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How I budget

So… budgeting. Several of you have mentioned wanting to see our family’s budget. I’m happy to show you what we do, though I have to admit — it’s nothing fancy.

Charlie Park blew me away with last week’s post about warm and fuzzy budgeting. He’s right — it’s nothing more than hopes, and goals, and dreams … on paper.

A budget can sound so boring, and it’s easy to assume you can live without it. Well, if a budget is simply telling our money where to go, I propose that we all live by a budget — we simply see it clearer when we write it out on paper (or digitally).

So — write out your budget. You’ll feel much more in control of your money.

Here’s how we do ours.

A zero-based budget

We use a simple zero-based budget method, which means:

expenses – income = $0

And yep, we use Pear Budget, the brain child of Charlie Park. There are lots you can use, but I like it because it’s easy to use and it’s pretty. Below, all the screenshots are from my own Pear Budget account.

1. Income

First, we list out all our projected income.

This is pretty simple, but it’s important to remember all your income. Birthday checks from Grandma count. Did you finally get paid back from your work from when you bought office supplies? That counts, too. If we have extra from last month — as in, we didn’t quite budget correctly last month so we have a few dollars extra to carry over — we consider that income to be budgeted this month (it usually gets allocated to savings).

2. Regular Expenses

Next, we list out our regular, monthly expenses. These are — well, expenses we have every month.

• The ones with asterisks mark our cash envelope system — as in, we withdraw money for these items and put them in separate envelopes. The rest, we have automatically deducted from our account.

We always take at least 10 percent off the top and have that automatically transferred to our separate “giving” savings account.

• Our “spending money” categories are our free spending cash. Coffee, a new book, fabric for a sewing project — we can spend it on whatever we want. Knowing we have a certain amount allotted each month means we don’t feel handcuffed to a strict budget.

When we still had debt, we paid it off as a regular monthly expense using the Debt Snowball method. It would show up here as a line item.

3.Irregular Expenses

These are our sinking funds. our expenses we don’t necessarily have every month. But we often set aside a regular amount in each of these every month, letting the accounts build up slowly over time.

When we decide on an exact amount we need, such as for auto insurance, we simply divide the total amount by the months we have until the bill is due. Once it’s filled, we pay the bill. Then we start again.

When we’re aiming for a certain goal a la Baby Steps, we throw as much money towards that line item until our goal is reached. So while we’re replenishing our Emergency Fund, the majority of our money is thrown there. When we’re done, we’ll move on to our Down Payment Fund.

4. Summary

As a good zero-based budget should, our income minus the expenses equal zero.

See that $0.00? That means we took what we’ve expected to earn in March, and allocated all of it into different line items.

Skinning a cat

In sharing our family’s budget, I’m not saying you have to do it this way. This is just one way to do it. Our salary arrives monthly, so our budget is pretty easy to plan (that will change this summer). If you get paid every other week, your budget might be slightly different.

If you depend on an irregular income all together — as in, you don’t really know what you’ll bring in from month to month — you might want to slowly work towards living on last month’s income. Every month for a season, set aside every extra penny you can into a sinking fund with the goal of a total of one month’s worth of expenses. It won’t be easy, but if you sacrifice for a few months, it’ll add up faster than you think. Once you have these funds, you can then start living on these funds while working in the present for next month’s expenses.

Graphic from You Need a Budget

Currently, all my SLM revenue goes to our Baby Steps. If one day, Lord willing, we can start living off this irregular revenue, we’ll move to this plan — living off last months’ income while earning next month’s.

The takeaway

We’ve been talking a lot about money management this month — having a long-term plan, making slow, methodical Baby Steps to reach them, and wielding the power of a budget for your family’s benefit.

We’ll keep talking money this spring, especially as we focus on our big picture, lifelong goals of living simpler and with more intention. On Friday, we’ll talk about what this money management has to do with Project: Simplify (you are joining us, aren’t you?). I love your suggestions for money topics to tackle — keep ’em coming.

How do you budget? What has been your biggest financial success because of planning with a budget?

Reading Time:

4 minutes





  1. Laura

    What a great idea to start living off last months income….perhaps even if you’re not on an irregular income. It would work like a mini emergency fund. Thanks Tsh something t think about 🙂

  2. Diar

    I think the way you budget is just so neat, I can almost hear myself whispering, “I SO envy!” :p

    But as a writing person, I’ve always been comfortable with budgeting by writing everything down in a fat, mini note book. This way, I can always grab the book anytime I want/need to.

