The second part of simple budgeting is envelopes. Envelopes can be physically envelopes, a record book of finances kept in a ledger, or a combination of the two. The first envelopes need to be the most important such as bills. Each envelope or page on the ledger needs to be a different bill. In a ledger book, there are columns. The first column is where the due date for the bill goes. The second column is for detailed notes such as when you paid, how you paid, and how much you paid. The third column is where you put the total amount that is in that envelope. At the top of the page, you label which bill is being recorded here and the due date for it each month. The key concept for bills is that for each paycheck, half of what the bill totals goes in the envelope. When you first start out budgeting, this will be a little hard because you will have bills due immediately that you will have to put the full amount in and then half for the other bills that come after your next paycheck. After about a month, you should be stable and be able to see the benefits of budgeting begin to unfold.
Bill Page in Ledger
Money is something that we work hard for. It is something that is a necessity. It is something that we want to use wisely. The downfall of money is that without a system in place to manage it, it seems to walk away from us easier and faster than it was to get into our pockets. A wise manager of money knows that it needs to be held accounted for; hence, putting a personal budget in place for yourself or your whole family is imperative so that the stresses of living paycheck to paycheck are eliminated, and if, heaven forbid, someone loses their job, the budget has a savings to help substantiate the loss of income for a certain amount of time. Budgeting isn't always easy, but there are simple concepts that can be applied to the most complex of budgets that will make the decisions of where the money goes a little easier.
A simple concept to remember when budgeting is that 20 percent of each check or 20 percent of the total income for the family is placed immediately into savings. Some vary on whether to take 20 percent of the gross or the net of the income. That decision is entirely up to what is preferably to you. Saving 20 percent though allows for the buildup of a savings account that will be beneficial to the family or yourself if there is a job loss, someone becomes ill and cannot work, or some other emergency arises. This is the most important part of the budget because it is the life jacket to your finances in case something goes wrong.
The third part of simple budgeting is a continuation of envelopes, but you look at the basic needs of the family and also the wants of the family. The basic needs could be health insurance, food, clothing, beauty and health, cleaning products for the house, gas for the cars, car repairs, car insurance, and the list can go on depending on the needs (things that the family cannot live without). You then determine a percentage of the money left after bills and savings that should go into each envelope for these things. The wants envelopes come after all needs are budgeted. Wants could consist of entertainment and vacations or whatever else is not needed to live, but wanted for enjoyment purposes.
The key to simple budgeting is self-control. There will be times when there are wants, but the budget does not provide for them. Our instinct would say to pull from something else for the momentary pleasure. If you give into that though, it could ultimately destroy the budget you worked so hard to put together and you can fall back into living paycheck to paycheck. The key to simple budgeting is learning how to discipline yourself to save and to say no. The no-no’s per se to simple budgeting is to not borrow from yourself, from savings, or from others. Stick to the budget and wisely managing that hard earned money and your family will learn to thank and appreciate it in the long run as there is less stress and more enjoyment.
When I was young, around 6 years old, my parents started giving me an allowance for doing chores around the house. It started out as small, 25 cents a week, and then rose to $7 a week when I was a teenager. When they began, though, they taught me a simple principle that I have carried with me into adulthood (hence the article you just read) - 10% into tithing (or for those who don't go to church, charities), 20% into savings, and 70% into spending. When I was 10 years old, I was able to open my own bank account under my parents' names. The organization who helped my parents teach me was Larry Burkett (who has now passed). The organization has transitioned into Crown Financial Ministries. Although it is a Christian based organization, the principles discussed are logical and can be used by anyone from any belief system.
I am a mother of two - a son who was born in 2011 and daughter who was born in 2013. I am a writer at heart. I wrote my first book when I was in Kindergarten. In high school, I won $300 and a plaque for an essay contest for Next magazine (http://www.floridanext.com/info.asp). They published my essay in the magazine (2001). I also got published in my college newspapers - poetry and articles.