Since we’ve been budgeting in the Canadian Budget Binder home we can’t imagine ever stopping. Back a few years ago we thought saving money in the bank was a good enough reason to not actually document every penny we spent. It’s unfortunate we wasted so much time in dream land but have awakened to many reasons why we needed to design a budget. I’m going to say that a budget isn’t as easy as 1,2,3 it takes time and you will hit many bumps until you get it the way you want it.
Mrs. CBB and I both sat down together to plan our budget together starting with writing out the reasons why we needed a budget.
to make sure we are spending less than we earn
to make sure we are saving enough money for our future
to control emotional spending by not purchasing crap we didn’t need
to take responsibility as a married couple to work together on our finances
to understand our spending habits and where we were spending too much money
Since we purchased our first home we started couponing more than when we rented because we now had more space. We spent about a year stockpiling mostly health and beauty and laundry products at the “best prices” we could find. We would on occasion purchase food that we could stockpile but later realized we weren’t able to keep up eating it. We’ve since donated much of our food and now only keep what we need.
Upon analyzing our bank account we starting to think we were spending too much money but needed proof. The only way to know was to design a budget that was right for the both of us. We had a look on-line at various ready-made budgets but failed to find one that was suitable for us. We wanted a budget where we could document all of our coupons to see how much we saved. We wanted a budget that was well-organized and broken down into categories that were comparable to what we needed.
It’s taken a while but we finally designed our Canadian Budget Binder Spreadsheet and it is in Beta testing at the moment. So far the feedback has been positive and we will be ready to offer it to fans shortly. When we designed it we came up with 9 steps that we felt were important to understanding our finances.
These are the 9 steps we used to Design our Budget
How We Designed Our Budget Step 1-Gathering All The Information- Document on paper or a spreadsheet every bill you pay each month, when it is due, interest rates,minimum payments and anyone else you own money to. Some people tend to forget mom and dad or friends they count as money you owe if you borrowed it and have to pay it back. It’s also important to discuss any bills you know you will have to pay throughout the year but don’t pay monthly. We call these expenses “projected expenses”. Saving a portion of these expenses every month in your budget will help you to be ready when the bill comes in. If you don’t you will have no way to pay them when they come due. Example: Vehicle Sticker due once per year $74.00/12 months = $6.16 a month all year. If you don’t want to save this you will need to find the money and it’s not considered an emergency when you know the bill is coming. It’s your choice!
How We Designed Our Budget Step 2-Categories- chose the categories that suit your family. If you use the 407 ETR make sure you budget this money into a category on its own or bundle it with transportation/fuel. Only you can decide what categories are best for you or your family.
How We Designed Our Budget Step 3-Tracking Receipts- Keep all receipts for anything you purchase. If you can’t get a receipt you still need to document the expense. If you think it’s tedious asking for a receipt when you buy a coffee then you better make sure to document it or your budget will not balance. You need to know where your money is going. Keep your receipts in a safe space and don’t make excuses as to why you can’t locate them. Be mindful and remember the reason you are doing this.
How We Designed Our Budget Step 4-Notetaking- Document and make notes so you know where the money was spent. If you buy a lawnmower at Canadian Tire document that in your budget spreadsheet. If you need to go back and find a receipt you can easily open your budget and find the month you purchased it in so you can pull a receipt.
How We Designed Our Budget Step 6- Who Does What and When?- Know who does what and when. So if you leave all your receipts on the counter make sure someone puts them in a file. Set time aside once a week to visit the budget and input data and schedule who will do this. If you think this is tedious it’s not, it works.
How We Designed Our Budget Step 7- Balancing Our Budget- make sure you are balancing you budget each month. Understand why you might be over or under and find out why. You must take this step seriously to understand where your money is going. Don’t just say, ah well it’s only $5 I have no idea why the budget is over. If there is a mistake, find it.
How We Designed Our Budget Step 8- Knowing Our Coupon Savings!- If you use coupons and want to track your savings then you need to document how much money in coupons you used. We incorporated this into our budget just to get true number of how much we saved. We also document gift cards received and any other discounts. This is purely for our own knowledge but some people may not care to know.
How We Designed Our Budget Step 9-Reading Our Bills!- If there is one thing we have learned it is to make sure you read your bills. Don’t rely on a computer to tell you how much to pay. If someone wants money from you read over the bill with a fine tooth comb. You may be surprised at the errors you come across. Have you ever found an error on your receipt and asked for the scanning code of practice? If so then you know errors are possible.
Once you have all the information and have the budget ready to go in front of you it’s important to stick to it. A budget won’t run on its own and you can’t expect one partner to take care of it if you’re married or in a relationship. Know your finances inside and out and make sure you set goals to achieve them. Over the years we have found some things work and some don’t when it comes to our budget. We stick to the tried and true and thus far have made gains we are happy with.
Don’t shop when you are emotional-If you’ve had a bad day and think shopping will solve your problem, it won’t. Shopping when you don’t have the cash to cover it is never a good idea. Even trying to justify why you need something and put it on credit is a big no,no. Take charge…find another outlet to vent.
Don’t shop when you are hungry-You’ve heard it before and you know it’s true because we’ve all done it. Never shop hungry or you WILL overspend at the grocery store.
Save for an item you want or need-Don’t go out and just spend money on something that you have time to save up for. Save up the money in your budget then wait for the product to go on sale at the best price then buy it.
Meal Plan-Planning your meals for the week will help you spend less money in your grocery budget. This will also take away the stress of what to make for dinner. It’s a time saver as well.
Visit your budget weekly and document all your expenses-having a budget is one thing but not visiting it weekly to document your expenses will only set you up for failure. Budgets will change and you need to make sure you are ready to edit these changes. Stay on top.
Spend less than you earn- if you goal is to save money you will never make that happen if you spend more than you earn. If you keep building debt it will take you longer and longer to dig yourself out if you are only paying minimum payment.
Budgets don’t need to be scary and although it takes time to put into place one you do you will be happy. We’ve since realized we spent around $600 a month on groceries and have stopped this. You need to figure out how much your grocery budget should be according to your eating habits and dietary needs. We designed The Grocery Game Challenge for our blog which we post weekly. We post our grocery budget which is $190 and how we spend it each month. We document our savings and coupon use.
The goal is to try to stick to the budget. Many of our weekly players have complimented the challenge as a big reason they are now sticking to the budget. The challenge has made them realize where their money is going and for those that don’t actually have a budget it encourages them put one into place for themselves or their family.
Stay motivated and focused and remember…”It’s not about how much money you make it’s how you save it”. A budget can and will save you money if you plan and design it to compliment your lifestyle.
Guest Post by: Canadian Budget Binder is a blog run by Mr.CBB and is about budgeting and Finance. Mr.CBB teaches his fans how he uses the budget, frugal tips and frugal recipes. He also shares his family income and net worth updates. You can also play the weekly Grocery Game to win a monthly prize.
He encourages you to email him at [email protected] with your success stories about debt recovery or how you paid for something big using cash. You never know it may end up on his blog!