Start a budget

This may seem obvious but you would be surprised at how many people do not have a budget. Make sure your budget is on an excel spreadsheet, word document, piece of paper or other computer program, not just in your head.

**Before I go any further I must confess that I never had a budget until I met my husband. He is anal with the budget. We update it every night. Everything must be recorded, even the 75 cents we spend at a vending machine. There is even a dead weight category for parking tickets and ATM fees. If it wasn't for the budget, I would not be able to stay at home with the twins.

Our budget:
If you already have a budget, you can stop reading, scroll down and look at the cutest kids in the world. If you don't have a budget and would like to start, I will describe how our budget works.
Our budget is on excel and my husband has all the bells and whistles on it: Formulas, charts, graphs, colors etc. The first thing you need to do is determine how much money you bring in each month. Our monthly income is my husband's paycheck after taxes, health insurance and 401k. Then create categories where you spend money. Our categories include:

• Auto (gas, insurance, payments, car washes)
• Home (Mortgage, rent, electric, gas, home improvements)
• Connectivity (Cell phones, Internet, phone)
• Debt maintenance (School loans, credit cards if any)
  
• Groceries
• Liquor
• Entertainment
• Eating Out
• Medical
• Charity (Includes church for us)
• Misc. (Big category for us. Includes our trips to Target where I buy diapers, formula, cleaning supplies etc. This category could be broken down into smaller ones)
• Clothes
• Investments (IRAs, savings)

After your categories are established, you need to put a dollar amount to each category on what you can spend. The easiest way is to determine the bills you have to pay - mortgage, car, gas, electrical and so on. Then figure out how much you can pay towards your debt and investments. Whatever money you have leftover each month can then be divided into the other categories. Obviously give yourself more money in areas that are more important. For example, we establish our entertainment and eating out budgets last.

Your next step is projections. My husband has the spreadsheet project out a month. We then fill in the mandatory amounts and when they are paid. He has a running total based off of income and as we fill in projected payments it shows us what our balance will be. This is helpful when we schedule hair appointments or want to make a big purchase, we know when we can afford to do it.

Whew. Make sense?

Let me know if you have any questions. I'm going to try to get a copy of the spreadsheet up on the site so you can see what it looks like.