, rather than a budget. The year is divided into 24 groups (each paycheck gets its own "group"). DH & I get paid on the same days - the 15th, & the last day of any given month. Therefore, for the 15th, my budget looks like this:
ReplyDeleteUtilities - blah
Credit card (this is all of the monthly charges) - blah
Primary mortgage - blah
And, for the 30th:
2nd mortgage
Insurance
Yard guy
Whatever
Each bill for the year is divided into the paycheck cycle before it's due. Ours is a little easier, as we charge probably 75% of all of our expenses on a credit card, & pay that off at the end of each month, so the amount of cash or debit balancing is really minimal.
We tried cash and it did not work at all! DH spent it so fast and we could not keep track of anything. I don't think any system is perfect, but the one that works the best is the one to go with.
ReplyDeleteOur best system is budgeting everything out to $0 and build up accounts - i.e. clothing, school, pets, auto, insurance, etc.
Although complicated, it works best for us. I hope this new system you came up with works for you!
Finding one sure is a trial and error type of gig.
A budget has never worked for us. I just could not figure it out.
ReplyDeleteI work on a two week system also, then I roll it up into 4 week intervals. I don't budget per se. I just keep counting things up so I know if we are under or over spending overall.
Once I did this for a little while, my numbers showed that groceries were our biggest problem. So we use a cash system for groceries only. Just that change keeps groceries in check which keeps our budget in check.
We still have unexpected expenses...our beagle had to have surgery and now sports staples in her head. That little issue cost us over $1000. Good thing we have a substantial emergency fund.
We use cash envelopes for food (we actually buy Trader Joe's gift cards of $100 each for each week so that we don't dip into food money), entertainment, clothes, "blow" money, gas, personal/toiletries, gas. We use the Allocated Spending Plan from Dave Ramsey's Financial Peace University. The key is to give each dollar a name and determine exactly where it will go. It sounds restrictive, but it is very liberating. If you need to buy some clothes, then put extra in the Clothes envelope, but some other category will need to shrink. Here is the introduction text from the spending plan worksheet:
ReplyDelete"There are four columns on this form, representing the four weeks in a given month. You will use one column for each week you get paid. If you are married and your spouse earns an income, then you will both use this same form. For weeks in which you both receive a paycheck, simply add those two incomes together and use a single column. Be sure to write the pay date at the top of the column.
Now, go down the list and allocate each expense to a specific payday, using your bills’ due dates
as a guide. For example, if your phone bill is due on the 22nd and you get paid on the 15th and
30th, then you know that you would probably pay that bill from your income on the 15th. Some things, like utility bills, will be paid monthly, while other items, such as food and gasoline, could be weekly. The point here is to anticipate both your upcoming expenses and your upcoming income and plan accordingly.
Beside each line item, you’ll see two blanks separated by a slash ( / ). Put the expense to the left of the slash and the remaining income from that pay period to the right of the slash. As you work
your way down the column, the income remaining should diminish until you reach a perfect zero at the bottom of the list. If you have money left over at the end of the column, go back and adjust an area, such as savings or giving, so that you spend every single dollar.
This level of detail may be uncomfortable to you at first, but the payoff is worth it. By specifically
“naming” every dollar before you actually get it in your hands, you will remove an incredible
amount of stress and curb your overspending."