    Anyway, some of the items in your budgeting just inspired me to do the same/similar for ours, like the way you allot “giving” money in a different account. We SO have to do the same.

    Thanks again for this neat budgeting model 🙂

  3. rache

    I am very excited about project simplify! I just ordered a copy of your book too.

    We have all our regular bills set up on directdebit but they go out at different times of the month and we always struggled to remember what went when and how much was ‘leftover’ to pay for the day to day living costs. so we went to the bank and opened a new account, into which we are paying a set amount of our income on which we are going to live and make additional debt-repayments. our ‘old account will be left with enough to pay the bills plus a bit extra just in case a bill is higher than normal (in the hope that within a year or so that will accumulate into an extra months worth of regular payments). Knowing there is a set amount each month that is for all our consumable/out of pocket expenses has really simplified the ‘budgeting’ job.

  4. Amy

    The single best thing for our budgeting life (besides heeding Dave Ramsey’s call to create one in the first place last summer) has been We do a $0 budget too, with every dollar allocated at the beginning of the month. Mint is helpful because both my husband and I have access to our real-time accounts at any time, and if one of us happens to go over on a particular line within the budget, we both get emails and also alerts on our smart phone letting us know right away. I can go into our budget right then and re-allocate some money to cover the overage, but that always means taking that money from somewhere else in the budget. It’s been so freeing to live in a way that we only spend money that we have. Not having debt has completely changed our lives!

  5. Liisa

    Is it just me or is the link to Pear Budget broken? I keep getting a 403 error. I’d really like to check it out!

  6. Kate

    I’m trying the zero budget. And I know it will work, I just struggle with the fact that I get paid monthly, rent is paid weekly and most bills are three monthly. It means some months have 5 weeks worth of rent and others only four. But it all works out in the end.

    But what caught my attention on this article was the picture at the top. I looked at it and though it was perfectly normal, (ok, hand over the $100+ but still normal) before realising that in the USA all your notes are the same colour/size. Unlike in Australia where they’re really quite colourful. It’s strange to think while so many things are the same, so many things are different.

  7. Erica

    I would love to check out the pear budget but I can not seem to get the website to open. Is there another avenue to take?

  8. Charlie Park

    Hey, friends. This is Charlie, from PearBudget. I’ll comment some more in a bit, but I wanted to let those of you who’ve tried to get to the site but couldn’t that we’re having an issue with our hosting company; we’re hoping to get it resolved ASAP so you can check it out.

    Thanks so much.

  9. Allegra

    Another fabulous budgeting tool that has worked so well for me where and other software didn’t is YNAB, short for You Need A Budget. Definitely worth checking out if you’re shopping around for a great budgeting tool or haven’t yet found the right fit.

  10. sara

    We follow Dave Ramsey’s program and we do an all cash/envelope system. We’ve been doing this for over a year now and it works great!

  11. MD Life

    Sara, I agree with You…
    Your Idea is Great… I like This..
    Thank You for your post

  12. Sara S

    I just installed Quicken Deluxe on my laptop. I LOVE IT! I used to write down our budget on a paper, but that didn’t work so well for my husband. I like Quicken because it very user friendly and the colored graphs work for me. I need pictures to understand what money is going where. I know that sounds preschool-ish, but it works for my right sided brain self. 🙂

  13. Alyson

    For us, I have us on a strict budget with allocated “fun funds” monthly. So, if one of us would like a big ticket item, we save from our monthly “fun funds” money and then are able to splurge. We have used a money budgeting work book essentially that has been really useful. As a result, we’ve been able to pay off more debt much faster using the snowball method. We continue not using credit cards and use cash. Also, for purchases we may want we don’t go out right then and there and purchase it. We wait at least a week and mull it over. You’d be surprised how many things fall off of your radar when you do that or you write it down to be thought about in a month or two!

  14. Hillary

    I have a small notebook that I keep our regular expenses and work out the month to month when I pay the bills monthly.

    Much like you I have starred items that go into our cash envelope system and the rest stays in the account to be paid out automatically or by check.

