Happy Thursday friends! Today I’m talking all about budgeting, cash flow and how I manage our families finances. Checking our finances is an important part of my morning Household Administration routine, and I definitely feel set up for a successful day when I ensure its complete.
Before we dive into this let me just say a couple of things:
This is how I manage our finances. In no way am I saying that this method will work for you OR that you need to switch to how I do things. Everyone is on a different financial path, and you need to find something that works for you and your situation.
We use one credit card, an American Express, that we pay off in full each month.
I'm not demanding nor suggesting that you sit down every day and look at your finances. This works for me because, frankly, I feel a sense of security in knowing where every penny is going and tracking it.
Everyones journey on this financial path is totally different.
I am not an accountant.
My Husband and I set this system up together and look at our monthly budget together at least once a month.
We are a one income family.
We have no debt, and are currently on Baby Step 5 and 6 - Saving for Amelias education and paying off our home early.
So, after getting that out of the way lets begin! I use three platforms when doing our finances:
Mint app (Monthly budget)
Mint is one of the most accessed applications on my phone and computer. Mint allows you to upload a new budget each month, centralizes all the transactions from all bank accounts (online accounts, credit cards, savings etc) into one place and then categorizes them and assigns them to a specific budget. Each month, I input our new monthly budget and start tracking!
Note: Each month you need to have a totally new budget. No two months are the same! For example, one month we have a water bill that becomes due and another month we would have no water expense. Budgets need to be customized specifically to the month, instead of trying to replicate it month after month.
Google Sheets (Yearly budget)
Google Sheets is where our master budget lives. Our budget lists our income, fixed and variable expenses on the left hand column, followed by the budgeted amount for each item. Expenses that come out irregularly are highlighted so I know they don’t need to be budgeted each month. The budgeted amount is followed by columns broken down into months. This method allows me to budget in planned expenses for the upcoming year. Using the water bill as an example, I know that the bill will come out on January 1st, therefore I can put a $0.00 in the February column for that item, and then assign money again for March. Using this master budget also allows me to plan for larger future purchases.
Note: I currently don’t use sinking funds for expenses that come out every couple of months. Mint DOES allow you to set up an option to have a set amount of money “put aside” to pay for future purchases and expenses. I however, choose to use my master spreadsheet and just allocate the money necessary during that month from the salary that month.
On the same spreadsheet but under a different tab, I keep track of ALL accounts: Savings, retirement income, Amelia's education, money allocated to taxes)
Click the image above to access the complete spreadsheet on Google, OR Click this link for a xlsx. (Microsoft Excel) copy!
Google Keep (Cash flow)
The final part of my trifecta! Google keep is where I do my cashflow. This is just a quick place to jot down numbers and share the accounts with my Husband in a quick snapshot. We keep two months worth of expenses in our checking account each month as a buffer. This is something I started doing when I was a skating coach and needed to ensure that I had enough to pay bills while payments for my invoices were trickling in throughout the month. This habit transferred over to our joint accounts when I married my Husband. For me, this is just a security thing. I feel comfortable knowing that there is enough in the main account to cover two months of expenses in case of severe emergency. To calculate cash flow I input : How much is in the current checking account, how much is owing on our American Express (we pay it off in FULL each month), how much is owing on our budget and how much money is coming in from salary. This gives us a great snapshot of how we’re doing in terms of money moving through accounts, and ensures that we’re not missing anything.
Note: We also have an emergency fund of 6 months of expenses in another account - Baby step 3, and separate retirement accounts - Baby step 4 and a separate college investment for Amelia - Baby step 5.
There you have it! I check these three "boxes" each morning so I know exactly where we are in our budget, cash flow and yearly budget. If you're reading this today (on Thursday, July 26th!) tune into Instagram LIVE at 1:30 PST for a live walk through on how I do this major part of my Household Administration. If you're reading this after the live presentation, check out Instagram TV where it will be saved!
Happy budgeting friends!