I'll start with a few disclosures.
-This is NOT a traditional budget system with daily bank balances! It is more about keeping track of where and when and what you spend your money on every month.
-Jeff takes care of the "big" stuff in our house. That means investments, mortgages, retirement things. I try to pay attention when he explains these things to me but usually I just have glassy eyes and start thinking about what's on the menu for dinner. What interests him (the big stuff) is not what interests me (the little stuff). He doesn't want to think about the little stuff, and I don't want to think about the big stuff. How perfect is that!
-I spend most of the money on a day-to-day basis, running this household. My brain feels SO much better when I am aware of, in control of, and accountable for where our money goes.
To me, this budget notebook is FUN! I like setting monthly and yearly goals and challenges, I like being able to make thoughtful splurges that I patiently waited for, I like the feeling of peace it gives me. My older kids definitely know about my budget notebook, and I am hoping that good money-management is sinking into their cute little brains.
I don't record things in my notebook like household bills (electric, phone, etc), gas, tuition, car repairs, ortho bills. I don't "control" those...they are just "musts" for us- meaning I can't really manipulate them, most of them come out automatically, and I don't want to waste my time recording them. (But you could certainly add a category or two to this system if you wanted to.)
I concern myself with these 4 categories to keep it simple:
FOOD-I shop at a super-store type of place so this also includes small household items and cleaning supplies.
ATM ($)-our cash withdraws.
EXTRA-clothes, books, gifts, school supplies, everything that's not food pretty much.
OUT-all eating out, movies, entertainment, tickets to events that sort of thing.
When I first started my budget notebook, I went back and recorded an entire year's worth of spending from my old bank statements. Since we pay for almost everything with a bank credit card it was easy to see where I was spending our money. You can find these on-line and/or you might have paper statement sent to you. (I used the paper statements of course.) I think this is a crucial step because you can't have realistic expectations and goals if you don't know what you spent last year. And thinking you spend $800 a month on food, only to find out that's it actually $1400 is quite eye-opening! Trust me, I learned to stay away from Target when I saw how much I was spending every time I walked through the doors. The whole process is a LOT easier than it sounds. I took me a few hours at the most.
Here is an example of a monthly page in my notebook:
The page on the left is where I write some of the things I am already aware that I need to spend money on that month, just so I know where I stand coming into the month.
The page on the right is divided into four columns. The top of the page where those two $ signs are, I write our account balance on the 1rst of the month, and then on the last day of the month. I can see the big picture that way.
I record every single purchase in these categories.
I wait to the end of the month to record it in the actual notebook though. (I explain why below.)
I have a piece of notebook paper taped to the inside of "my" drawer in the kitchen that looks like a duplicate of the page above (minus the cute stickers, how dorky, you'd think I was 5) and EVERYTIME I walk in the house after making any purchase I immediately record it. (I round numbers, no decimals, just to simplify it more.) I always ask for my receipt, put it in my wallet, and then whip them out when I get home, or if I am in a rush, throw it on top of my slip of paper in my drawer to record later.
Jeff will tell me if he spent any money also, and I record that. This becomes a habit very quickly!
Accountability and awareness and simplicity is why I love this budget system. Here is the piece of notebook paper in my drawer. I keep a calculator handy to add things up once in a while. I have a set amount that I want to stay under in each category, that I decided upon in the beginning of the year.
At the end of the month, I sit in front of the computer with my taped-drawer-page and my bank statement on the bank's website and transfer them into my budget notebook-I can double check my work and see if we missed anything and that everything is accurate on the bank statement.
I also have a once-a-year page that looks like this. I can see what I spend in each category by the month, and add it all up at the end of the year. I can then average what I spend. For instance by doing some simple math (with the calculator of course!) I know that last year I spent an average of $326 a week on food. Holey Moley! This year I have implemented some new things (that could be a whole other post) and I have spent an average $195 in the food category once a week. Jeff and I also sit down at the end of the year and talk about general financial goals, wants/needs, etc.
Here is an example of what one month looks like, so you can see that I AM messy because I do this quickly. I usually just write the store after the amount so I can see where the money went and maybe a one-word description also.
Did I make it sound so much more complicated then it is? Let me know if you have any questions and I will answer them.