    We are small business owners and our income is very irregular. We had to get savvy quick and live off last months money. In fact, most of our money comes in during one part of the year so we save a budget for months ahead of time. We call it “paying it forward” and it feels really good to start the month with X amount ready to go.

    I have a question for you. How are you tracking irregular expenses? Do you just make note of it and then go add it in one by one? Also , the same thing with checks from grandma. Adding it manually as it happens?

    Up until now I don’t really account for all the surprises, but I’d like to.

    • Hillary

      I just went and reread it and it looks like you keep sinking funds for your irregular expenses so my question is where are you storing the funds and how are they bookmarked? Simply in pear budget?

      • Tsh

        I have literal, separate savings accounts through ING Direct, an Internet bank where you’re allowed to have unlimited savings accounts. I wrote about it some here (check out the screenshot of our savings accounts under Baby Step 3b).

        Hope this helps!

        • Hillary

          Thanks so much Tsh. All of this has been so helpful.

  15. Renee

    I have enjoyed your budget series Tsh. We have budgeted since day one of our marriage and even before. So I guess 15 years. We use our own system (zero based – I didn’t know there was any other option!) in a spreadsheet with an envelope system. I can look at the whole year in one glance and know exactly how our income and expenses will affect the budget in say Sept.

    I like that earned last month/spend this month chart. We are moving away from regular paychecks to irregular and this is a good way to plan for that. We already do that with our mortgage in our current paid once/month employment.

    The biggest financial success is probably that we have lived comfortably (we don’t feel deprived) on one modest income the entirety of our marriage. I have stayed home with our kids and have not ever needed to work to help support our family, even though we went through periods of spotty employment for Damien.

    In the next stage of life we will be exploring ways for me to earn income doing the things I love to do (my husband also) – and that is also a blessing of budgeting.

    I LOVE budgeting. Budgeting makes me happy (but that’s also my personality – to categorize, organize etc.) It has also eliminated a lot of tension points in our marriage re: money. We set the budget together and then it tells us what we can and can’t do vs. one of us telling the other “you can’t do that”.

  16. Stacey

    I use to keep track of all of our accounts, as well as a spreadsheet on Google docs that I use to monitor our checking account and keep track of what I call “flexible budget accounts” (items that fluctuate every month). I could use Mint for that as well, but I find it easier to have a planning and at-a-glance spreadsheet summarizing how we are doing month to month.

    I think that it is important not to follow the rules too blindly. For example, when we received our bonus a couple of weeks ago, we could have essentially become debt-free (other than our mortgage and a business lease on my husband’s car). Instead, we transferred our debt (about $12K) to a 12-month, no fee, no interest credit card and put the bonus into our emergency savings fund. My husband heard that his company will have some significant layoffs over the next year or so. If you don’t have a job, you can’t get credit and you might lose the credit you have. Therefore, we are saving as much cash as we can. In the meantime, we have budgeted extra each month to pay off our debt before we have to start paying interest.

  17. Kelly

    I would love to hear more about how you live off last months pay! We are also self-employed and this is an area in which we have had a lot of struggles. We use the envelope system but it can be difficult trying to work out the budget kinks when pay is irregular. I had never thought about living on the money made the month previously! How do/did you set this up? Thanks!

  18. Clever Colleen

    If you haven’t checked out Crown Financial’s MVelopes system. . . you have to check it out! It is super neat and uses the $0 budgeting method. Every dollar is given a ‘home’ and accounted for. Just using it for the past month, but I’m blown away by how much more aware I am of our finances and I always thought I was decent at keeping our books prior. I’ve always used Quicken or MS Money and I’m very techie, but what I’ve found with the former systems is that it is “after the fact” reconciliation of where your money went . . . as opposed to a “think it through first” method that MVelopes (and it sounds like Pear and Mint do encourage as well) forces you to use. Love it. Thanks, Tsh, AGAIN, for giving us such great material to think on. 🙂

  19. Cori

    Hi all!
    Tsh, thanks so much for the Dave Ramsey shout out. I read it here on Simple Mom a while back, but my hubby and I finally signed up in December. What a huge difference it’s already making for us. A relief! Anyway, we’re trying to set up the whole budgeting/tracking our expenses stuff really for the first time, but we’re Americans living in the UK, soon relocating to Asia, with accounts in both the UK and the US. Anyone know of software that can be used and linked to accounts with two currencies? That’d be so helpful!

