Using the Budget Template

A budget worksheet is a great tool to start with for organizing your finances, so use the ones Booth made since she's a CPA! In this episode she walks you through how to fill out the templates and evaluate your financial situation.

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• (00:00) - Using the Budget Template
• (00:15) - Introduction
• (01:00) - Budgeting Tools
• (03:21) - Reviewing My Template
• (05:31) - Evaluate Your Budget Worksheet
• (08:01) - Budget Planning for Future Months
• (09:47) - Give Every Dollar A Job
• (11:17) - Reviewing Each Month
• (11:59) - Allocating Your Essential Spending
• (15:19) - Next Episode Preview

This podcast is produced by Rooster High Productions.

Creators & Guests

Host

Booth Parker, CPA

Financial guru by day; domestic diva by night and sharing it all in between.

What is MOM-enomics with Booth Parker, CPA?

Real moms. Real mom financial issues. Real moms in business. Real stories. I am Booth Parker. A CPA, wife, and mom that loves all things home and family. In this podcast, I talk all things money for moms, families, and small business. From tips to ideas to info you just need to know, I break it down so moms can apply it to their own families and businesses!

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Today on the podcast, we are doing a little tutorial, so if you are listening today, I highly recommend switching over and watching this because I'm going to have some templates and stuff that I'm referring to, and you can get a visual if you watch instead of just listen. But if you're in your car or something like that, then stay focused on just listening and know you can come back.

Watch it and see the templates and stuff as I'm walking through everything. So what I'm going to do today, we're starting off a new year. It's a great time to take control of your budget. If you haven't been budgeting, it's a great time to start at the beginning of the year. So great new habit to get into for the new [00:01:00] year.

If you don't have my budget and assessment template, it's linked in the show notes so you can go grab it and download it right now. You can print it as many times as you want to. So, uh, go grab that and then follow along.

So I know there are a lot of apps and stuff like that out there for budgeting, and they can be fantastic. However, if you've not been budgeting and you're starting to take control of your money, doing it on paper really does help with your brain to register everything and really get a good grasp on it before you start using apps or anything like that.

Additionally, if you haven't been budgeting, you may think you know where all your money's going, but you don't really know where it's all going. So doing an assessment of what you have been spending your money on for the last few months is where I recommend people to start. So I think three months is a great way to get a good [00:02:00] average of what you're spending money on.

This past month was December. Obviously has Christmas in there, but that's a great month to include because you can make Christmas its own category. You can know how much you spent, if you wanna spend that much again next year, if you need to tone it down. And then you can even start including an amount in your monthly budget to set aside for Christmas next year.

And then it's not all going onto credit card and hopefully not credit card debt. So, um, the assessment really gives you an idea. . Of where you are. So if you, um, everyone knows I love to meal plan. So if you're not a meal planner and you eat out all the time. Or maybe you stop at the grocery store multiple times a week just to grab a few things.

Odds are you are spending significantly more on groceries and food than you may think. Another big one that seems to come up when people do their assessment is they're spending money on [00:03:00] subscriptions. Maybe . They have a subscription and their husband has a Netflix sub subscription, so you don't need both.

Um, or maybe you have subscriptions you don't even use anymore. So definitely wanna kind of eliminate those kind of things. The assessment is great for that as well. So here it goes.

So in the template there is this spending assessment. So it has, this one says essential. So you're gonna go through your months and this you'll need to print, if you're doing three months, you'll need to print three copies of it. So you're gonna go through and you're gonna write down what you spent in these categories.

This would be your mortgage or rent payment, things like that. Um, your utilities. That's gonna be your power, your water bill. Um, most people include internet in that nowadays 'cause it is pretty much an essential. So you're gonna do that here on the food category. That's gonna be where you've been to the grocery store and [00:04:00] bought, um, food to prepare meals at home.

It is not going to include your eating out because that is a non-essential. So I'm gonna scroll down to the non-essential page so you can see.

