Molly’s Money: How To Create, Set, and Maintain a Working Budget
You guys, welcome to the latest installment of Molly’s Money. How much are you loving that graphic? I mean, doesn’t it make you excited about budgeting? I mean, come on. Right? Right.
Moving on.
Today’s post is fairly self-explanatory per le headline: HOW TO Create, Set, and MAINTAIN a WORKING budget.
Now, I am not a math person. Numbers hurt my head. Seriously. I am not technical, but this has worked for me, I just needed someone to show me.
This is, the NUMBER ONE way to help identify whether or not you have a spending problem or an income problem. AND, this is the number one way for you to visually see EXACTLY where your money is coming in, where it NEEDS to go, and where it’s ACTUALLY going.
Now, this may not work for you, but this is what worked for me and continues to work for me. I am showing you the EXACT spreadsheet formula that my husband and I use every month (obviously not with our actual budget numbers). This is also the exact type of spreadsheet that I used monthly in helping to get me out of debt.
Yes, I know there are sites like Mint and other budget helper apps, I have used those… but they just didn’t work for me. I like to kick it old school with my girl Mrs. Microsoft Excel (or Mr. Numbers if you have a Mac). It’s what has worked for me.
NOTE: If you have ANY questions, please do not hesitate to email me. ALSO, if you would like me to email you a copy of a pre-formatted budget spreadsheet that you can easily customize and plug in numbers, I am HAPPY to send one to you. I have one ready to go. Why not start fresh? It’s almost September. Eh?
[THE GOAL]
Now, the goal of the budget is very simple: you want to keep track of every penny you bring in… as well as every penny you spend.
Seems like common sense, but is not always so easy in practice.
[STEP ONE: INCOME]
Now, in slide number one below, you see that this spreadsheet is titled September 2012. In the first section you need to determine and record your take-home-pay income. I have put in sample income for you at nice even numbers of $1,000 per paycheck and a total take-home-pay of $2,000 a month.
**NOW with enlarged slides!
[STEP TWO: EXPENSES]
-Now, the next step is to identify every expense you have that is NOT optional (i.e. rent / mortgage, utilities, etc.) For me, my tithe is first, and then beyond that I include my other “NECESSARY INFLEXIBLE EXPENSES”. This is the section in RED. Necessary inflexible expenses are bills and dollars that MUST go out every month.
-Next, determine your “NECESSARY FLEXIBLE EXPENSES” – these are things like gas, groceries, and toiletries. This is the section in GREEN. These are expenses that must go out every month, but YOU can do things to cut back if you’re really in a money pinch. (e.g. carpooling to save on gas, etc.)
-Lastly, in your expenses section, are your “OPTIONAL EXPENSES” – these are things like eating out at restaurants, savings*, and clothing**. This is the section in PURPLE. These are expenses that you could completely eliminate from your life and, believe it or not, you would not die. These are expenses I, personally, have eliminated before, and am still alive and kicking. Hard.
*I list savings in optional not to devalue it’s importance, but to show that it’s a more flexible number and can be adjusted easily depending on your budget that month.
**No, clothing is NOT a NECESSARY expense. Trust me. I went almost four years essentially buying NO new clothing unless it was, in fact, an absolute necessity. If you have clothes in your closet right now, you don’t need new ones if you have ones that work fine. This is for a separate post. This is also coming from someone who blogs her outfits. I love clothes.
Now, the GOAL of the EXPENSES column is to BALANCE your income and expenses. Your expenses SHOULD NOT exceed your income.
The key is this: at the beginning of the month, you need to have a plan for EVERY SINGLE DOLLAR that comes IN and EVERY SINGLE DOLLAR that goes out. Plan ahead of time.
[STEP THREE: ACTUAL EXPENSES]
Now, in the ACTUAL EXPENSES column (highlighted below) is where you keep CLOSE TRACK of every dollar you spend.
That means:
- Save EVERY receipt (this was a tough one for me to get used to!)
