Creating Our Budget

Because some of you asked, today I'm sharing how I create our budget! I love your questions. Thank you.

Every month I take a sheet of notebook paper and a pencil, and I write down all our expenses. I make it as detailed as possible and take into account all the variances that happen month to month.

house payment
household items/toiletries 
health insurance
doctor visit co-pay
Laurie's asthma meds
Pilates Anytime subscription
preschool tuition
school pictures

 I always it run it by Stephen and he "signs off" on it.

Once I've listed each category, I write the amount of money I estimate we will spend for that category. For example, school pictures were in October, so I created a school picture category and estimated that they would cost $30. Once I actually spend the money, pay the bill, etc. I write the actual cost down and then I highlight it when it clears the bank.

I always make a category for unspent money, also known as blow money. This is my buffer category. It covers things like baby gifts, fair tickets, babysitting, spontaneous dinners out, unexpected doctor visit. This category allows for a little spontaneity because life is unpredictable. It is my budgeted margin. There have been seasons when this category has been non existent, small as $30, and other times when we have been able to bump it up to a few hundred.

I use the cash envelope system only for groceries, and I operate on a monthly basis. I take out all the cash I need for groceries for the entire month. So that I'm not carrying around so much cash, I only take the amount I need for that individual shopping trip. This cash is only for food items. Often I run two transactions if I'm picking up something extra like dishwasher detergent or school supplies.

Because I have 3 small children, I don't go to  clothing or general stores very often, and I do most of my shopping online. To keep up with all my purchases, I save my e-mailed receipts and simply keep a record of what I spend. In pencil, on paper. Say I spend $20 at Gap, then I write (Gap $20) next to the clothes category.

When I have spent all the allotted money for a certain category, that's it.

Every couple of days I have a "budget review." I sit down with my written budget and get online to look at my bank account and I update/make changes/review the budget. If I need to get Stephen involved then I do, but usually there are only small scale changes that he trusts me to handle. It really only takes a few minutes every couple of days.

This is what works for me, but there are so many ways to keep up with your expenses. I'm sure there are hundreds of apps and computer programs out there. I just happen to prefer paper, and it's the way I've always done it.

It's not so much how you do it but that you do it.

One tip for practicing self control is don't keep extra money in your checking account. For example, say $1000 covers all your monthly expenses, including your blow money/buffer category. Only put that amount in your checking account. You are less likely to impulse buy if you literally don't have the money available in your checking account.

It's a process and often it takes several months to get the hang of it. (It's taken me years!) But don't give up. Each month, little by little adjust, tweak, and experiment until it works for you. Your budget is a tool to help you and to liberate you. It's not about depriving yourself but about being responsible.

In my next personal finance post, I will share a reader question and some tips for staying organized with spending amidst the chaos of having young children. Keep your questions coming!

Our Getting Out of Debt Story
Budgeting: Heart Issues and Whys


  1. I am loving this blog! So practical and helpful, and you are great writer. Thanks for the bday wishes! 30 is awesome. And lastly, glad to see tithe up at the top. I know the Lord blesses that.

  2. I love love love your blog!!! Keep on writing. :) It encourages us all!

  3. Love this! Love your practical and actual advice, rather than vague "just keep a budget" advice. And I love that you do a paper budget. I've always felt so un-techy the way I do mine (Google spreadsheet) and not a fancy app. Thanks for sharing!

  4. Hi! In another post you mentioned y'all recently cancelled Netflix and started Amazon. Do y'all have cable? Who is your service provider for Internet? Do u have a special TV that you hook your computer too? We have got to get out technology category down!! I don't know how?

    1. Kelli-

      No, we don't have cable. We haven't had it in years. Knology (aka WOW) is our internet/phone provider. We don't have a special TV. It is a flat screen we bought in '09. We use a Roku box to stream everything.

      My sister wrote a post about Roku boxes

  5. Great minds think alike. It was so weird reading this post, as we/I do this every month and have for over two years. It helped us pay off our truck 14 months early. I have never posted about it as it was not the 'norm'...like so many who use Dave Ramsey, envelopes, cash, fancy budget systems. Mine is simply like yours. A piece of notebook paper...well several actually. I do everything with our debit/credit card or I write checks. Only our insurance is on auto payment. If we have cash in our pockets...it gets spent. Not paying with cash is the reason I believe we paid off our truck early. Checking online with our bank everyday and seeing the balance go up or down was a huge motivator. Nice to see someone else beating to a slightly different drum.
    blessings, jill
    ps. just found you today, what a lovely family and blog you have


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