    • Heather

      Although I’ve not used the function, I see that ibank has the capacity for different currencies. I am still learning the ins and outs of the program but I like it and it is very graphic.


  20. Tsh

    I wanted to echo Charlie’s comment here — Pear Budget is a very solid, easy-to-use budgeting platform. And it’s back up and running! Apologies to those of you who happened to click just when they were having server issues. All’s well now.

  21. Living the Balanced Life

    We did Dave Ramsey’s system for a while and it worked well. I really like the zero- based budgeting. We fell off that wagon some time back, and for some reason I am having a difficult time getting hubby to climb back on. He must not remember how well it worked!
    I’ll keep working at him to see if I can get him to join in! Would love to get that debt paid off once and for all!

  22. Carla

    I remember a while back there was a free spreadsheet version of Pear Budget. Is it still available? We’d love to support the business but we’re focused on gazelle intensity right now =) If there is a free spreadsheet, is it available on Google Docs? Thanks so much!

    • Charlie Park

      Hi, Carla!

      There is a free spreadsheet, available here: PearBudget spreadsheet.

      • Carla

        Thanks so much!

  23. Liz

    Thanks for these great budgeting articles. One thing threw me for a loop tho – think that should be “income – expenses = 0”, instead of the other way around. I’m going to check out the pear, as minty fresh is confounding me lately. (But here’s to more finance programs with food-based names!)

  24. Alissa

    I really like your attitude about your “spending money,” as that is something we always get stuck wtih budgeting. My husband wants to have “fun money” he can spend however he wants (read: recreational equipment!), but I don’t spend that way. On the other hand, we struggle allocating a BUDGET for household items – decor, organzational stuff, art supplies – things that don’t really fit the “fun” category. If I think of those things as “spending money” we will probably have a solution. Thanks!

    Question: Is your spending money equal or are the amounts different because of your spending habits?

  25. Lynn

    Tsh, I have been “lurking” for a long time now – really enjoy all of your posts!

    We started using PearBudget the first of this year, and I LOVE it! It’s always been difficult for me to stick with a budget because I’m very literal and need everything to match up exactly. With PearBudget, I can go back and change my projections if I need to. Knowing where we spend our money has also helped me to know where we need to cut back.

  26. Becca

    We use Budget from Snowmint ( combined with a budget spreadsheet I put together after we used Mvelopes for a while.
    This is the link to the spreadsheet I made (I published it on Google docs). Basically the only thing I have to do is each month copy the amounts from our budget spreadsheet over to the “pay allocation” on Budget, and then when we get paid, I can allocate all our money to different envelopes. Since we don’t actually use physical envelopes (we actually tend to spend more money that way, than if we’re using a debit card) we like the virtual envelopes on Budget.

    Also, when Tsh (and others) say income-expenses = 0, they DON’T mean “bank account balance at the end of the month = 0” – that would freak me (and several other people) out. It is important to budget some money to either stay in the account (i.e., your sinking funds, or simply a “month ahead” line item, etc).

    We have a specific line item for money that we leave in the account to use on the 1st of the next month. It works really well for us, and then we’re not freaking out that our balance is getting close to zero around the end of the month.

    • Tsh

      Yes — good point. I don’t mean “spend all your money so that your bank account reads zero.” I mean, assign a job to every dollar. You’ve got your income side, and then you deduct certain amounts on the expenses side, giving each dollar a job. One at a time, until there’s none left — zero.

      Thanks for the clarification.

  27. Meredith

    I love this series about managing finances! We’re on Baby Step #3 and couldn’t be happier. Getting on the baby steps, doing a budget, and using cash have made all the difference. I just write out our budget in a good, old-fashioned spiral notebook. I love looking back each month. I love reading finance ideas and am looking forward to the rest of your posts. I’m always looking for ways to save more money. Thanks again!

  28. Greta

    My husband and I just started to learn how to budget. Can I say EMBARRASSING? How have we gone for so long without it? NOT WELL!

  29. Stacey

    My biggest issue with budgeting is hubby and I can’t seem to get on the same page. He’s coming around but it’s taking a while. In the meantime I have a hard time zero budgeting because of it. The other part about budgeting that I find difficult is actually sitting down to plan for the upcoming month. I know that’s a matter of self-discipline though.