- Track EVERY cent you spend, EVEN if it’s a small expense (yes, I even record my $0.79 cent fountain sodas in my spreadsheet)
- Enter EVERY receipt into your spreadsheet at the end of the day
Below is an example of what it looks like to enter in individual expenses. The spreadsheet is per-formatted with formulas that will do the math for you. All you have to do is hit the + sign, the #, and enter. BOOM.
[STEP FOUR: EVALUATE + EXAMINE]
Now, if you have been keeping track of your expenses throughout the month, it’s important to periodically throughout the month, check in and see how you stand.
In this sample sheet below, the surplus of remaining money for the month is $193. In my example, I went over budget a little on groceries and miscellaneous.
At the end of the month, this is your chance to tweak for the NEXT month.
For example, if you are being realistic and you know that what you are getting at the grocery store each month is the ABSOLUTE bare minimum and you are going over budget each month, that means it’s time to adjust accordingly. You’re not budgeting enough. And vice versa. If you notice you’re staying UNDER budget each month, you can take that surplus and put it towards savings.
Now, hear this: At the beginning of the month (when it comes to the budget) YOU, yeah, YOU, make the rules.
At the beginning of the month, YOU are in control of the budget. You decide where the money goes.
HOWEVER, with that in mind, once the budget is set, from that point forward for the rest of the month, the budget now controls YOU.
So, you make the budget rules, but then you have to FOLLOW the budget rules.
A COUPLE OTHER IMPORTANT BUDGET POINTS OF NOTE:
- Surplus in a particular category is not free money to go and spend on clothes or unnecessary items. Now, say for example you researched cheap electricity deals and switched your provider, so now your electric bill is $30 less than you budgeted for one particular month… that is NOT an excuse to go spend $30 on clothes. Put that $30 in savings, because guess what? Odds are your electric bill is going to be $30 MORE than you budgeted for one month and if that money is in savings, boom, you have it covered.
- If you are in debt, that minimum credit card / debt payment goes in the RED category of NECESSARY INFLEXIBLE EXPENSES. Your MINIMUM payment goes there. As you can budget accordingly and pay extra, you can adjust in other areas. I did not include this in the examples above because it is going to vary for each person and their situation. So, add your expense into that category and then adjust numbers accordingly in your GREEN and PURPLE categories.
So, there you have it. The dummies* guide to creating, setting, and maintaining a budget.
Questions? Comments? Concerns? Want a budget spreadsheet? I will send you one. For real. A pre-made budget spreadsheet is ready for you. Just ask.
*You are not a dummy.
I am graduating college in May and I have started budgeting in 2016 so I am prepared for when I have a real job and significant income coming in. I have been browsing through this series and it is seriously so helpful! Thank you for sharing your experiences and your candid advice!
If it’s still possible I would love a spreadsheet! I’m trying hard to get my finances in gear and know the first step is to budget! rjlee2009@gmail.com Thanks!
So I would like you to know that I started using this method at the beginning of this year (2014) and love it. It’s the first time I’ve ever created or tried to follow a budget and it works so well for me. Two years after you posted this I’m still coming back to it whenever I have a question or want to show a friend. Thank you so much for sharing this!
yes!!!! omgah that is amazing!!! i’m so glad!!!!
Could you send me a budget worksheet? I use pages for Mac to make our budget now but I think sometimes the way I laid it out makes it confusing. I would like to see your example in actual Pages.
hey megan! totally! can you send me an email so i know where to send it to? molly@stillbeingmolly.com
Great post Molly. Budgeting is so important and it gets extra complex if all the family are involved. I love the use of screenshots which have given me some great ideas for my blog. One of the keys to budgeting is not just to do the budget in the first place, but to commit to it and follow it through month by month. If you had budgetary responsibility at work you would do that because you have a boss breathing down your next… why don’t we do the same with our own personal finances?
Molly, seriously how helpfull!?!!
