The Money Game

I'm not going to get into the specifics of our financial situation (obviously) but since one of my 2012 goals is to save more and pay down debt, I thought I'd share what our financial plan is for this year.

We haven't exactly been the most responsible financially and we are definitely paying for it. Its obviously not that dire of a situation, because people gave us money to buy a house a year ago and who would have done that if we were downing in debt? But overall, we have more petty debt than we are comfortable with. Its also coming to a point where we want to pay off the debt before we die of old age, so we're paying more than our minimum payments, therefore leaving us less money to have fun with.

I'll be honest with you, I am not a budget-er. I'm the type of person that pays my bills at the beginning of the month and then does whatever I want with the rest of the money. I somehow manage to completely forget month to month the amount of incidentals that inevitably come up. This situation leaves me scrambling more often than not. Its not a good feeling to know that your car needs a tune-up and you spent the money that should have been budgeted for it at Target on things you don't need.

I know I'm not the only one like this, and I have little to no willpower or self-control, so if you're thinking that you would never be able to stick to a budget, you're wrong. If I can do it, anyone can do it. This is not even mentioning the fact that I live with Mr. Spendy. ;)

Here's the secret. Create a budget that takes incidentals and "allowance" into account. If you have a set amount that you can afford to spend at Target each month and you know what it is in advance, you're less likely to go over, plus you're going to think twice before buying something on a whim. The awesome thing about budgeting for incidentals is that if you don't spend all the money you budgeted for that category one month, then that money can go into savings or the "fun" category next month.

Another secret that I learned from another blog is to create an estimated budget and an actual log. If you look at what you spend in each category every month you can add up all the totals and then divide the amount over the year. Basically, if you spend $1200 a year on your water bill, you put $100 as your budget for water each month, even though your bill in January is only $75, you know that you're probably going to have a $125 bill in July. If you put the "overage" into a savings account, you won't have to cut back on another category come July because you saved the money from your January budget to cover the extra cost.

Also, if we know we have a large bill that will come due at the end of the year, like our Property Owners Association bill, I divide the total amount by 12 and put that amount into a separate savings account each month. Then when the bill is due at the end of December, I just transfer it to my checking account and pay it without worrying about where the money will come from.

Here's what our budget categories look like:

Auto

Registration

Gas

Misc. Auto.

Loan

Credit Card

Christmas

Savings

POA

Dog

Entertainment

Clothing

Dining

Mortgage

Grocery

Household

Electric

Garbage

Cell Phone

Cable

Water

Insurance

You can see that I broke the categories down into sections that make sense to me. I basically grouped "like" things so I can keep track of everything a little easier.

In addition to the estimated and actual budget worksheets I keep a computerized account register for both of our checking accounts. I am not the type of person who is going to carry around an old school register and write everything down, so doing it on my computer works for me. As soon as I write a check or get home from the store, I type in the amount and calculate my account balance. This helps me more than checking my account balances online (though I do to update hubby's register because he always forgets to bring me receipts). I don't have to worry about remembering to take the checks into account that haven't cleared yet because on my register, the money is already taken out.

It sounds like a lot of work, but if you sit down every day for like 5 or 10 minutes, its done and it can really help you manage your family budget. So far, this is my preferred method, and I've tried basically everything!

What do you do to keep track of your finances? Do you use a program? Do you budget?