How I Budget Every Month, Year after Year and What I Have Learned Along the Way

 I always love reading about how bloggers do what they are best at. Whether it’s a fashion blogger showing me how they put together outfits, a lifestyle blogger who talks about their routines or a home designer who talks about their own style,  I always find it insightful to hear how real people live their lives without sugar coating it.

 It feels like so many people live this perfectly put together life and it doesn’t always resonate with me. We live a perfectly messy, stressed out life just like everyone else. I was just at my favorite yoga studio on vacation and I saw a block that said “I meditate, do yoga, drink green tea, and I still want to punch someone in the face!” Totally me and my life. So when I thought about doing this post, I felt I should focus on the unperfectly normal way I budget and hopefully you find it helpful.

I start at the beginning of the year and fill out my budget book. I have been doing this for 10+ years and it has evolved into the planners that I have created to share with you all. My husband and I sit down and work through our whole year in December. My husband used to hate this and now he sees how much it helps me to plan and actually have the funds set aside for all our big plans.

We used to sit down and plan trips and then wouldn’t put a budget to our plans and then at the end of the year we went over budget and year after year we were racking up debt and could not figure out why when we were planning all our spending. What I forgot to do was make sure we could 1. Really afford multiple family trips a year and 2. We could live off of the monthly budget that was left over after saving for our planned trips and other spending. 

Through years of budgeting and working to cut our budget to meet our goals, I have learned the following budget truths:

  1. I can’t live off of $200 a month on food - for all 5 of us 

This always seemed to be where I would cut our budget first. I would look at our budget and think, "$800 for groceries?! That is crazy! I know we can spend less than that." So I cut it down to $200 and then we spend $1,000. When you have an unrealistic budget, you don't just stop spending, you angry spend after you bust the budget. Or at least that is how it feels for me. I think, well we couldn't keep that budget, so why try now?

    2.  Clothes aren't optional 

There are so many things that I logically think I don't need to spend on. And really I don't have to. But if month after month I don't allow myself some money to spend in these categories, I will angry spend one day and it won't be pretty. Give yourself some room to spend. If you are in the middle of debt payoff mode, then your budget will be different. Once you start trying to live a more normal budget, make sure you are realistic about what you choose to spend your money on, and make sure you give each of you a budget to spend on the things that make you happy. I know its materialistic to say that buying things makes you happy, but it really does. And when it is in budget and within reason, it is totally okay and something you should try to make sure you have room for in your budget.

    3. There are areas we don’t feel emotionally and physically when we cut spending.

There are types of spending for each person that are personally emotional. What I mean by this is that there are certain things that you spend your money on that make it feel like you work hard and it pays off when you finally can afford to do these. And each person has their own set of things they want in their life. 

For me, going to Target and being able to buy that shirt that I think is cute, right there on the spot and not feel guilty for doing it once in a while feels amazing. To know that I have a budget for those impulsive purchases helps me feel like we make enough money for the kind of life that we want to live.

Really think through areas in your budget and how they make you feel when you spend on them, each individually. When you get to go to Starbucks twice a week, does that make you feel like those late nights at the office are worth it? If you were to cut that out of your budget would it emotionally frustrate you? Make it so that every time you drive by Starbucks you curse that you don't make enough money to buy one stinking cup of coffee? If that is the case, then you need to give yourself a budget to get a cup of coffee within reasonable limits so that you don't burn yourself out of the budgeting process. We all can't go without everything forever and we shouldn't need to, if we are budgeting correctly. 

For help with a more in depth budget planning process, see my Level 2 planner.

Planning for the Year

After we set out our years goals and spending plan, I get to work deciding how much to save each month and how we are going to fund our goals. I make a plan of our savings so I know what I need to save by when. Once I have the dollar amount decided, I start entering these numbers into my annual budget.

Next I get all our bills entered in each month. I usually do my annual budget in less detail, so I just put totals, like Utilities instead Gas, Power, Etc. After I have the bills I have to pay I go in and subtract our income from these expenses and take the leftover amount and divide it out in the remaining columns. If I don’t have enough in that months budget left over to cover our necessary spending for the month, I start looking at months where I have more budget and make any adjustments to cover each months spending. 

Now that I have an idea of the annual spending, I move on to the first three months budgets and I put together the spending plan for each month. I make sure to include all the holidays and birthdays for each month and their budgets into my monthly budget. Anyone else sick of seeing the word budget yet? 

Account Setup

I have talked about my account setup, but I’ll review it again. I have three accounts that I actively use each month: 

  1.  My bill account (Checking Account - I don’t have a debit on this, just checks)
  2. Our spending account (Checking Account- Debits for me and my husband) 
  3. Our savings account (Savings Account- no access to this account)


For more information on how I set these up, check out my post.

Monthly transfers

After each payday, I sit down and look at what I need to spend for the following pay period in my budget and I move the cash into each of my accounts to have the funds available for the pay period. I have started using a paycheck by paycheck sheet to keep track of each paycheck spending. I have it available here. 

When we have a really tight budget, we turn to cash and use only cash to make sure we stay on budget. When I say cash, I mean from my spending account. Anything that goes into my bill account goes automatically as bills, so we don’t touch this account. But any grocery money, personal spending money we get as cash each week. 

Weekly Family Council

We try to review our weeks budget and what we have spent every Sunday as a family. We discuss things with the kids and then have an adult discussion for the things we don’t think our kids need to be included in. Our kids are young, so we keep their discussions pretty basic. But we do review their chores and their chore money and what they are saving for. 

End of the Month

At the end of the month I review our spending and write it down in our Family Finance Planner and look to the next month and roll over any budgets that need to be rolled over. And I start the process all over again. 

This year I only half heartedly planned the year and stopped doing my written budgets and guess what? We have done horrible AND have regressed at least a year on our goals. This has reaffirmed to me that this process works and when I don’t do it, we don’t go anywhere but backwards. I am starting now to change and put together a budget for the rest of the year. I can still save the last 6 months. No matter where you are, you can change and be better starting now!

Is there anything that you do that works? I am going to give some different budget ideas on future blogs. If there is anything you would like to have discussed, let me know in comments below. 


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