Creating My First Real Budget Step #1

I started this way of balancing our budget 2 years ago. Back then we were living paycheck to paycheck and living out of one bank account. We would bounce a bill payment a lot more then I want to admit. Just trying to pay for groceries and car gas … I would miss writing down one thing or my husband would forget to tell me another thing and poof NSF fees everywhere! We are still living paycheck to paycheck, but haven’t bounced a BILL payment since then (we have gone under on our spending IE groceries and gas accounts from lazy record keeping and lack of communication, but at least no bills have gone unpaid!)

OK – here is the plan. Have a “household” account separate from your spending account. The household account will be the account you write your checks from, or have your bills come out of however you are most comfortable doing it. We get paid weekly so I added up our bills and divided by 4. Each week I transfer that amount into the household checking account. I started this 2 years ago when we got our tax returns and put one MONTH of payments into the household account so that we have everything one month in advance. And always be ahead of the game. Also I round everything up to the nearest dollar amount. This way when the once a year bills come due I have extra, and usually enough to pay it. Even if I don’t it’s NOT such a big deal on the budget. One more thing that really helps is when that extra paycheck comes (the 5th week of the month happens 2 or 3 times I year) I transfer as normal to try and get ahead.

Honestly we are not as ahead as we should be. When we had things like unexpected Dr’s bills or my husband got a ticket, we had to use the stuff I saved in reserve for it – but at least it was there to use.

My long term plan with this payment system is that we keep adding to our account as we get those 5th weekends in the month as well as adding more each time we get a tax return. We can’t put all of our tax return to it, but some. We will keep adding to this account until we have 3 months worth of money in it to pay for bills and ultimately 3 months worth of food money. That way if we have some unforeseen issues, we can live for 3 months with a little less worry.