  30. Angela @ Homegrown Mom

    Thank you so much for sharing, and in such detail. I am very visual, so this helps! We’ve been doing envelopes for a while, but we need better plans overall. Love this!

  31. Femita

    However you want to turn it, money is important. Some people don’t like to budget because they feel that by doing it they put their focus on money. What they tend to forget is that money gives you the opportunity to follow your dreams and do the things that are important to you. Therefore budgeting is not about money, it’s about living the life you want.


    • Tsh

      Yes. Great point!

  32. Kimberly Terrill

    Congrats on the Shining Blog Award!!

    Great Job!
    We had a budget for a few years. I wrote it in a notebook. I like writing out stuff like that- it was almost therapeutic.

    We haven’t had a budget for a while. Maybe those of having one were enough for us to figure out how to spend/save?

  33. Sara Tetreault

    I completely agree with Femita’s comment. Well said. I love all of the budget talk, Tsh. The biggest thing that has helped us in budgeting is sticking to it and doing it as a team. Team work is huge! We’ve been married almost 21 years and have always lived very frugally and it has allowed us many more choices. We also get to enjoy our greatest luxury in life – time together as a family.

  34. tuxgirl

    I’ve never done a 0-based budget. I guess my budget is similar to yours, but it doesn’t have the 0 base. When I figured out our budget, I made it entirely based on my husband’s monthly salary, ignoring all other possible income. Yes, we get other forms of income, but those aren’t part of the budget. If I get a birthday check, I can choose whether to take that money and add it to my “spending money”, or just cash the check and stick it in my wallet for whenever I want to use it. (Our budget gets managed by looking at our debit/credit cards. We literally never use cash, so money that is in cash is generally considered “outside” the budget). Along the same lines, if we have an unexpected windfall, unless we have a specific need, that money just becomes “savings”

    This works for us because I don’t want to have to re-do the budget every month. I also wanted the amount of money going into each category to be a “round” number each month, so I didn’t want to have to worry about the side numbers. Our actual expenses (including planned savings) actually add up to a little less than our monthly income, and I’m okay with that.

    The other thing I do (which I didn’t see you mention) is to carry over money from month to month. So, I have a car maintenance budget. I don’t normally have to pay for car maintenance ever month. In fact, aside from an oil change, we rarely ever use it. However, I put a bit of money aside from it every month, and when we do end up having a major car maintenance expense, I don’t have to worry about it.

    I like how you mentioned the “spending money” fund. When I was first getting married, my mom re-emphasized to me the importance of having an “allowance” in the budget for each of us. She said that if you want to buy something for yourself, you shouldn’t have to ask your spouse every time, and he shouldn’t have to ask you every time. If it’s something you can afford using your allowance, then it shouldn’t matter to him, because it’s in the budget.

    I’ll be honest: I love our budget. I love that if I see something I absolutely want for our home, I can open up our budget and check the “home decoration” section. If I can afford the item, I can buy it. If I can’t, then I need to wait until I can. (If I *really* have to have it, and I can cover the excess with my allowance, I can do that, but that happens more often with clothes than home furnishings…) For me, the budget is about freedom.

  35. Kathryn

    Thanks for doing a post on budgeting–it’s so important! I like your suggestion for living on last month’s income if your income is variable. For anyone who’s looking for even more info about managing a variable income, The Money Book for Freelancers (by husband-and-wife freelancers Joseph D’Agnese and Denise Kiernan) is great. It’s basically a Dave Ramsey-type system adapted for folks with unpredictable income.

  36. Stacy @ Delighting in the Days

    I just had a little warm and fuzzy moment seeing that Australian cash (from my home land). It’s so colorful. I love it!

    We are still working out the best way to budget. I wanted to use a computer program, but I honestly get tired of being on the computer. I still like paper. Although it can’t calculate for me 😉

    That said, I am interested in Pear Budget. It seems simple – I like that.

  37. Erica

    I am still having trouble with the pear budget website. Is anyone else having the same problem? I made it through stage two and then an error message came up and now I can not open the site.

    Tsh, thank you so much for this post. It has given me that extra push to put everything in my head in writing!

