After more than two decades of blindly earning and spending money, I met Becky. And she taught me about this magical thing called a “budget.”
Becky’s an accountant by training and needs her spreadsheets and charts like I need air…or bacon. I’m not that into numbers. But I’m absolutely lost if I don’t know at least these two things about our family’s finances.
How have we spent?
First, I need to know how much I’ve been spending and on what. Today, Becky crunched all the numbers from the last year and handed me a spreadsheet showing exactly what we’ve been doing with our money (not including savings).
Every expense fit into one of four categories: Health, Home, Giving and Education. Sure, Becky could break those categories into even smaller ones, but not without duct-taping my head together first. We keep it simple – big categories, small words. We’re just trying to get a bird’s eye view of our spending past.
For fun I also like to figure out what percentage of our total spending each category has taken up. Ok, it’s not fun, but my wife finds me more attractive when I’m tapping on a calculator. The end result looks something like this:
How will we spend?
Next, I want to know how I’ll be spending going forward. We’ll start by budgeting for the stuff we need to live (legally): food, shelter, school, medicine. Then, budget the stuff we need to live obediently: giving.
Last, fill in the rest, starting with the things that are most important and moving toward those that are least important.
For instance, I don’t need to take my wife on a date. But they’re really important to us. Also, I don’t eat kitty vittles. I don’t even like our cats. But I should probably keep them alive too. So date nights and cat food make the budget because they’re important, even if they’re not essential.
On the other hand, I have a bad habit of grabbing a Coke from the nearest drive thru when I’m on the road. Apparently, I do that a lot. But it’s not important. Not in the budget.
Eventually, we may get to things that are so unimportant they’re downright ridiculous. Things about which we shall not even speak. Probably best to leave those off the budget too and spend elsewhere. Or save. (That’s a whole ‘nother ball of wax.)
Have No Fear!
Budgeting doesn’t have to be complicated, see? Start simply by totally up how you have been spending. And then, with a few priorities in place to guide you, choose how you will spend.