Money (How We Budget)

Of the two of us I tend to be the spender and Seth is definitely the saver. But of the two of us I also work more jobs at any given time and therefore make more money to spend, so that may have something to do with it. At some point I got sick of having $5.03 in my bank account and no gas in my always-on-the-brink-of-breakdown truck and decided to be more active about finding better paying jobs and about simply working more when making more for my time just wasn’t an option. This strategy has served me well and now that Seth and I are doing pretty well considering our student debt and the current job market, I have turned my attention to making sure I’m spending that money more wisely.

I have spent the last couple of years or so trying out different budgeting apps and techniques to get a good handle on my spending. Most apps I attempted to use wanted to connect to my bank accounts. I have found this to be generally problematic. Either it cannot connect to half of my accounts at least half of the time, so the app is constantly sending me error notifications, or my bank website ends up freaking out because an “unrecognized user” is trying to access my account CONSTANTLY. Even the apps that do successfully connect have trouble categorizing my spending in appropriate ways, and very few apps “learn” to categorize things appropriately when you correct these errors. Often, I find the categorization the app uses to be at best unhelpful, and at worst totally nonsensical. Last, many of these apps are confused by money moving between accounts, so some transactions end up being counted twice, thus rendering the record of my spending inaccurate. After becoming fed up with all of these issues, I even tried keeping a paper ledger. While I do enjoy writing things down, this proved inconvenient in that everything had to be calculated and categorized by hand, it was easy to forget to include things if I was not very diligent in recording cash transactions, and it was easy to lose/ruin my paper ledger which was obviously not backed up. After a few years of frustration and making the switch to an Android phone, I had an epiphany: I could make my own “app” using a Google spreadsheet that I can access from my phone, my computer, and better, that I can share with my husband. Now we manage our money together using this baby:

Now, you could use the same format in Excel or another similar program, but we like Google Docs because we can share it. We can each access it from our phones and our computers. That means that when I buy $20 in gas, I can add it into the spreadsheet while I’m waiting for the pump. And when we go out to eat, Seth can add how much we spent into the spreadsheet while I’m driving home. I firmly believe this kind of up-to-date budgeting is important. If you simply save all of your receipts until the end of the month and add them up, you have no opportunity to correct your spending habits if they get out of control. Having your finances staring at you in real time can be an eye-opener and is also really handy for keeping your budget on track.

Now that you know why we track our budget the way we do, here’s a breakdown of how the spreadsheet works:

We use eleven categories to divide up our spending. This is totally a personal preference thing that we’ll talk about more later. These categories are each a column heading on our spreadsheet. For example, in the picture above, “Rent” and “Utilities” are each a main category. Each main category has subcategories listed underneath. Rent doesn’t have one because it’s all one large bill, but under Utilities there are sub-categories like “Water” or “Netflix”. The column next to these labeled sub-categories is for the bill amount (next to “Nexflix” it says “$10.00”). At the bottom of the columns are the total amounts spent for each category. The spreadsheet is setup so these are calculated automatically as they are entered. The total amount spent overall is also calculated automatically in the last column.

The spreadsheet also automatically generates a pie graph of our spending as we enter data. Personally, this is my favorite part:

It summarizes the totals for each category on the left, and shows them in the pie chart on the right. This is really helpful when you’re trying to spend a specific percentage of your income on something, such as giving 10% to your church or trying to save 15% of your income each month. The visual is also great for showing you where your money is really going. How much do you really spend on rent? On eating out?

Last, as you may have seen, the budget is color coded, which may be my obsessive tendencies showing a little bit. But because we have two people managing this budget at any given time, it helps to make sure each of us knows what we’re responsible for. In our case, things in blue are my responsibility, things in green are Seth’s, and things in purple are things we both need to keep track of (such as spending on groceries). There are also categories that are lined in red. These are what we call “savings funds”. We use these to try and have money set aside for things like the yearly vet visit for our dogs and cat or car maintenance.

