Tuesday, August 10, 2010
Let's start our Budget with the easy things first! My favorite Budgeting forms can be found in the back of The Total Money Makeover.
Even with an irregular income, you often know the minimum you will bring in. That is your starting point for the budget. You spend that amount on your Budget form, later you will make a list for any other income, but for now you will only be putting your minimum income at the top of this paper.
The tithe is usually the very first expense line on your budget. It is placed there because God asks us to give off the top. It also helps us to think of someone besides ourselves first. There are times when it would seem so easy to cut this step out. It seems that it would give the budget some wiggle room. However, we personally have found God to be faithful and provide for our needs even when it didn't work out on paper. It's all God's anyway, and He loves us so much!
Your largest expense is likely your mortgage. If you are in the process of buying a house, look very realistically at the mortgage. It's best to keep the payment at 25% of your income. More than this can make you feel strapped. Falling in love with a house without counting the costs can hurt your finances. While the first little while it's not too bad to scrimp for your dream house, the fun quickly loses appeal. You come to despise the house that was so perfect.
Insurances & Taxes
It's best to pay insurances on a longer basis. There are usually discounts available if you pay them quarterly, semi-annually, or annually. The longer you can pay at one time, the better the discount. To start with, you may need to pay your monthly premium and put a little bit extra aside each month until you are able to do this. Once you are on a longer basis, all you need to do is put your monthly amount into a savings account. Transferring it automatically or online will take out the hassle factor. It's so nice to know when the amount comes due, it will be waiting in your account.
Property Taxes and License Plates are another bill you want to transfer to that savings account each month. Then these items don't become an emergency. They happen each year and you know they are coming, so do a little planning early and save yourself the panic.
It's nice to have a Savings account that you use to hold the money until these large payments are due. Have it only for these accounts. Then make sure you have a record of why what the money is allocated for. I use a Breakdown of Savings sheet from the back of The Total Money Makeover. That way we can tell that this money is earmarked for our car insurance and don't accidentally use it to go on a vacation!
For our budget, I have figured all the accounts that need to be transferred monthly to our savings and just do it in one lump sum. So say all our long term bills come to $3600/year, I will put $300 into the savings account per month. I then allocate it to each separate category in my Breakdown of Savings sheet.
Total Transfer $300
Add these amounts to each category on your Breakdown on Savings Sheet:
Car Insurance - $75
Property Taxes - $125
House Insurance - $75
Car Tags - $25
It makes the transfer much simpler for me, but if you need to start with doing each transfer separately until you get the hang of it, go for it!
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Let's Hear From You
Have you started making your budget yet? What's the hardest/easiest part of budgeting?
If you're a blogger I'd love you to link a tip for the home, family, or money management. Please link directly to your post so others can easily find your tip and put a link back here on your blog.
Budgeting Works for Me! This post is linked to Thrifty Thursdays, and Frugal Fridays.