The B-Word-Budget: Part 2

BECU Employee

Welcome back! You came back, right? Because this week we’re tackling the money, honey. We’ll accomplish steps in the plan to understand income and expenses, following Stacey’s continued guidance. And if you’re anything like me, you’ll want a calculator handy.

 

Hi everyone! It looks like we didn't have anyone share their financial goals with us, but that's okay- I still look forward to setting you up with the power to make them reality. Even if you didn’t share your financial goals out loud, you set them, and that’s what’s important.

 

Now comes the math.

 

Add Up Your Income

 

Make sure you include all sources of income such as your salary, child support, interest and your spouse’s income. When you are calculating your income, use your net income (take home pay) and don’t include overtime or bonuses since these aren’t always guaranteed.

 

Create A List Of Monthly Expenses

 

Think of everything you pay for on a monthly basis whether it’s a fixed expense (the amount stays the same every month) or a variable expense (the amount can change month to month). When you’re trying to figure out what to record for variable expenses (like gas, groceries and entertainment) you can either go with the worst case scenario or take an average of the last several months.

 

This is where online banking and bill pay can really come in handy since you can look at a history of your payments. If you like money management tools, I encourage you to play around with the money manager feature in your online banking, too.

 

List Your Debts

 

Record the minimum payment for all of your debts and then add them all together. Even though this could fall under the monthly expenses category, it’s a good idea to have them on a separate list so you know who you owe, how much you owe and the interest rate. This way your debt is front of mind and you can work on getting it paid off.

 

It’s important to plan for periodic expenses and set aside money for them each month. A periodic expense is anything that you don’t pay on a monthly basis. For example, car tabs, birthday and holiday gifts, vacations, tuition and clothes. Figure out how much you are spending on these items throughout the year and add them all together. Now you can divide that total by 12 to find out how much you should set aside each month to cover your periodic expenses throughout the year.

 

You might even consider opening up a separate checking account to keep the money in along with a separate debit card (labeled “periodic expenses”) that you can use for that account. That way, when the expense pops up, you have the money in that account ready to go.

 

Whew, that’s a lot to cover- time to go forth and calculate. Take your time outlining your expenses and feel free to ask questions or share your experiences in the comments below. Cheers, KristinA

 

 

5 Comments
BECU Employee

I like the idea about setting up a separate checking account. I actually have several additional savings accounts that I have set up to help with my monthly budgeting. For example, I have one that is for groceries, another for utility bills and one for my daughter's daycare. I used the recommendation of figuring out an average of what my bills / costs are to know how much to set aside in each account - always overestimating a little for those times when a bill it a little higher than planned. I also use this method for specific things I'd like to save for - like my next trip to Maui. Each payday, I set aside a minimum of $20 (more if I can) and when I reach that magic number needed to pay for hotel and airfare, it will be time to book a trip! I have found this works well for me, especially when it comes to saving for something I really want. Then I can really enjoy that purchase as it feels like a reward to myself with no guilt as I worked hard to put those funds aside.

BECU Employee

@TheresaS- Thank you for kicking this off and sharing your tips and approach to budgeting. It's definitely a discipline and it sounds like you have it down! Do you auto-deduct the amount each payday or trust yourself to do it? I have an amount from each of my paychecks that goes into my savings automatically so I don't even have to see it.

 

Thanks for following along, we'll have a new post up on Friday! Cheers (and Aloha!), KristinA 

BECU Employee

I haven't set up any auto deductions from my paycheck. At the beginning of each month, I write down what bills I'll have and figure out what funds need to go where. It's all planned out ahead of time so when my check gets deposited every other week, I just make the necessary transfers. Whatever is left after paying bills and putting funds in designated savings accounts, I get to have for "fun" money. My paycheck and bills tend to stay pretty close to the same each month so there isn't a lot of variance in what gets tranferred to where.

JE
Trailblazer

...Well, I do use the Money Manager, but there's a problem! I use the credit card whenever possible for all expenses, and pay it off entirely each month. So this means most of my spending information is in the credit card transactions. When our credit card was compromised and cancelled, and a new one issued (very promptly handled by BECU), the transactions from the cancelled card disappeared from the Money Manager. Of course, I can still access my statements in--wait for it--PDF (a singularly useless format for tabular information!) So I could, theoretically, enter manually the last few years of transactions based on those statements... I could use a third-party tool to extract the tables from all those PDFs as spreadsheets, but even that requires quite a bit of massaging, because the layout of the PDFs isn't friendly to extracting the tables, so the resulting sheets are pretty messy. BUT: Money Manager doesn't appear to have any way to import CSVs or spreadsheets. I'd still be back to adding each of the hundreds of transactions manually... so I'd probably just work with the data from those spreadsheets. It would take a lot of time. : ( AARGH! ...and this happened immediately before I really needed to work with budgeting data. To add insult to injury, I had recategorized many of the transactions, when (as is common) Money Manager mis-categorized them; all that time is now wasted. I am sad.

BECU Employee

@JE- Thanks for joining in the conversation and sharing your experience! I've shared your feedback with our technical analysts, and we're going to see if we can find a way we can prevent issues like this from happening in the future by exploring a way to leave that information in money manager. Thanks again for joining the MIX! Cheers, KristinA 

Meet with an Expert

Meet with an expert to get assistance with budgeting and our Health Check.

Schedule a Phone Appointment for a Financial Health Check