Our Family Budget

In December of 2010 Chris and I sat down to have a serious talk about our finances.  He decided (even though we were dating at the time) that I should start to look at where our money went each month and how much we were spending on everything.  I was extremely flattered that he wanted to share this information with me, but I was also worried because I am in no way what-so-ever good at math.  I was positive I'd screw it up and told him as much.  But, for some reason he put his faith in me wholeheartedly (I think it's because he has his "love goggles" on) and I've surprised us both with how well I've handled the whole thing.

The first thing we did was sit down and figure out what our "fixed expenses" were.  Fixed expenses are payments that are taken out of our account every month for roughly the same price.  Those expenses can include:

1.  Mortgage or Apartment payment

2.  Phone Bill

3.  Cable Bill

4.  Student Loan payment, etc.

The second thing Chris and I did was figure out what our "variable expenses" were.  Variable expenses are items that do not cost the same every month but are items that are still bought every month.  Those expenses can include:

1.  Gas for your cars

2.  Food

3.  Utilities, etc.

When Chris and I lived in Seattle for six months Boeing gave us an expense account.  We were given a certain amount of money a day for food, lodging, and gas.  We used their system to figure out how much we should be spending on our variable expenses and found that their system seems to work best for us.

Each day they gave Chris $5.00 a meal ($15 a day) for food.  Chris and I figured that $25 a day for the two of us was a good place to start when it came to food and that is the system we still use to this day.  Do we spend the $720 allotted for our groceries every month?  Not even close.  But, it's a system that works for us and I can't see changing it anytime soon!     

As you can see from the picture below Chris and I use three categories:

Deposits

Fixed Expenses, and 

Variable Expenses

I use Microsoft Excel to set up my report.  Here is an example of what my budget looks like.  All the numbers are made up because I feel that sharing how much money we make/have is a little too personal, but you'll get the general idea!

To find out how much money you have leftover use this formula:

DEPOSITS -FIXED - VARIABLE  = SPENDING MONEY LEFTOVER 

Chris and I use the leftover spending money to pay extra bills that come up (like property taxes for the cars) or fun things like funding our trips to Disney.  

Here is an example of a monthly report that we would use:

The next couple pictures will all be the same as the one above but I will explain the math behind all of it!

To calculate the Yearly Savings you subtract the Deposit, Fixed Expenses, and Variable Expenses totals.  If there is any money leftover at the end of the month, I roll it over and add it to the Yearly Savings of the next month (which, in this case, is October).

Calculating the Monthly Savings is exactly like calculating the Yearly Savings.

I always use the little red numbers beside my Variable Expenses.  Why?  Because it helps me keep track of how much money I have left to spend in that category.  I use the numbers I calculated from my Budget Report (see first photo) and subtract whatever I spent in that category.  Confusing?  Let me show you the formula:

We're going to use Gas for Car as the example:  $175-SUM(I9:I10)   

$175 is the amount of money we can spend on gas each month.  Then you take the sum of the two cells (which are I9 and I10 in this scenario) and subtract it from the $175.  As you can see in the picture below, we still have $75 left for gas for the month.

As I stated above, Chris and I usually have spending money leftover.  We use that to buy things we want or to pay off bills or trips.  That is where the Miscellaneous Category comes in!  I have a strict $200 limit that we must either meet or come in under each month.  You can make it more or less depending on what you want to spend it on, but we find that most of the time $200 is more than enough.  

If we spend our Miscellaneous money on clothes or crafts, I usually put it under the Variable Expenses for the month.  However, if we are planning a trip or have a bill that needs to be paid, I put it under Future Expenses (see box below).  Then, I take the amount and subtract it from the Yearly Savings.      

As you can see there is a lot of math involved.  But, once you set up the chart the way you want it all you have to do is start plugging in the numbers!  

I usually update my report every three or four days just so I make sure I am on track.  And sometimes, I have Chris double check me so I know that I am doing all the math right (it's great to have a super smart husband around!).  We also have online banking which is such a blessing when you're doing something like this.  And it's a great way to keep an up-to-date record of your expenses. 

You can find my version of the Expense Report on my Google Site.  Please feel free to download it and customize it to work for your family.

Does anyone else do an Expense Report?  What's the best way you keep track of your finances?

EDITORS NOTE:  I really should not do math late at night.  Originally I messed up the calculation for the Yearly Expenses.  I have now fixed it on this blog as well as the Report on my google site!  I'm sorry if there was any confusion!