January 18, 2017

With the new year comes new budgets and new savings goals, so I thought this would be a good time for me to talk a little bit about how we budget. These are a few general things that work for us that I think could work for a lot of people. None of this is particularly groundbreaking and I’m sure it’s all been written about before, but sometimes tried-and-true is the way to go.

Before I get into it I feel like I should also say that even with doing all of this, sometimes we go over our budget. Sometimes extra expenses come up. I buy things that I really don’t need. But these things have helped us stay on track and to get back on track when we mess up:

how we budget (1 of 1)

1. We keep track of every penny.

We use a computer program for this. We use You Need a Budget (YNAB). We bought YNAB when we first got married, so we have been using it for years and we know that it works. What I love about it:

Whether you use YNAB, some other software, an Excel spreadsheet, or paper and pencil, I think that keeping track of where your money goes can help you a lot.

2. Fun money.
Nick and I each have some fun money that is not part of the budget each month. We get the money deposited in our own personal accounts each month and do whatever we want with it. I think that having a set amount of money that Nick and I each get to blow helps us budget better. We can spend that money on anything we want for ourselves or anything else, so we don’t feel bad about it. Plus, it helps keep that kind of spending in check. We usually use that money to buy each other presents for birthdays and Christmas, too.

.3. We both participate.
Even though I manage the monthly budget, we talk about the budget each month. We both know how much all of the bills are. I think that helps a lot with managing expectations and with impulse purchases. Nothing is a surprise for either of us and we know whether or not we can truly afford something. Also, I think it’s too much to put on one person if the other partner doesn’t have a clue about what the monthly grocery bill is.

We don’t make big purchases without talking to each other first. Not communicating is an easy way to go over budget.

4. We save all year long for things that we don’t need every month.
Gifts, vacations, and moving are things that we don’t necessarily need money for every month, but we slowly build up those categories each month. The vacations budget is the budget that we usually pull from if we need extra money for something else, like an unexpected car repair. So that is also a nice buffer. But still, saving whatever we can each month means that when we decide to go on vacation, we don’t have to worry about where the money will come from.

A few months ago, we went to California for our friend’s engagement party. It was a last-minute trip, but since we had been saving money all along, we could do it. He is one of our closest friends and we wouldn’t have wanted to miss that, so I am really glad that we were able to go.

I also like to buy gifts as I see them and as they are on sale. This saves me a lot of time, money, and energy. If I see something that I know someone will just love, I buy it. Or I keep an eye on it until there is a sale or coupon code. It helps with the overall budget so that I’m not spending a ton of money on Christmas gifts in December, and I usually end up saving money on the gifts I buy too. I have a shelf in my closet where I store gifts for people and then when their birthday or whatever holiday comes up, I don’t have to spend extra money on expedited shipping or go crazy trying to find the perfect gift. And I already know exactly where the gift is (I am known for putting things in “special places” and then forgetting where those special places are). My mom’s birthday is in April and I already have a couple things in my closet for her.

Right now we don’t need to save money for moving since we have 2.5 years before another move, but once we get closer to a move we will start setting money aside.

5. We automate savings.
I just pretend the money isn’t there to spend.

6. We use credit cards that give us cash back for everything.
This isn’t really part of our budget, but it helps. We use credit cards for everything, from groceries to going out to eat. We pay off all of our credit cars each month, but we also get a lot of cash back just for buying groceries and gas, things that we have to buy anyway. Basically, the credit card companies pay us to use their cards.

Also, if you are in the military, you cannot be charged annual fees for credit cards. Nick has an awesome card with great rewards that normally has a really high annual fee, but it’s free for us.

7. We have the same priorities.
Luckily before we even got married, Nick and I knew that we had similar priorities. We spend more on things that are important to us and we spend less on other things. We love taking trips, so that’s what we save for. We also own way too many books and every cooking gadget you can think of. It doesn’t matter what your priorities are, I think it just helps to be on board with them. No judgments here.

Do you have any budget tips? Please share them!

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16 responses to “How we budget.”

  1. Rachel G says:

    In the USA, we used credit cards and got cash back whenever possible. Here, it’s very much a cash-based society…opportunities to use credit cards even if you have an international card are few, so nearly everything is cash. That’s one of the reasons that we account for every penny spent–but in a handwritten account book, since it’s all spent in cash. At the end of each day we put whatever we spent into the record book. We have a couple big bills that come once a year–health insurance, car insurance, so I divide those bills by 12 and make a mandatory savings account for that–anything we can save beyond that amount might go toward vacations or future goals.

