This post is written by contributing writer, Sarah.
Yesterday, we learned about the importance of stewarding our finances well by taking a look at key scriptures from God’s Word. Today, we’re going to get a little more practical by showing you how to set up a budget with a simple spreadsheet.
If you want to know the truth of where all your money goes, start doing a running account and budget. Believe me, sometimes it is scary! We did not realize how much we ate out until we started doing a running budget.
When I say running budget, I mean a budget that keeps track of every credit and debit you inflict on your bank accounts. This works the easiest if you have online banking, but if you are diligent in writing down your transactions in your checkbook ledger and keeping receipts, this will work just as well.
My husband and I started by sitting down and making a list of everything we need to put money toward.
- Child Care
- Emergency/Unexpected Expenses
- Fun/Date Night
- Eating Out
These categories became the column titles in our budget.
Above the title of each column, you put how much money needs to go into that column from your paycheck to cover the amount that column requires. If it is something that you pay monthly and you are paid twice a month, you will take half the amount needed out of each paycheck.
For example: If you have a rent payment due each month at the cost of $800, you will put $400 dollars at the top of your rent column. Then with the two checks you are paid with for the month, you will take $400 dollars from each leaving you with $800 dollars at the end of the month.
You will do this for each column. See if it is something paid monthly, twice a month or weekly and then figure out how much needs to come out of each paycheck to meet the amount needed when it is due.
The rows of your spreadsheet/table are the debits and credits to your account. Every so often, you enter in the debits and credits you inflicted on your account and total the amounts in your columns and then total all your columns in an over all total balance; making sure your overall balance matches your bank account’s balance.
Now let’s talk Tithing… Personally, I think that 10% of everything you make should be given to God. I do not think that it would have been recorded in Leviticus 27:30 if it was not important. If you feel led to give more than 10% in extra contributions, then that is your choice. Of course, if you have given up every non-essential expense (e.g., cable, eating out, shopping) and you won’t be able to feed your family because of the 10%, I think God would understand if you did not give the full amount, but I strongly encourage you to pray and seek discernment about this first. If you are able, I believe you should honor the blessings God has given you by giving Him back 10% of your earnings. So, that being said, I always start the distribution of our paychecks after I have taken 10% out of the starting total.
We also like to have a float/emergency column in our checking account budget. We tend to leave around $200 in the column. We use this column for unexpected expenses that we don’t have an assigned column for. These expenses would be unexpected car care, your vacuum cleaner breaking, an unusually high bill, etc. This does not include buying shoes, ladies!
Shoes would come out of the column titled, fun. This column is there only if you can afford it. My husband and I each have our own separate fun columns. This money is ours to spend how we choose. For example: movies, clothes (that are not a necessity), playing a club sport or taking a class.
Also, we like to have a eating out column, because it is inevitable that we will eat out, so we want to set a limit and track how much we are spending. When we were in debt for cars and schooling, we did not have these two columns (fun and eat out). So let me repeat, these columns are only if you can afford them.
Once you have assigned your columns names, you then need to look at how much you make and how much money you wish to or can spend on each column. Some columns are a set limit like rent and others you will need to assess what you can afford/need like groceries or eating out.
The money you hopefully have left over will go into savings or toward your debt! Yeah! And then you guessed it; you will have a budget sheet for your savings, and separate your savings money by percentage into assigned columns. Our columns are emergency, house, car, vacation and gifts. I would suggest that you work toward your emergency fund first; 3-6 months of income or more, and then once that is established decide what percentage of your savings money goes into what column.
It might be a little clunky at first, since everyone has different needs, but eventually you will get into a rhythm of knowing how much money goes where. If you find that your paycheck does not meet the amounts needed to cover all your columns, then you need to assess what you are spending your money on and decide what needs to be adjusted. Sadly, this might mean no new shoes. Sniff Sniff.
Obviously, since this is a blog post, I cannot go in depth with you, but one source that I enjoyed reading that takes you beyond budgeting was Dave Ramsey’s book The Total Money Makeover. You can find the book along with other helpful financial tips at Dave Ramsey’s website or your local public library.