I’m getting married next month and we’d like to start our budget planning right from the start!
i was stressed about it but now it seems a little easier than i thought, so could I please get one spreadsheet too??
thank you soooo much!!
Panagiota
hey panagiota! sorry for the delay in replying – send me an email molly at stillbeingmolly dot com and i’ll send you the spreadsheet!!
If it’s not too late, I would love a copy of the pre-formatted excel sheet you use for budgeting. Thank you!
hey susannah! sorry for the delay in replying – send me an email molly at stillbeingmolly dot com and i’ll send you the spreadsheet!!
Hey Molly, can you send one of those budget sheets my way? dlalrutz@gmail.com. Thanks!
Done and done 🙂
Very informative and helpful post. I was doing this manually in a little composition notebook once upon a time and then….I kinda lost track of it around about April. I seriously need to get back on it because my budget is struggling girl! Thanks for sharing!
http://thriftyandshameless.blogspot.com
thank you so much, miss rockwell!! once you get a good habit set in place, it’s really easy!
I must admit this is the best post I’ve seen on budget management. This is very thorough and totally helpful. I can now make some changes on my own spreadsheet based on your budget sheet. Thanks a lot for sharing.
thank you so much!
I love these budget post you’re doing. I think they really apply in the style blogging world, it’s great to hear that new clothes are NOT a need but a want and only if they fit into the budget. We have a pretty tight budget, I don’t use a spread sheet, but I do much the same thing you do. Figure in your take home pay, subtract your rent/mortgage, bills, gas groceries, put money monthly in retirement fund and a emergency fund (since it’s pretty much a given that a car will break down sometime during the cold winter.) and then money is set aside for a little fun budget for everyone. My clothes budget comes from what ever I make from lessons(minus the gas money) and free lancing. (yikes, all I did was talk about me and this is your post!)
I think you did a really great job breaking this down and making a budget not sound overwhelming. It always surprises me how many people don’t use budgets so this is a really great resource for me to point people towards
thank you by the way for your comment on my post the other day, you brought up another point I hadn’t touched on and you were so correct on it. thank you for taking the time to write it out, you are such a doll and I always enjoy getting to come to your blog. You have such a well-rounded blog, it really is a delight to read and you are just the sweetest person. 🙂
thank you so much, katie! keeping track, i’ve found, is the most important thing! and thank you so much for your sweet comments, katie. seriously. your encouragement means so much!
Super helpful!!! Love this budget idea – I’ve tried Mint, too, and this is just so much easier!!!
thank you so much, jamie! glad it was helpful!
Wow, Molly. This is so elaborate and detailed and awesome. I wish I had this back when I was in college. I’m sure you are helping so many people with this, you should be very proud! Love it! 🙂
xo, Yi-chia
Always Maylee
thank you so much for the encouragement, yi-chia!
Clothes aren’t a necessity? Ack! Thanks for the great info, Molly!
scary, right??? hope it helps!
Thank you for posting this Molly! Great info!
anytime, anna!! hope it helps <3
I’m an excel sheet nut too : ) I’m actually really good with money, but I feel like excel & constantly making new financial goals helps me stay on track.
that’s awesome, raquel! so glad to hear! 🙂
You had me at the awesome thumbs up graphic – love a gal who doesn’t take herself too seriously! :o) Great advice, girl.
haha YES! glad you like it! 🙂
You rock my sock Molly. I need this SO badly, my debit and credit card are smoking after the damage I did last night…
thank you so much, evani! let me know if you’d like a copy of the sheet 🙂 <3
Wow, I totally needed this! Thank you so much! This is genius!