    • Tsh

      If it’s down, then I know Charlie’s working on it. He’s had issues lately with his servers (not a Pear Budget thing — a hosting thing), and he knows this is a major deal. Rest assured that in the 3 years I’ve used PB, not once have I ever had an issue getting on to the site. This is a rarity among rarities. PB is quality.

  38. Erin OK @ it's OK

    Your system is very inspiring, thanks for sharing. I hope I can get this organized. I’m really enjoying this money series. I used to budget pretty well for myself, but since I got married, I seem to never know where our money is coming or going. my husband and I have to really work on it together.

    I like your system of ING accounts for irregular expenses.

    One thing I’m wondering what other couples do about is do you have your own separate personal accounts, joint accounts, or some combination? I can’t figure out the best thing to do.

  39. Kimberly

    Thank you for sharing this. I am interested in hearing more about how to start. Hubs and I have previously started a similar system, however have ran into the following bumps: 1.) how to you cash all that cash out at once? I love the system, however there is no 1 time during the month I could take out that much, and 2.) I understand the concept of wanting to = $0 between the income/expenses. Yet, I always worry about not having the right amount in the account at any given time during the month, and over drawing. Thoughts?

  40. Liisa

    One more question: I like the appeal of a simpler way to budget, but what about keeping track of finances in general? Can PearBudget or a similar program be used to reconcile my accounts as well?

  41. rache

    having gotten ‘on the same page’ about our goals over valentines dinner (our first evening out since baby 2 came along last summer) we went to the bank.

    we opened a second account with the same bank so that we can view both accounts online from the same login. we’ve left our income and directdebit bills in the original account, but transfer a set amount each month (always the same) into the second account which has become our ‘out of pocket’ expenses fund – all our groceries/other purchases/car fuel/allowances have to come from here. we’ve left enough in the first account to cover the bills and have a little extra (varies a bit) to build up an emergency pot or for larger than average bills. It means I can’t forget about the phone bill that goes out on the 20th etc. because that money has been physically ‘set aside’. when I check my balance at the cash machine I know I am looking at the ‘living money’, and my husband can see how we are doing while he’s away from home by doing the same.

    • Stacey

      Hubby and I opened another account like you but we’re going to have all our bills come from that account. We’re having a hard time getting started because we have direct debits already setup with different accounts already. Also I find our pay schedules to be a hurdle. Hubby is paid weekly and I’m paid twice a month.

  42. Chris

    My husband I aren’t very good about remembering to budget. Not that we overspend, but just that we could do a better job of managing our money instead of letting it manage us. I wish I could get my husband to use something like Pear or Mint. He insists on using his specially designed spreadsheet. It actually offers us many more options that any other program could, since it’s specifically designed for us, but it’s hard for me to follow. The layout of Pear is so easy to glance at an understand!

    • Charlie Park

      I’m glad your husband has a tool that he likes, but I can understand your desire to be a part of the process. I commented a few days ago on a post here, noting that every couple that’s budgeting — regardless of the tool they’re using — needs to have a dedicated place, a dedicated time, and a dedicated process for looking at their money. It doesn’t have to be perfect, and it doesn’t have to be complicated. It just has to be.

      One thing that sometimes works is to schedule your budgeting time for the half-hour before your favorite show each week. That way, you make a “money date” and you sit down together. If you commit to that half-hour, you can look at all of your bills together, see where your spending is in line with where you’d like it to be, and make plans for the coming week / month.

  43. Vicki R.

    I grew up in a home where budgeting was a way of life. Mom & dad used the cash envelope system (this was in the 1970’s) & I distinctly remember the “ceremony” they did when they cut up their credit cards. We were homebodies, traveling only by car or train & of course, there was no Internet or needing to purchase much with a credit card. As I became an adult I certainly made some financial mistakes, but I honestly can’t remember living without some sort of budget. I’ve been married for 6 years & throughout that time Hubby & I have tried various budgeting software, including Quicken & the Crown money management program. Currently we are using YNAB & we both think it’s the best thing out there (for us, that is).

    I would say our biggest financial success has been to reach the goal of having 6 months of expenses saved up in an emergency fund. That took awhile but in this crazy volatile economy, it’s just another step of protection. I think our weakness is to actually save for large purchases before buying them. We don’t carry a credit card debt each month, but that $$ comes from another category when we do make a purchase that is over $150.00. (That’s a “large” purchase for us – LOL!).