So the non-essential page looks the same. It just has different categories. So household wants, maybe you need some new porch furniture or something like that. Um, and you bought it. So anything like that that you didn't have to have, but you bought maybe some throw pillows. I know us. Us ladies, we love our throw pillows, so things like that that you spent money on for your home that you wanted, but you didn't necessarily have to have.

Um, entertainment. This is where your Netflix subscriptions go. Maybe going out to the movies, anything like that, that's gonna go here in this entertainment category. Here's the eating out. So this is not your grocery store. This is your drive-throughs, takeout, going out to dinner, and you know, if you wanna have family date night and go out to dinner, that's great, but you're still gonna [00:05:00] put it here because if things are tight, that might be something to eliminate for a little while.

And it just scrolls on down through the categories. You're gonna total up each category. . And then on the third page, you're going to assess your total spending. Okay? So you're going to have, you'll put in your total income what the total essential spending was from the first page of the essential categories, and then the difference between the income you have to spend and your total essential spending.

So if this, um, difference is negative. , that's not a good thing, right? So, um, that means your essential spending is more than your total income. So, and then you're gonna put in your total non-essential, and you're gonna see what you under or overspent. So if your total spending is more than your income, then you have overspent and you are most likely building credit card debt or something of the sort to be paying for these things.[00:06:00]

So then what you want to do is make a list of the non-essential things you're going to eliminate, so that way you can quantify what that amount is before you make your budget. So all of this is to make sure we know exactly how much our essentials cost us, what our total income is, and then what we have left over to use for non-essentials,

often called the discretionary spending. Um, and then you also can find money to, for savings and debt pay down and things like that. So, um, the non-essential spending to eliminate. You definitely want to, uh, clarify what those items are, quantify how much they are so that you can use that number to make your budget.

Um. If you underspent, which is a good thing. And normally when I do this exercise with people, um, it's pretty rare that people underspent, but if you did, [00:07:00] don't use that money as further money for the non-essentials. Like let's, we're gonna put it towards debt pay down or savings or something when we get to the budget, that's, that's the ideal thing to do with it.

Okay, so once you have done your spending assessment and you know how much you're spending, especially on things like utilities. And groceries. Probably know how much your rent or your mortgage payment is. That one was . Shouldn't have been a surprise, but once you have assessed all of that, then you can start building your budget, because you don't wanna start budgeting and think that you spend $600 a month on groceries, when in reality you're normally spending $800 on groceries.

And then when you go to look at your budget at the end of the month, the first time you do it, you've overspent and you're not getting everything. . Paid for like you had planned to do in your budget. Same goes even with utilities. And then those things you don't need, like some subscriptions, um, or [00:08:00] throw pillows, right?

So let's look at the budget. Now that we know where our money has been going, let's make a plan for where our money is going to go in the future. So. In the budget piece of the template, the first page is this one that says, how should my budget break down? These percentages here are just some industry guidelines.

The housing one. . If you're at 25%, you're doing great because this day and age, that number is normally higher. Most mortgage companies won't let that number go much above 35, 30 6%. So, um, as long as you're under that number, you can probably make it work. But if you are at over 40. Really may need to do some evaluating, um, maybe a side hustle or something to bump that income up a little bit.

That's just a reality. Um, these days, unfortunately, with housing costs depending on where you [00:09:00] live. So these, these percentages, I like to do this exercise because you can run through, you can take, you know, your after tax income. and just run through the percentages and you can quickly get a good feel from your assessment categories that you're over or under in so that you know where you may need to focus, decreasing some spending and things like that.

So this is just for kind of a comparison thing. These are not percentages that are gonna be spot on for every person in every category, but it's just kind of a guideline so that you can see what categories you may need to tweak a little bit as you start adhering to a new budget.

So the goal of your budget is to take your total income and assign every dollar of it with intention. And what I mean by assigning every dollar of it is. You are gonna know [00:10:00] how much is going towards your mortgage or your rent payment. You're going to know how much you're gonna put towards groceries.

You're gonna know how much you're saving every month, all of these things. So you're going to assign every single dollar if you go through and you assign your money to the housing and the transportation and the groceries and all of those things. Then you can have more to assign to savings if you're able to be assigning less to those categories.

