rabbit,
my hubby and I went through alot of different 'budgeting' books and advice... and finally settled on a system that works very well. (Some of the systems are crazy!) in case it would help you, this is what we do... First, add all of your 'fixed' expenses (these are the things which must be paid, in an exact amount, every month, or bad things will happen... ie your mortgage, your car payments, etc.). Mark that amount as "fixed". Then add all of your 'necessary but not fixed' expenses in another column (things which must be purchased, but vary in cost, such as food, electric, phone, gas, etc.) and mark it "variable". Give yourself good estimates of what these will cost. Then add a third column of 'unnecessary' expenses with things like vacation, restaurants, presents, etc. Mark this "extras". If you are not trying to save every penny you can, but want to be sure to save some of your income, you might want to put 'savings account' in your fixed column. Figure out your net pay each month (if you have a variable income, look at last years total for the year, divide by 12, and allow for a big margin of error). Subtract your 'fixed' expenses from your net pay. Subtract your 'variable' expenses next. If you have a negative number, then you need to adjust your spending on these, and refigure the column. Once this number is positive, you know how much you have left to spend or save. you can save or spend more by cutting back your 'variable' expenses. We keep $2000 in our checking account at all times, before checks are added in, and before bills are paid. At the end of the month, we figure out what is left after all the checks have been cashed and paychecks deposited. Since we pinch every penny, our checking account tends to grow. When it reaches $2500, we transfer the extra $500 to savings. We try to keep $2000 in savings at all times. This is for deductibles, emergencies, etc. When our savings grows to over $3000, we transfer the excess to outstanding debts. If we had no debts, we'd invest the surplus. Hopefully this may help you as you figure out a system that works for you. Obviously, you may need to keep more or less in checking or savings. We don't have any children, health problems, etc. We only have one car. So our 'emergencies' fund doesn't need to be as large. |
