How To Create A Budget That Works
Let’s talk about finances and keeping a budget! Budgeting for yourself and your family can be hard! For years, I avoided having a budget and when I did make one I struggled with keeping it. I think in part it is because for a long time I was in denial about my financial situation. I was living paycheck to paycheck, I had a job that I did not enjoy, and I had managed to max out my one and only credit card. I knew something had to change, adulthood and my financial situation did not have to be like that! As time passed, I was able to get a better job and pay off my credit card, but it wasn’t until I married Chris that I finally found some financial clarity and a system that worked for not only me but the both of us!
Having a budget system that works has not only allowed us to have better communication between the two of us, but it has also relieved some financial pressure that comes when you combine your income. If you are struggling with your finances or just don't know where to start, I am going to show you our budget system and what we do every month! We have been married for about four years, and in the past six months we have purchased two homes, one of them is our personal home and the second one is an investment rental property. We have also saved enough money to pay off our student loans, and travel to Thailand and Europe!
Where to start?
Chris and I have separated and created four different accounts. 1. Expenses/Household Account 2. Miriam Personal Account 3. Chris Personal Account 4. Savings Account.
This account is our main account, and the one that we use the most! We each have our own debit card that belongs to this account. We deposit our income into the this account, and use this account to pay for household expenses. We characterize household as routine expenses that we share. For us, it includes our mortgage, electricity, gas, water, groceries, subscriptions, going out to eat, and any expense that Chris and I share.
"Miriam" and "Chris" No Judgement Accounts
We each have a personal account, and at the beginning of each month we transfer a set amount from the household account to each personal account! The money that we have in our personal accounts is money that we can use for ourselves during the month on whatever personal items we want. Our monthly personal allowance has pretty much stayed the same since we started this budget. We do evaluate it every few months and may increase or decrease it depending on our needs/goals.
This may seem extra, but setting up these personal accounts has proven to be a BIG stress reliever. Once the money is transferred to these personal accounts, it is considered that persons money to spend on whatever they want, judgement free. Have you seen those videos on TikTok about a spouse coming home from a shopping spree and having to hide their shopping bags? While this video is funny and true, Chris and I don't have to do that with each other! These are no judgement accounts that keeping us working together, toward our goals.
This account does not have a debit card and it is pretty much untouched. At the beginning of each month, we make sure to have enough money for our expenses, make the transfers to our personal accounts, and the rest of the money gets moved into our savings account. I read an article one time, that discussed how a majority of Americans do not have $2,000 set aside in case of an emergency. As someone that used to live paycheck to paycheck, I understand the stress that it can cause to not have any money. That is why we have also set a "zero" number for ourselves in our budget. Once we save a certain amount of money, we decided to call that our "zero" to never go below it! In case of an emergency, we know that we have and can use that money and we do not have to stress!
How to Start!?
The best way to start is simply looking at the numbers each month. Whether you use an app (we use an app called Clarity), or a spreadsheet, just look at your income and expenses. You want your income to be (much) higher than your expenses every month. The key to using your budget to have a positive impact on your life is making decisions and creating opportunities that increase the gap between your income and expenses!