It sounds kinda crazy but I love to budget! I don't know why, I'm kind of a control freak so maybe it's because I feel totally in control, but I love it. I even do it for family and friends
I can't explain how much peace of mind a budget rewards us with.
Being a stay at home wife, we live off of one income, and since Lee brings home the bacon it's up to me to divide it up and make sure there's enough bacon for today, tomorrow and 40 years down the road.
Here's the formula we use:
We have used this formula for about 5 years now and it's served us well. It helped us get out of debt and now that we are out of debt (except for our mortgage) it's helped us stay that way.
Housing 35% includes, your mortgage or rent payment, home repairs (necessary ones, apparently a new deck is not a home "repair") property taxes, utilities and insurance.
Savings 10% personally I think 10% is a little low, but the idea is to pay off all debt then take the 15% you would spend on debt repayment and add 10% to your savings and add the remaining 5% to whatever you like.
Other Living expenses 25% include Food, eating out, entertainment, vacations, gifts, clothing and other variable expenses. A variable expense is an expense that you have control over, your mortgage is set, heat and electricity are set (although you have a some control over how high your bill is). You can control variable expenses, you don't have to buy those new shoes,
Transportation 15% This includes any car payments you might have, car insurance, repairs, gas, parking or public transportation. This category is a bit lean even for us. We don't have any car loans for any of our cars and we are at 12% with just insurance, gas and repairs. And we both drive very fuel efficient cars my SUV gets 500km to a $45 tank and Lee's car Gets almost 750 km for the same price.
Debt 15% self explanatory, credit card debt, line of credit debt, loan shark debt (hopefully not) and loan debt you might have, student loan, car loan. If you have no debt you can always bump up your savings or another great idea is to start adding that 15% against your mortgage.
And don't forget all of these percentages are based off of your net income (the amount you have after taxes). This chart is also open for interpretation if you have excess in some area's and run over in others, move the money around. The chart is just a good starting point, a general idea of what you can and cannot afford.
Disclaimer: I am no money guru by any stretch of the imagination, but this is what works for us!
If you're looking for something simpler you could always follow the 50/30/20 formula
50% on Needs
30% on Wants
20% on Savings
Sweet, simple and to the point!
So this is how we budget, if anyone has any budgeting tips or methods I would love to hear them. I'm always excited to learn more about how other people deal with and manage money.