My wife and I sit down monthly to discuss what our projected income will be, what our expenses look like for the month, and what we would like to do with the money that’s leftover… now that we actually have some. Budgeting has been the backbone of our financial life together. It’s a board meeting of sorts, concerned only with running the business of our household. I personally feel that approaching personal finance as a business first and using only great excess to indulge in the things that are purely “wants” is the best way that my wife and I have found to keep us on track. When you look at your finances like a business, and you’re the CEO of YourFamily Inc., your budgets becomes a balance sheet, your bank account becomes a profit/loss statement, and (just like a real CEO) you’d better keep the shareholders happy.
Since we make a unique budget for each month that actually represents money we predict we’ll spend that month, no two budgets are the same, aside from the fixed expenses of course. You’ll notice our “entertainment” line item for this month is significantly slimmer this month. While we use the name “entertainment” for that line item it could just as easily be “miscellaneous”. It is a catchall for guilt free discretionary spending. We’ve set a goal of keeping that at a baseline of $100/week now that we have our finances under control so we come to $400/month. No big trips planned for this month so we’re back to baseline. You’ll notice that this month our income is up Significantly because this is a 3 paycheck month for both of us! If you’d like to see some great ways to take advantage of a 2 paycheck month for yourself check out our post: 7 Smart Ways to Take Advantage of a 3 Paycheck Month
Obviously this month is a great month for us due to the 3 paychecks and that may lead to some unique opportunities with our investable dollars. The key to our financial plan now is to maintain our expenses as a low baseline regardless of that month’s income, as it does fluctuate since we both have 2 jobs and schools have a lot of days off due to holidays etc.. If you are interested about our philosophy on investing you can check out our succinct post on our investing strategy at the following link: A Breakdown of How We Invest
If you’re interested in following up this post by seeing what we plan to do with our large surplus this month be sure to check out our next post where we detail how we plan to use it!
Please share your thoughts and feedback in the comments below!