On blogs I follow I often see copious amounts of advice on budgeting and money management.  Part of me thinks this is great, people getting the word out there that credit cards are evil and you don’t need 5 or more zeros behind a number to live well.  However, what gets me the most is people extolling advice that always ends with “Buy this book” or “Buy this software”, it cracks me up that people think the way to save money is to spend money on things like these.

Since I got married I have been the accountant for my little family.  We have a nice system worked out where everything is getting paid on time, money is going into savings, extra is going towards paying off bills, and we even have enough left over for a movie every now and then.  And I’ve done this without buying a single money management book or piece of software.

Okay, that’s a little lie.  Last year I did purchase ” Your Money or Your Life” at the local Goodwill for $1, but it’s an amazing book even if I refused to buy it wholesale (also if I had the profits don’t go to making someone ::Cough::Dave Ramsey::cough:: richer).

So I decided to share “My Simple Advice” – MSA for budgeting.

1. Your computer is your best friend – I use two programs for my budget the Microsoft Word Calendar function and Microsoft Excel.  I open a document and make a calendar for a year (I started with only doing 3 months at a time as  not get overwhelmed).

My Calendar shows me –

  • Everyday we get paid  and the amount.
  • All known expenses and when they are due (or approx. if you have a bill like my utilities that is never quite the same)
  • Approx. Expenses each week or fortnight for items like Groceries, Gas
  • Approx. Expense each time a special occasion comes up – Holidays, Birthdays, known vacations.
  • A monthly buffer for unknowns. I call this my incidentals.

With this basic information plugged into the calendar I get out my calculator my current (todays) bank statement and add and subtract each number for the week.  On Sundays I record what my approx. Account statement should be at the end of each week if I’ve stayed on budget and not had any emergency expenses.

This way I don’t have to look at my bank account every minute of the day and it gives me a better idea of if the money in my account is actually free (do we have the money for that night out with friends) or if it has to stay in the account for next weeks bills.

July Example

Though I didn’t share our exact numbers this is the month that we should be paying off our Debt #2 and be 50% complete in our Debt Free Plan.  Yup 50% in 8 months.

I also have an Excel file to keep track of my debt managing.  This file is keep track of how much I pay on debt each month and helps me plan ahead for a pay-off plan.

I update both of these files at the end/beginning of each month and re-evaluate my next months goals.  I also don’t kick myself if we went out a little more than we planned or the car needed a repair, this stuff happens and it’s not worth it to starve yourself of life just to pay off bills.

2.  Give yourself an allowance. – Both Ben and I have an “allowance” – a certain, small weekly amount that we can use for lunches, books, whatever no questions asked.  If we want to spend a little more on ourselves we talk about it which leads me into –

3.  Talk about money. – I’m anal-retentive about money because I’ve seen first hand what it can do to good relationships when there is dishonesty about it.  Even if it’s something as simple as “I really need something for work” or “There’s a movie that I really want us to own”, talk about.  Don’t sneak behind your partners back about money!

4.  Be honest – Be honest with yourself about your income and the life it can afford.  You might not be where you want to be at this point, but being honest and responsible will get you there quicker than a life in debt will.

5.  Want vs. Need – Simply put, there are things your want and things you need.  Use step 4 to figure out the difference.

Using my own simple advice, especially #1, we’ve made leaps and bounds in our monetary lives.  Since October we’ve payed 25% of our consumer (non student loan debt) – April we will be rid of Debt #1, July/August – Debt #2, and February/March 2011 the Final Debt #3.  Starting in August we will be able to put 20% of our monthly income into savings and in March 2011 that will increase to 30%.  We are also hoping to be able to save up about 1/3 of our annual income for when we move in 2011, which will allow us a little time/money to travel and a financial buffer as we trying to find jobs and a place to live back in Iowa.

Oh yeah, and we didn’t have to buy any special software or books to do it. =)