As I sit down at my desk on Sunday evening to hack away at my freelance projects and prepare for the week, I see a mountain of receipts to file, bills to pay, and notes to re-categorize…(I'm one of those people who is always scribbling something on a post it or napkin, and then I bring those home and “consolidate” them into a notebook.) In doing so, I had the chance to go back through all of the old posts and I realized…I've never, not once, broken down for you guys how I attempt to budget and run the finances in my own life. Here's a peek at how “L Bee and the Money Tree” budgets her own single gal money.
How L Bee and the Money Tree Budgets her $$
I have an excel sheet CLOSELY modeled after Cait's at Blonde on a Budget. I use the excel sheet to track my overall spending, and my net worth and debt pay down. In the excel columns I divide my spending into three categories: Fixed Expenses, Savings and Debt, and Variable Expenses or FUN! Money. Since I have a basic idea of what my mortgage and utilities run every month, those are easy to forecast and plan for.
Before the first of each month I sit down and calculate what's coming for the month ahead that I need to plan for like gifts, special events and trips, or doctor's visits. I adjust my “fun” money as necessary.
Many recommend the 50-30-20 approach to budgeting -50% on fixed expenses, 30% on lifestyle, 20% on savings.
For me, I have general targets I like to stay within, but for the most part, after I pay my bills, allocate to savings, whatever money is left over is mine to do with as I please.
I rarely say, “I'm going to only spend $200 this month on going out..,” because that's just not how my life works. Some months I'm out all the time, others I stay in. Some months I have a lot of projects going on the house, other times I don't. This kind of budgeting (or the one number strategy as Learnvest calls it) allows me to be more flexible and helps reduce the stress in my life.
The L Bee and the Money Tree Budget Breakdown
Unfortunately, this also means my savings goals suffer from time to time.
I have savings targets that I want to hit (ideally, 40% of my take home income each month) but like any human being, that doesn't always happen, so I have to reduce the amount that I'm saving. Last month in May, I landed closer to 30%. This was due to a number of factors, mostly the 1k in car repairs I spent last month. 🙁
If we go by the 50-30-20 rule, I may need a little help cutting back on my lifestyle, but since I save considerably and live on less, this works out. And again, this was just one month in my life.
Sometimes even I am shocked at how much things can change month-to-month, and that is OK too. When things feel a little out of control or I get too crazy during a month, I'll often do a week or month long no spend challenge or financial cleanse to try and get me back on track.
Some may be surprised (given how I'm into personal finance and all…) at how rigorous of a system this isn't. Personally, I feel that as long as I am tracking my spending in my budgeting app (I use Learnvest) and making progress on my monthly and quarterly goals to hit my net worth target by year end, I should be alright.
Since I switched to this less-strict method, I've actually spent less than I made every month in 2014 thus far.
Again, this is just my own method, honed after many years of not having a budget, or budgeting rigorously and failing miserably.
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