Now, every month has its own spreadsheet at our house. We make a copy of a blank spreadsheet, label it according to the month and year, and fill it in as we pay the bills each month. However, we also have a sheet called “Standards”. This is our budget in an ideal world. It tells us how much we plan/can afford to spend on each category (except for two, but we’ll get to that later). As long as the main category stays under the amount at the bottom of the column, the subcategories can get a little crazy. For example, the spreadsheet above is a sample “Standards” page. The whole category of “Utilities” adds up to $620. If one month the water bill is $60 instead of $50 but the electricity is only $100 instead of $120, we’re still good as long as the whole Utilities budget stays under $620.

Now, I’ll break down our categories for you really quick:

• Rent – This one is obvious. It’s your rent or mortgage payment.
• Utilities – This one isn’t hard either. It’s payments you make every month for stuff like your water bill or your electricity. We also include things like cable, phones, and health insurance premiums in this category.
• Cars – We made this one a separate category because it involves a lot of separate bills. We keep track of car insurance, both car payments, and how much each of us spends on gas. Some people might fit this in under Utilities.
• Pets – Now, this is a weird one to have as a category for most people, but for us, it makes sense because of our Menagerie (read about all of our animal loves if you haven’t already!). Between the horse’s board and other bills and the amount of food Reliant eats and the number of toys he chews to bits, we spend a fair amount of money on our fur babies.
• Student Loans – Obviously a must-have category for any millennial since it feels like this eats up a huge chunk of your earnings (because it does). This one doesn’t have a limit as much as it has a “minimum”. We have to pay at least a certain amount on our loans, but we try to pay as much as possible to make them go away faster. I’ll share our strategies for paying down our student debt another time. 
• Food – This one combines groceries, eating out, and fast food purchases.
• Personal – I love this category. This is a small amount of money each of us gets to spend on whatever we want each month without feeling guilty. Find a new book you have to have? Go ahead and treat yourself. It’s personal spending!
• Savings – This is a big one for millennials because all too often saving can be hard for us. We have a few saving strategies we use to help give us a little padding which we document in this category. We can talk about saving strategies in another post.
• Everything Else – This is the category that is easiest to go over budget on. This is where you list the toilet paper you stopped to buy on your way home, the new curtains you put up in your room, or anything else you bought that doesn’t fit solidly in another category. In our sample budget, the limit on this category is $500.00. You fill in the items purchased where there would normally be subcategories and the amount in the next column just like the other categories. That way you know what you spent your money on instead of just wondering where your $500 went.
• Charity – This is where we list any donations we make. You list the charity as the subcategory just like when you fill in “Everything Else” and fill in the amount next to it. We don’t have a limit for this category right now because we can’t afford to spend much on it. However, our goal is to spend 10% of our income on charities we believe in once we get our student debt paid off.
• Yearly Expenses – This category is for things you only spend money on once or twice a year. I use it to keep track of money spent on things like property taxes, birthday and Christmas gifts, license plate renewal fees, and our car insurance (which we pay in a lump sum at the start of the year). It helps keep me prepared for the extra spending that’s coming up because I have a record of it from the year before that tells me when these things are due and approximately how much they cost. You fill this one in the same way you would “Everything Else” also. It also lacks a limit like “Charities” because in this case, it changes every month. Sometimes it’s zero, but sometimes it’s a LOT (I’m looking at you December, with your property taxes and Christmas gifts!).

So that’s the basics of how we now keep our budget in check. Here is a copy of the spreadsheet to download if you like our method and want to try it out:

Budget Spreadsheet

It’s totally customizable so you can add, subtract, or change categories, subcategories, color coding, or anything else to suit your needs. If you want to use this download but you’re having trouble customizing, feel free to contact us for help. And be warned, this spreadsheet may show you things you don’t want to know, like how bad your Taco Bell habit really is!

What methods have you tried to keep track of your budget? What do you like about our method and what would you change? This method is only a few months old for us, and we’re always looking for ways to make it better. Share your thoughts with us in the comments section below!