Budgeting that Works - Stop Living Paycheck to Paycheck pt. 2

Budgeting is one area in my life I get asked about quite a bit lately. Probably because I've shared publicly that last year, we started working on our finances.

It's crazy to me that in this day and age of hyper sharing, we're still all weird about sharing financial information. I used to work for the government, which meant my salary was public information. And that's when I realized....wait, we all pretty much know what we all make. And we all see the economy, and we're all living with the effects of coming out of a pretty bad recession. It's been rough. We're all going through it. Why don't we TALK about it!?

I would venture to guess that one reason we're in such an economic mess is that we still treat money like some taboo, untouchable subject.

Well, let's stop that right now.

My name is Cyndi, and I used to live paycheck to paycheck. I don't anymore, and here's how I got out of that hole.

I shared yesterday what I always did wrong. I feel like I'm really on track to getting this right. I'm not perfect and I'll bet in 10 years I'd have some better tips. For now, here's what I do and how I do it.

Start with listing your income.

I list our income in a small section of my budget that spells out how much each check is and when it comes it. Based on our current pay cycles, our family gets a check every week, plus I get a child support check on the 1st of each month. So on an average month, I have five lines for our income.
Then I list our expenses. Here are the standard expenses I list on our budget each month:

savings 4th
groceries 4th
rent 4th
media 4th
RT Pass 4th
Christmas 11th
gas 11th
car payment 11th
cell phones 11th
internet 18th
BJJ 18th
Student Loan 18th
car payment 18th
savings 18th
electric bill 18th
car insurance 18th
groceries 18th
tax payment 18th
gas 25th
kid fund 25th
natural gas 25th
Tithe 25th

 There is an additional column that lists the actual dollar amounts.Next to that list, I have our income and expenses broken down by week, i.e. how it all actually comes in and out. You can make a monthly budget but that's not gonna help you a ton if you get paid on the 15th and have rent due on the 1st.

I've found it critical to break out spending by paycheck, not just by month. 

This was one way I used to get myself into trouble...I used to pay bills based on what I had coming in FOR THE MONTH, when in reality some of that money wouldn't be in my hands till the 15th or 20th or 25th. I was digging through my garage recently and I came across a bank statement from about 10 years ago....I had over $300 dollars in overdraft fees one month! Mostly because I wasn't carefully tracking money in and money out. I would pay bills based on my monthly income, and not really pay much attention to when money ACTUALLY came into my hands. Dumb.

Anyways, the right side of my spreadsheet looks like this:

in month$
out month-$
left month$
In 2nd$
out 2nd-$
left 2nd-$
in 9th$
out 9th-$
left 9th$
in 16th$
out 16th-$
left 16th$
in 23rd$
out 23rd-$
left 23rd$

This gives me an overview of where we are for the month, as well as any given week. 

At the beginning of the month I start plugging in ACTUAL NUMBERS. My husband sometimes gets overtime or bonuses from his job....but I don't factor those in until we get the check in our bank account. Until his pay comes in, we have a placeholder amount listed, and that is the minimum he'd get on any given paycheck. 

I do the same with my bills. For example, I'll enter a placeholder amount into the electricity bill cell, and I try to 1)over estimate and 2)base it on previous usage. I check our electric company website about twice a month. Once when the bills are released so I can input the actual amount we'll need to pay, and then again when I pay the bill.

Because we almost always under estimate our income and over estimate our bills, we almost always have extra each month. This extra either goes into savings or covers any unexpected things that come up (although we really REALLY try to plan out everything possible). 

Based on this method of budgeting, it's a must to check in once a week, which is when we get paid. You'll need to adjust your budget every time you have a significant input or output of money. My weekly check-in's take maybe 10 minutes. You could probably shave that down to 5 if you aren't picky and obsessive like me.

At the beginning of the month, I take about a half hour to and hour to go over the entire month, enter in actual amounts for bills where I can, and adjust bills over the month. Usually, I have at least one week where the bills are more than the paycheck. So I spend some time adjusting those based on the given month and when we can pay them compared to when they are due. Tithing and Savings aren't time sensitive so often times, we end up contributing to those areas through the month. 

We budget based on the "zero balance" method. We budget every dollar until our "left for the month" section equals zero.  Using the "zero balance" method of budgeting has been the key for us to control our spending and ending up with more money. 

We also use the "mostly paper money" method of spending. Things that can be paid with cash are paid with cash. This has been a huge help in evaluating our spending. Because as our gas envelope dwindles, there's no just using the card to get more gas. It really truly helps set the idea in your head that each category of spending has a finite amount you can draw from each month. 


TL/DR version:


As with just about everything in life, nothing will work for you if you don't stick with it. That means committing to doing it regularly. I'd guess that about 90% of my friends who tell me that budgeting "just doesn't work" for them actually have a case of "just didn't stick to it". And it's funny, because they will tell you that! I just had a conversation with a friend who was telling me how budgeting didn't work for her and she laughed and said "Well, it was really complicated so I probably didn't check in with it as much as I should have, ha ha ha".  Yeah, she probably didn't!

If you're sick of living paycheck to paycheck.....and I mean TRULY fed up with it.....commit to creating and working a budget spreadsheet for 1 month. Just one month. Start now and plan out your October. You'll have plenty of time to craft your personal budget and ease on into it.

2) Use REAL numbers. 

Don't guess. Don't estimate. And don't leave anything out. Put real, actual numbers into your budget and include everything. Your coffee budget, school shopping, Christmas savings, date night money. EVERYTHING you want to spend money on, enter it into your spreadsheet. EVERY TIME you get paid, put that actual dollar amount into your spreadsheet.

3) Zero Balance your budget.

This has probably been the single biggest game changer for me in terms of moving out of the paycheck-to-paycheck cycle. Budget every dollar. Or, as Dave Ramsey says, give every dollar a job. That way your money works for you.

Zero balancing our budget is probably the single biggest reason we no longer live paycheck-to-paycheck and actually have given ourselves a pay raise, simply by making our money work for us.

4) Use paper money when possible.

If you struggle with budgeting, this step will be critical for you. Money isn't just money....it comes with all sorts of mental and emotional baggage. Getting it into your hands and physically paying for something is HUGELY different that swiping a card. After a week or so, it will completely change how you view your spending and it makes you much more cautious with your money.


That's how we stopped living paycheck to paycheck.

If you want tips or advice, drop me a line! I'd love to help.


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