1. List All Expenses
When my husband and I were newlyweds, we decided to create a budget. We'd start the month as serious as beans to stick to a budget. (Just how serious do beans get? Serious.) Halfway through the month, the budget would fail and we'd give up for a time.
I figured out the main reason the budget was not working for us was because as the month went on, we'd find that we had forgotten to include haircuts, for example. Another time, we forgot about oil changes. Whenever we hit these snags, we didn't know how to adjust our plan and ended up using credit cards to cover them. (In future blog posts, you'll find out how to adjust for unexpected expenses.)

You can go about this in one of 3 ways to jog your memory:
1) List all expenses that occur in the categories of weekly (i.e. gasoline), monthly (i.e. rent), quarterly (i.e. haircut) , and yearly (i.e. car registration) expenses.
2) List expenses by categories, such as "House" (mortgage/rent, insurance, maintenance, property taxes, HOA, etc), "Car" (registration, gasoline, maintenance), "Kids" (clothing, school lunch, school fees), "Holidays" (Christmas, birthdays, anniversary, Thanksgiving travel), etc.
3) Go through your checkbook and debit card transaction history to jog your memory.
I prefer option #2 because it chunks everything in a logical grouping which triggers my memory for other related expenses. When I thought of "Pet," I remembered not just our dog's food, but also his grooming, vaccinations, and occasional boarding. Also, categorizing is the way I will suggest you organize your final budget draft.

- Make that list!
- Compare it to the last 3 months of bank activity.
- If you are married, have your spouse add anything you may have missed.
This step should take about 15 minutes.
2. Organize your Categories
Organize your list into categories in a computer document. I prefer Excel because the budget will change a lot in the first three months and paper makes it a hassle to erase-write-erase-rewrite. But if you prefer paper and pencil, do it! Throw perfection out the window when creating a budget and just do it!
Here are some sample clips from my own budget as to how I have arranged categories.
On occasion, I change a few of the things included in some categories. For example, last year, I deleted the "Pet" category when we sold our dog. Also, even though the above have been our categories for a few years, I may move our life insurance lines to their own category and the Isagenix line (nutritional supplements) to "Household" with groceries. The point is don't stress too much if you are unsure where to list something because your budget will change (it should) and especially in the next three months.
The reason I suggest categories is so you can later see how much you are spending total on "Fun", or "Pets", or "Car Maintenance."
- Arrange in categories.
This should take 5-10 minutes.
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As a memory jogger, here are some categories. You do not have to use these and some of these expenses may fall under different categories for you. For some, gym membership may fall under "Health." For others, gym may fall under "Memberships" along with Netflix or hobby clubs.
- house (escrow, maintenance, mortgage, rent)
- discretionary (kids allowance, personal money, haircuts)
- savings (emergency fund, retirement contributions, college fund, car fund)
- car (payment, insurance, gasoline)
- health (medical co-pays, life insurance, nutritional supplements, gym membership)
- toiletries car registration insurance
- pet (grooming, food, boarding, vaccinations, exams)
- fun (dining out, entertainment, vacations, holidays)
- kids (clothes, school fees, allowance)
- household (toiletries, groceries, preparedness, utilities)
- communication (internet, cell phone, land line, webhosting)
- help/services (landscaping, babysitting, housekeeping)
- office (stamps, printer supplies, paper, shipping labels)
- miscellaneous (things that are a rare occurrence, passport, speeding ticket)
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