If you have debt, you wanna pay down and prioritize debt. Pay down before savings. Eliminating some of that other spending just builds up more of your total income to allocate towards the debt pay down. So now that we have done the assessment and we've seen where our spending has been comparing to kind of where it should be for certain categories, now it's time to make the budget.

So you're going to . [00:11:00] start with your total income. So here, got the income, got space to put, you know, husband, wife, if there's multiple streams of income, you're gonna have your budget amount. And then at month end, when you go back and you track how you did on your budget, you do the actual, maybe you got a bonus or you ended up working a little overtime or something like that.

And that number was different. So it is good to go back at the end of the month and compare your actual to your budget. So if you're paid once a month. This is real easy, right? If you're paid weekly or biweekly, it can get a little more complicated. So I generally like to tell people if they get paid weekly to use four pay periods for their budgets, and then you're gonna have some extras, you know, and those can already be planned for, to be used towards savings and debt pay down.

So being conservative in your budget is definitely the way to go. Always err on the side of caution when it comes to things like this.

So the [00:12:00] first money you're gonna allocate is your essential spending. You have to have a roof over your head, gotta have something to eat those things. So you're going to prioritize your essential spending first. So you've got your housing, you know your rent or your mortgage payment. Transportation. Um, that's your gas.

You may have a car payments. Um, you may have found in the, um, percentages that your car payment is a little high. So, uh, that tends to happen 'cause cars have gotten more expensive and people like to . Sometimes buy cars they can't afford. But that goes back to all my days in the car business. So, um, you got your utilities in there, you know, maybe you saw you were high there and it's gonna encourage you to keep the thermostat at a better temperature and the lights turned off, things like that.

So the assessment can definitely trigger some new habits for your daily living. Um, food here. This is your groceries. This is not your eating out. Um, . Essential household things you may have to do, um, maybe daycare or something [00:13:00] like that is in here. That's an essential item that applies to your household.

Um, if you prioritize giving that one's on here. And then minimum loan payments. If you are currently paying off debt like a credit card debt or something like that, you've at least got to meet your minimum. We definitely want to do more than that, so we're making a dent in it, but at least get those minimums in there.

Then you're also gonna have your additional debt payments that you're going to prioritize as well as your savings, that you're gonna prioritize all of that before you do your . Non-essential spending. So here's the household wants again. So might want some more throw pillows. I know I'm using that over and over again, but definitely something that us ladies love.

Um, your entertainment, your eating out. So if the family date night is important that goes here, maybe the drive-throughs and takeout have gotten eliminated after the assessment.

And then just, you know, little miscellaneous things. Um, I think clothing [00:14:00] was up a little higher. Clothing, cosmetics, things like that. Things you don't have to have, if you have a child and they've outgrown their shoes. New shoes can be an essential in those situations, so you just have to be thoughtful as to what really you have to have and what you don't.

In some of these categories. . So, and then you're going to add it all up and then you can compare it all. So, um, this gives you the ability to put more to additional debt or savings if you're able to cut down on some of the non-essentials and things like that and not be spending all of your income.

So I know a lot of people think that a budget isn't fun or blah, blah blah, and you, um, you only live once and all those things. And I totally agree. I'm not one of those people that thinks you shouldn't live life or anything and that you should eat rice and beans and that kind of stuff. Like think you should eat healthy food and, but cook it at home and not eat out all the time and not

Do the drive through for your coffee every morning. All of those little things that [00:15:00] really, really, really add up. So you can truly find a lot of things that you can eliminate when you do your assessment. Things that add up really fast, that will make a big difference in having money in the budget to put towards that additional debt, uh, pay down and additional savings.

So the next episode, we are going to focus on savings and finding how much you need to put into your monthly budget to achieve your long-term goals. So that number could, uh, be very essential in your budget once you kind of back into what it is. So stay tuned for the next episode where I show you how to find that number, uh, to put into your monthly budget to reach your savings goals.

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