I would like to say I love budgeting, but I don’t. I don’t suck at it, either, but I’d rather live without it. However, I can tell you one thing from my experience: After I started to monitor our ins and outs in financial ways at least basically we finally have a little bit on the plus side. For the first time ever. With the simplest Budget ever.
Do you want that, too? Then try basic budgeting and don’t let your hard-earned money slip away. Find an easy free spreadsheet to get started below. But first,…
Why everyone needs a Basic Budget
Though I know from experience how beneficial budgeting even in a very basic form is I drop the ball once in a while. And every single time I fell off the band wagon our money just slips away somehow and is never seen again. Like water that will find its way, our money will inevitably be gone by the end of the month somehow. It seems to be some kind of magic if you ask me.
Only some change gets caught in my change trap saving boxes.
So, obviously, you better tell your money where to go before it sneaks out of your home in the middle of the night.
However, I don’t want to sit down each month and figure out a perfect, super expert, sophisticated budget. So I will not do that but instead, determine some basic fundaments of our financial situation. If a basic little budget sheet can do magic for me it can definitely transform your finances, too. And it is so easy to do. (Otherwise, I surely wouldn’t do it.) Just follow the first basic steps and you are good to go. You will probably not become a finance guru but you will move forward a BIG step and build a strong foundation.
Let’s dive in. First, determine what is going on and start with what is coming in. Don’t panic I will walk you through these first steps of budgeting and provide a ready to use spreadsheet below.
Your basic monthly budget: The Ins
If you are anything like me you may have a good idea but no exact numbers when it comes to your family’s total income. But you can only live within your means and avoid debts if you know how much you can spend each month at most. You will also need to know these numbers when planning investments, saving plans and such.
The list of income streams and amounts can be short and disheartening. I know it is to me. Face it. You really need to know!
There are three Ins in my family: my husband’s salary, child benefit and my freelancer’s income if any. Period.
Other income streams may be rental income, income from a business, retirement pay, other benefits than child benefits and more. You probably know what kind of income streams you have. Now all you need to figure out is how much they are exactly, when they are paid, and how much you make in one month.
Important: Count Nets so you really know what you have in your hands to use.
Make a list of net incomes, due dates, and amounts. Sum them up. Finished first step. Hurray!
Example for a family of 2 parents and one child (Excuse any weird numbers as I don’t know better. These are just examples.):
Salary 1: 2000 Dollar
Salary 2: 800 Dollar
Child benefit: 80 Dollars.
TOTAL Net Income: 2880 Dollar.
Basic Monthly Budget: The Outs
Unfortunately, the list of outgoing money is usually a lot longer than the list of money that comes in. But again, we need to face it because we need to know. It is happening anyway. But knowing your numbers will enable you to actively manage your finances.
Next step is to determine the fixed costs so you know what remains to be spent.
List all your family needs to pay in one month, the due dates, the way it is paid, and from which source if you are using more than one bank account. Sum everything up.
It is easy to forget payments that are due yearly or quarterly. Make a separate list for them and, if necessary, update this list throughout the year when those payments are due. Then sum up everything. Split this sum up to a monthly amount and put this amount on a saving account each month so that you are prepared. This way, seasonal payments won’t tear a hole in your monthly budget anymore.
Example of monthly fixed costs (Excuse weird numbers, as I said)
Housing: 1000 Dollar
Minimum Credit card payment: 100 Dollar
Debt payment: 100 Dollar
Energy bill: 100 Dollar
Phone bill: 50 Dollar
Water bill: 50 Dollar
Insurances: 200 Dollar
Internet/Cable bill: 50 Dollar
Membership fees: 50 Dollar
Natural Gas: 50 Dollar
Car payment: 150 Dollar
Childcare: 100 Dollar
Saving: 50 Dollar
[ -> enter the amount of saving for quarterly/annual payments]
TOTAL: 2050 Dollar
L’Addition, sil-vous-plait! (The Check, please) – Money to spend each month
Now comes an easy calculation. The amount of money coming in minus what is going out as fixed expenses and for the seasonal payments. In our example this calculation would look like that:
2880 – 2050 = 830
The family of my example has 830 Dollar left in one month for running costs like costs for food, personal care, transportation, clothes, etc., to donate or to put away into savings. That is 184 Dollar a week. It would make 26 Dollars a day but you better calculate on a weekly basis. If you want to know where that money is going you need to get into the habit of collecting receipts and make a household accounting book.
For now, you have it: The simplest Budget of all times that will help you start managing your finances like a boss. This is the fundamental calculation you will always need to stay ahead of your finances and move on. Once you put it together you will only have to keep it updated. But mind that it may take a couple of months to whip your basic budget into shape. It took me almost a year to perfection because I wasn’t sure when those seasonal payments were due. But now, they can’t sneak up on me any longer. When one is due I take the money out of the saving account and the month runs smoothly.
This Budget may be simple but it is important. It is the foundation for your family’s financial management and decisions. Now, go grab pen and paper or use this ready-made spreadsheet to enter your numbers and have your budget calculated for you automatically. Just save a copy for yourself and you are ready to create your simple family budget. No entering of an email address or anything. (Create a copy in Google Drive: File – Make a copy – ok) Then you will enter your numbers, due dates and items replacing the pink numbers. The Totals will be calculated automatically. Add or remove rows if you need to. The spreadsheet will adjust.
Did you find anything surprising in your brand-new mini-Budget? Stay tuned to create a monthly cash flow sheet next week to monitor what is going on with your money.
Please, subscribe to get access to free printables, worksheets, and more in the subscriber exclusive library!