    I’ve not read Dave Ramsey but I’ve heard good things about him. Budgeting is always something good to talk about. Always!!

  44. Richard Blaine

    I have been living on a budget all of my life since I was a teenager. My mom calls me the family banker. It is because of this budgeting that I finally got to buy my first home last year.

    I keep my budget on paper as you do and I also have envelopes with headings on them for the intended purpose. I have always lived by a rule that I learned early on in a business success book and that was “pay yourself first!” I do this with a minimum of 10% and then the rest gets divvied out!

    I have never got into using software of any kind to do my budget, but I have lots of legal pad pages with budgets and revised budgets all over the place. I don’t have an irregular expense account, I use the Dave Ramsey approach and have accounts for 1 month of expenses and 6 months of emergency expenses just in case. At this point I am almost debt free except for my mortgage and I am not a huge income earner, but it feels good to not have to much going out the window!

  45. Nicole @ Simple Organic

    I love the idea of starting the month with enough to live off from last month’s paychecks. Maybe after our tax return comes we can start doing that! Great advice as usual, Tsh. It always helps me to visually see how others do things. 🙂

  46. Unintentional Housewife

    I’ve always had a budget – that’s the easy part for me. The hard part has always been (#1) sticking to it, and (#2) verifying that we did actually stick to it. I think that part of my issue is that I know I made my budget up on some level, so what’s to stop me for changing it? We’ve (finally) begun tracking our spending so that we can really see where the money goes. Next step: creating a budget that’s based on reality instead of guesses. Maybe I’ll be able to stick to it better when it’s empirically derived… here’s hoping!

  47. Celine

    I’ve never really been a big fan of budgeting, but since my money became tight I’ve felt the need to better organize my personal finances and control my spending. I’ve never kept track of my expenses before, and the outcome was obvious: at the end of the month I kept asking myself where did all my money go. After reading some reviews and digging a little bit further into the topic, I figured out that setting a budget wouldn’t be such a bad idea after all. Now I’m using, which is a free web based personal finance planning and budgeting tool. Having my money carefully divided among different spending categories gives me peace of mind and I no longer worry that I’ll run out of money way before the end of the month 🙂

  48. Fred

    For those of you that are interested in using a budget like Tsh has described I would strongly recommend YNAB ( It is designed to be used in exactly this way. YNAB displays a lot more numbers than Pear Budget (looks to be a simple solution that will work well for many) so it might appear a bit more scary, but it’s really easy to use. It also is designed to work with the “live off of last months income” principle which is one feature that makes it unique. Another difference is that the YNAB method is to only budget money that you have recieved rather than estimating the correct amount.

    Question for Tsh: How do you account for overspending? I’m assuming that if your grocery bill is $2.50 more than your alloted grocery cash you don’t choose an item to put back?

  49. Lolo

    Question: how do record in your budget when you use sinking funds? For example, let’s say you move $200 from your auto insurance fund to checking to pay the bill for this month. Do you record it as an expense, even though it’s not really coming out of this month’s budget? Thanks!

  50. Kate K

    My husband and I have the same principles behind our budgetting, but we do it in two different ways, as we’re two very different people! I thought I’d share them, just in case either of them are any help to anyone…

    He uses a spreadsheet with lots of columns. First column is income for the month: +£x. Then there’s a column for each of the direct debits/regular bills: -£y. Then there’s a column for each of the saving-for categories, like holidays, next car and so on, and they get a certain amount each month allocated to them: -£z. Anything left over goes into savings. And he magically makes the spreadsheet add all this up for him – beats me!

    I can’t think like this at all!!!
    So I do a modern equivalent of the old pots on the mantlepiece system (one pot for the coal man, one for the rent, one for the gas bill and so on) and have different accounts for different things: one for housekeeping, one for saving, one for my own spending money. And I keep track of them by writing it all down, in a notebook with different coloured pages for the different things. And I keep a running total of the amount I’m putting on my visa card, so that I know how much that is each month.

    Both our sets of parents had a very simple approach to money: If you can’t pay cash for it (except a house, obviously, and maybe a car), you can’t afford it. We’re grateful to them for bringing us up like that. It’s made it much easier to resist going into debt.

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