    • Carolann says:

      I haven’t mainly used cash since college, but that is really interesting. When I went to Bulgaria everything was cash-based and while it was a bit difficult to get used to, it also made spending more real. It’s so easy to just swipe your credit card which is why I take budgeting so seriously. When I first got my credit card t during college, here were a couple of times that I overspent. It never became anything more than a couple hundred dollars, but still, it was scary.

      We pay each month for insurance so we don’t have any big once a year bills, but that is a great idea. It would be really hard to come up with a big chunk of money at once for something like that. I remember reading your post about budgeting and how you live debt free and it sounds like you have a great handle on it.

  2. Jen says:

    Budgeting is one of my favorite things to do. We have a set amount each month that goes into savings, E’s college fund, as well as principle payments on my car loan. We always have a number that is our 0, we do our best to never hit that number. It’s fun saving money and staying on budget.

    • Carolann says:

      It’s fun for me too! Budgeting doesn’t seem like something that would be fun, but it makes me really happy to save money and have enough money to buy gifts and go one vacation.

  3. This sounds SO similar to what we do! I actually have a blog post for next week about our main budgeting tips, and it’s basically all of these. It’s a pretty good system. I manage all the budgeting like you do, but we are on the same page about it which is good.

    • Carolann says:

      I love reading budget posts from other bloggers, which is one of the reasons why I finally wanted to make my own. I can’t wait to read your post! I will be on the lookout for it.

      When we first got married, Nick did all of the budgeting. I had never lived on my own before so I never had bills like rent and electricity, but he had been doing it since he was 18. When he was making the budget but I was the one grocery shopping and running errands, I felt like I really didn’t understand the budget. I slowly started taking over and now I love that I’m the one that does it. Now things are a lot easier.

  4. Audrey says:

    Our budgeting style has changed so much over the last three years. We don’t necessarily budget- and K definitely has no clue what the bills are- but I watch our funds like a hawk and allocate funds for the bills each month before anything else. Right now, since we’re working at the same place, we’ve revamped some things and it’s been a little easier to pay down credit cards and put money into savings. Finally! 🙂

    • Carolann says:

      One blogger that I follow called Mr. Money Mustache says that once you have a good handle on money you don’t really need a budget because you can manage your money without one. Without a budget Nick and I would go crazy going out to eat or not really pay attention to what we buy. We both need discipline!

      I think that as long as you have a system that works for you, you’re good. I’m so glad things are easier for you now! It must be so nice to work together.

  5. I’m so bad at budgeting, but I’m determined to get better this year. That budgeting app sounds amazing! I love the fact that you can separate it into as many different sections as you want


    • Carolann says:

      The budget app helps me so much! There are tons of others like it, but we just like YNAB. I’m really bad at spreadsheets so I think that having this program has been the key to me actually sticking with going over the budget every month. Good luck this year!

  6. The rewards credit cards are seriously the best! If you know how much you’re spending each month and pay it off you really can get things for free! We also try to save up for things throughout the year, and it really does help out so much when an extra expense comes up. And yes, having the same priorities helps out so much! I feel like it’d be so tough to try and save with a partner that wanted to spend a lot of money. All of these are such great tips!

    • Carolann says:

      Thanks Ashley! I was never really good at saving for things in advance but luckily once Nick and I started budgeting together I got a lot better at it. It really makes a world of difference when a big car expense comes up or when you get the chance to take a last-minute trip.

  7. So we’ve tracked our spending retrospectively using a spreadsheet ever since we got married. We review it every couple of months or so to make sure our outgoings are less than our incomings. It’s not the most sophisticated way of doing it and saving is haphazard because some months you do great and others you don’t- it’s not predictable at all. I think when we move we’re going to have to start setting forward looking budgets to make sure we’re saving enough to hit the goals we’re aiming for. I’ve heard about that software from a few different places now, might have to check it out…

    • Carolann says:

      I never tracked my spending before I got married. We didn’t even do it for our wedding. I just had a general idea of what I could afford and luckily I could always pay off the credit card at the end of the month. Sometimes this meant a lot less would go to savings though, because I wasn’t really trying. So I am the kind of person who needs the discipline of a budget. I kind of hate using that word (budget), because I don’t really feel deprived when I am using You Need a Budget, I feel more in control, if that makes sense. I don’t think that everyone needs to break it down into categories the way I do, though.

      Some months are definitly harder than others. We definitely went over our budget with moving and Christmas, but we are getting back on track. I really recommend YNAB. It has saved us a lot of time and money, and I am sure that it has prevented a lot of arguments too.

  8. Number 5 helps me SO much!

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