Saturday, November 1, 2008

Budget "A Ha"

How to budget on a flexible income? Ya, that's been my question for a long time, but I think I've finally come up with the solution. How to pay the bills, keep priorities straight, and not feel like I can't spend any money on fun things. I think this budget plan might work... the trial phase is coming this month. If you're like me, I keep it simple... once the bills are paid and savings set aside the rest of the money goes into one big lump where everything an anything comes out of. I tend to run out of money, find good deals or need more groceries and then lean on the credit card crutch with a balance that just keeps expanding. Well I hit my wall and had to come up with a system that would work... so after my long-winded intro, here it is:

Take INCOME

pay % for TITHING (best investment you'll ever make)

transfer % for TAXES (since we don't get it taken out) to savings account

deposit amount for FIXED EXPENSES into bank account
(fuel, utilities, insurance, car payment, you know... and make sure to have some personal savings automatically transfered to a savings account... treat it like a bill and only use it for pre-determined purposes)

The remaining money gets pulled out in CASH and divided into ENVELOPES with specific categories based on PERCENTAGES
(these catagories are ones that un-fixed spending occurs on a regular basis... analyze past spending and figure or guess what percentage of the total is spent on each respective category)

Put this money in ENVELOPES and keep a balance ledger of the spending... only buy with cash... divide it into weekly amounts to pace your spending.

So, here's an example:
Income = 2000
Taxes & Tithing = 400
Fixed Spending = 1000
Remaining = 600 pulled out in cash

Envelopes
Food 50% = 300
Non-Food Groceries 10% = 60
Christmas 10% = 60
Clothes 10% = 60
Entertainment 10% = 60
Fun Money His/Hers 10% = 60

1 comment:

MoLe said...

Oh man thanks for the percentages. I never know how to do that. Such a great idea doing cash! :)