Xx
http://chelseasgirl.wordpress.com/
I’m so glad it was helpful, chelsea! let me know if you have any questions <3
I love this! I’m not a numbers person, either, but budgeting is kind of fun to me (dorky! I know!). My husband and I use Excel, too. It’s so, so easy. We store it in Google Docs so we can both access it. And! I found an awesome budgeting tool for my phone. It’s called EEBA (Electronic Envelope Budgeting … something that starts with an A), and it has REALLY helped keep track of where our money is going. That way, I can record expenses on the go and log them on our spreadsheet later. It’s awesome!
thank you so much, rebecca! that’s so great y’all have a great system! it’s so important!
Molly- thanks so much for sharing this. I have been really wanting to give the excel budget thing a try so this post is SUPER helpful. I think I might try to get this all set up this weekend and give it a try for Sept. Thanks for sharing!
Stephanie
anytime, girl! i sent you an email <3
great tips…it’s always a good idea to be smart about your money!
xo,
nancy
thank you so much, nancy!
This is a great post! I love reading about money management and budgeting, thanks for sharing!
anytime! thank you so much, allie!
Love that you took a topic your readers seemed interested in and turned it into a series (with a fun graphic as well!) I’ve always used Excel or just a plain old piece of paper do make a similar list and it’s always worked for me.
hahah thanks, rachel! it definitely seemed to struck a chord with people 🙂
Thank you SO much for this, Molly! I’ve been trying to figure out a sane way to keep track of my expenses and earning since I started my job, and nothing has really feel doable (I’m terrible at math as well!). I can’t wait to try out your strategy.
-Alyssa
The Glossy Life
anytime, alyssa!! i totally understand- i’m the same way. let me know if you need a copy of the spreadsheet 🙂
you are awesome!! I have been trying to set up a budget for the past month with no luck…I can’t wait to try this 🙂
i hope it helps! let me know if you need a copy 🙂
i halfway to this. i have a spreadsheet that totals up all of our bills (the inflexible ones), so we know what we can spend on everything else. the tough part is our bank is based in cali, and we’re in va, so we don’t really use cash that much (i just can not ever be ok with $5 atm fees!) and i think that would go a long way in helping with budgeting. i’ll have to see what banks here offer free checking and that can be our grocery/household account. our bank (union bank) is just way to awesome to give up!
that’s awesome, amber!! the method of payment doesn’t change – it’s just all about cash flow and knowing where things go!
somehow it just hurts more to spend cash. i feel that will help stop me from buying all those little things at kroger during the ten-for-ten specials.
truth, i totally know what you mean.
great tips, Molly! I’m with you on accounting for EVERY.SINGLE.DOLLAR. It’s so important to know where you’re money goes!
SOOO important! it just wasn’t something i understood at first!
Love this! I’m definitely going to keep it in mind when we are sitting down next to talk budget. Makes so much sense.
http://www.domesticatedworkingwoman.blogspot.com
awesome! let me know if you need help, girl <3
Great post Molly! I have never been good at setting a budget. Your spreadsheets look so simple to follow. I’d love a copy please.
absolutely, lisa! shoot me an email – mollystillman at gmail dot com <3 (by the way i just updated the post with larger screen captures so hopefully you can see the slides a little easier! :))
Wow Molly, that’s very thorough! Great post. One of the best things that anyone can do is track their spending (ALL OF IT)…like you said…every penny needs to be accounted for. It’s such an eye opener!
It’s the little leaks that will sink a ship!
Maybe it would be helpful for your readers to see a slightly larger images when they click on the screen captures..a little hard to read!
Great inspiration as always!!
Margaret @ Live Like No One Else
Hey Margaret – I just updated the post with larger screen captures! Let me know if that helps! 🙂 thank you for the encouragement!
Perfect! 🙂
thank you, margaret!
Being a finance major you think I would be better about sticking to a budget, but I’m so awful at it. I’ve been thinking that hubs and I really need to start being strick about the budget again. This was a great how to!!
xo,
Angela
headtotoechic.blogspot.com
hahah i totally understand – i don’t think you’re the only one! i’m glad it helped! (by the way i just updated the post with larger screen captures so hopefully you can see the slides a little easier! 🙂 )