Starting a spending plan

[iowabergmanns]

My wife and I are wanting to start a monthly spending plan but we're kind of at loss of where to start. We plan to work off of net income after taxes, insurance, Health care flexible spending, dependent care flex spending, 401k, etc. We were thinking of listing out all of our fixed expenses and making sure those are paid first, and then moving on to variable expenses. Or do you use categories like living expenses, auto, debts, etc? For right now we plan to input everything into an excel spreadsheet and then later on transferring it to some type of budget software. We're also considering using envelopes of cash for those categories where we've struggled in the past (eating out, groceries, lunch at work, blow money, toys for kids.

Any tips or suggestions for getting started?

[skydivingchic]

When I sat down to lay out a spending plan, I looked back through my files to get an idea what I had been spending and then tried to give it my best guess. I keep my bills and account statements for several years, so this was a relatively easy proposition. For bills that vary such as the electricity bill, I budget the highest amount it has ever been each month. Most months it comes in below that and I move the excess over to savings. Same goes with groceries, though I used a bit more of a high average for my monthly budget number and tend to carry over a little padding from one month to the next. I also set aside a certain amount every month to cover "life happens" type of stuff - namely cat care, car maintenance, and medical costs in my case. In addition I have escrow envelopes set up in Mvelopes (you could do it in Excel) for car registration, gifts, and annual membership/subscription expenses. Once you've used your budget for a few months, you'll see if there are any categories that you are consistently going over or under in and can adjust accordingly.

I budget on two paychecks a month but am paid biweekly. That means twice a year I have an "extra" paycheck that I can use for larger purchases or to boost my savings.

To get you thinking, here are the line items in my budget:
Mortgage
HOA
Groceries
Gym membership
Vehicle maintenance
Cat care
Gifts
Roth IRA
Insurance (vehicle, condo owner's, and disability)
Electricity
Cell phone
Spending money (blow/fun money)
Mvelopes subscription
Vehicle registration
Gas
Personal care (soap, facial cleanser, haircuts, toothpaste, etc)
Medical (prescription and doctor copays, deductibiles, etc)

My short/mid term savings for items such as travel and a new (to me) car are set aside automatically through my paycheck direct deposit elections, so I never "see" that money. I also have some going to my EF savings each paycheck.

[Pitman]

My saving plan is pretty simple, I get two checks a month, the first check of the month is my saving check, I try to save the whole check but with gas, grocery shopping, a date here or there, its impossible. A bulk of it though, goes into my ing account, and the rest in my bank account, I keep no more than $300 in that account, but since I've gotten a case of frugality, I've been only spending about $40 - 50 a month on gas, and etc.

My second check is only for bills, I pay all my bills with that one check, the car note, insurance, CC bill, cell phone, and netflix. Recently though, I've been paying almost double my car note bill to pay it off so its cutting into my "savings check", which was hard to do, but its worth it, if my car can be paid off by Aug.

[maat55]

In my budget I list every possible expense for the year. I figure what my average is on utilities, gas etc. Remember all insurances. Then I divide the total by how often I'm paid, for me it's weekly, so I divide by 52. This tells me how much goes into my bill paying account during every pay period.

Come up with a monthly total. I set aside in my account enough to pay 1 months bills as a working capital so to speak. Then you are able to pay any bill or weekly expense as it comes. Your account should grow to cover the bills that get paid only once or twice a year, like insurances and taxes.

Make sure every month on your spreadsheet, that you reconcile your actual exspenditures to see if you are under or over. Your capital will allow this with no problems.

[Snave]

Skydivingchic hit most of the categories. One thing we did was lumped our water/electric/gas and into 1 category and gave a budget number for the 3 as a total. These tend to fluctuate through the year based on seasons, so we looked at the 3 as a whole. It winter, our electric is down (no air), but gas is up, etc... We found that this made it easier to control. We put the personal care items into the grocery fund so as to not have another envelope to worry about. I would try to scale down on the number of envelopes or categories that you have initially. I think that is where people starting out get overwhelmed and then stop altogether. Set the main categories as stuff that you know happens monthly and then have a misc. fund that you add to every month for those things that pop up randomly.

[kork13]

I keep/track everything in excel, just so it's easy to keep my head wrapped around it. I've got mine into a bit fewer categories than skydivingchic--it's just simpler for me to manage. I start with gross pay, and have everything split into 4 priority groups--Critical, Necessary, Important, and Flexible.

Critical:
-Taxes/FICA
-Housing
-Debt/Loans
Necessary:
-Auto (gas, maint.)
-Food
-Utilities
Important:
-Insurance
-Charity
-Saving/Investing
Flexible:
-Entertainment
-Miscellaneous

From there, I work with % of income and related $ figures to see how much I can put where. To manage my spending, I basically have all my money go into my checking account, from which I dole out what goes where, most particularly my saving/investment money, which goes into a few various accounts by automatic txfr, and my play money ('flexible') goes to its own account as well. For everything else, I simply pay all of my expenses straight from my checking, and when that money is gone, it's time to stop spending. I have a few $100 as a buffer in there, but most of my expenses are pretty fixed, so this way works just fine for me.

[LuxLiving]

tips for getting started?

Try YNAB.com software or Mvelopes software. Either makes it pretty simple. Good luck!!