Budgeting can be complicated. Irritating. Heavy… When my husband and I faced a difficult financial period, we learned one blatant fact about budgeting …
Simplification works. In this post I will explain to you absurdly simple, easy and practical budget system, which helped us to get out of big debt. And it helped us to gain a financial advantage. The best thing is that it works for thousands of other people as well! This technique works regardless of whether you use cash, debit or credit cards to make purchases and pay bills. Ready to learn the mystery? Let me start by explaining why it works so well for us…
When we first started planning our home budget, I tried everything.
At the beginning of …
– I tried the monthly budgets. (But managing a lot of money is hard and at the end of the month I didn’t know where the money had disappeared.
– I have tried several budgets. (But it was confusing and difficult to grasp, especially when some expenses are in May but in June they are not there, like a hairdresser or a visit to a dentist).
– I tried it with cash. (But it was hard to follow, so I had no idea where everything went at the end of the month.
Nothing worked in the long term, so I invented and built my own system.
Now …
– I divided my budget into weeks.
– I had only three budgets that covered all our regular expenses (food, others and family … more on this subject below).
– I used my bank cards to track all our transactions and pay all my bills.
The budget for ‘Food’ shall comprise:
Everything you can find in grocery stores.
We are not talking about Costco or Macro. We are talking about ‘corner shops’, Morrisons, Asda. They do not have electric drills and bedding, but they have most of the basic items you can buy every day.
Examples of “food budget” products:
Food, shampoo, dog food, lotion, wipes / nappies, shaving cream, sandwiches, basic utensils and baking supplies, cleaning products, milk, basic cold medicines, make-up and other toiletries etc.
The ‘firm’ budget shall comprise:
Money set aside for ordinary, regular, non-food expenditure.
These are things like “I want to have”, not “you need to have”. Once again it does not include any form of bill or tools, and for this there is another category. See below for more information.
Examples of things in the “other” category:
Home décor needs, clothes, hairstyles, child care, piano lessons, car cleaning, photos at school, lunch with friends, spa treatments, birthday gifts, etc.
Where do we get our bills and our petrol paid from? In our home, the money for this comes from our home budget.
The ‘family’ budget comprises:
Repeated fixed monthly expenses including family, home and travel, and unexpected expenses.
These are expenses from the “no other option” series that are not related to food.
Examples of elements of a “family budget”:
company (gas, electricity, cable TV, Internet), car expenses (gas, repairs, new tyres, car registration, oil changes), house costs (mortgage repayment, home insurance), house repairs, new water heater, new furniture, TV or other large household expenses, etc.), family entertainment (travel, excursions), etc.
See below (bank accounts section) how we separate all these budgets.
Make your card/ envelope (envelopes work better with cash). Here we have an example (you have to enter your own numbers)
Remember … It’s about keeping to a weekly budget. However, life is unpredictable. So if you happen to exceed your budget, remember … you can’t LOOK over the line! Please refer to the “page to page” loan.
If you have money left at the end of the week. Set them down! The idea is to try and keep it below budget every week. If it is the end of the week and you have money in the envelope, try not to look for a way to spend it. Instead, pay off your debt, or if you are free of debt, put it in your savings account.
Trust me, it’s much easier than on paper. Making these simple changes has changed us
financial life and allowed us to get out of a very difficult situation … and move forward! Adjust the system to suit you and your family. And remember, if we can do it, you can do it!
Additional notes and tips:
If you have a long month (the one with 5 weeks), you can do the first or last week of the month longer to include additional days, or simply divide the budget by 5 and keep all weeks as 7-day weeks. Simply do what works best for you. In our free tables we have divided everything into 4 weeks