Basics of Our Budget: 8 Steps We Take to Make and Keep Our Budget Each Month

Apr 3, 2019

[posted by: Hannah]    

You could say our excitement about how we budget “started it all” (the blog, that is . . . not our relationship. But who knows, maybe that too). We heard peers say that they struggled with putting together a budget and/or sticking to it, and we wanted a simple way to share how we do things. Sharing our budgeting strategies for personal finance is so FREAKING EXCITING! This should give you a really good idea about how nerdy we are. We lose our minds over budgeting and then tell everyone about it. But here you are, reading this blog post . . . so you must at least be curious. And maybe, just maybe, you’ll join us in our excitement as you read more about the basics of how we budget!

So, this post is not even going to come CLOSE to covering it all in detail. What I’m sharing today is the general overview. It’s a great starting point if you’re curious about the basic concepts we use without diving into the nitty-gritty (which we will totally be doing soon!). It’s also a great starting point as a newcomer to our blog! We encourage you to sit back, grab a glass of vino and your favorite Texas Instrument (how to choose!?), and start reading!

  1. Know your income. First thing’s first! You need to take an honest look at your income – both monthly and annually! Our budget is a monthly budget, so we allocate a certain amount of money for each of our categories on a month-to-month basis. But we also pay careful attention to our annual income, particularly because Evan’s paycheck comes every other week, NOT twice a month (spoiler alert: those two extra paychecks go straight to savings!). After you figure out how much money you make on a monthly basis, write it down and keep it close at hand!
  2. Know your spending. Next thing to do is evaluate your CURRENT spending. I’m telling you to take an honest look at what you actually spend each month, not what you wish you had spent. The best way to evaluate your spending is to look at your last 3 months worth of bank statements. If you have never looked at a bank statement before and have no idea where to find them, don’t panic. I’m pretty sure there is no one under 50 left that looks at paper bank statements. Because we live in the 21st century, you can access the last several months (or years, depending on your bank!) worth of bank statements online through your bank. From here, start observing what you spent money on. You can make broad categories – food, entertainment, gas/fuel, donations/giving, monthly bills (like rent/mortgage, phone bills, utilities, cable, etc), miscellaneous, etc. Add up home much your spending per month for each category. Make special note of large purchases (over ~$100) and frequent purchases (like your daily Starbucks run). Finally, add up your total spending for each month. Yes, this is going to take a little work. But it truly should not take more than an hour to look through everything, and it’s SO WORTH IT!
  3. Compare! Now that you’ve looked at the POSITIVES and NEGATIVES for each month, it’s time to do the math! How much of each month’s earnings are you spending? For most people who don’t budget, the answer is most of it (if not ALL of it!). This will help inform your budgeting decisions moving forward. After you have a really clear idea of your income vs. spending, you can construct your very own BUDGET! *insert 3 party horn emojis* . . . so let’s talk about where to start!
  4. Figure in the Non-Negotiables. Budgeting starts with setting aside money for the things you have to pay for each month. Rent, utilities, student loans, other bills, groceries, and gas/transportation, are just a few of the categories you may need to set aside money for. Be thorough with this category and make sure you’re not missing anything. Once the non-non-negotiable are set, it’s time to . . .
  5. Think about your goals. After you figure out those non-negotiables, the next thing to think about are your goals. It may be tempting to skip to more short-term purchases (like clothing, entertainment, or eating out), but your long-term saving goals are much more important! Take a moment to consider what it is you may want or need long-term – these are big purchases. Examples include a car, a house, a wedding, retirement (!!) or a vacation. There are also tons of other goals you might have. In addition to some of these categories, we currently are saving for a downpayment on a second home and expenses related to (*some day*) having a baby. If you know how much you need to meet your goal and when you need to make the purchase, you can plan accordingly for what you have to put away each month (we even wrote out the equation for you below!).
  6. Factor in the rest. After you’ve allotted your monthly income to each of these categories, take a look at the difference. How much do you have left to spend? Have you allowed too much money total? If there’s money left over, you can put the remaining amounts in lower-priority categories, like entertainment (concerts, happy hour with friends) or clothing (non-necessary purchases). A lot of people (particularly millennials!) are resistant to the idea of “depriving” themselves of something like a fun experience or new stuff. We’re not telling you not to treat yourself, but by budgeting your money, you will know exactly how much you have to spend on less important things so that that most important things are covered! And ultimately, this is going to lead to greater financial security long-term.
  7. Find a reliable way to track it. Now that you’ve made a plan, you need to be able to track your progress. A budget literally will do nothing for you if you’re not paying attention on a month-to-month basis. We absolutely love Mvelopes for budgeting ($36/year . . . the BEST money we spend all year!). We haven’t found another app we love as much as this one. You can also do it manually through an Excel spreadsheet (although this takes more discipline and time!). This step is SO important – even if you don’t have a perfectly-designed budget, you have got to pay attention and keep track of spending! Using Mvelopes, it takes us about 30 minutes each month to categorize all of our spending and allocate money for each category. No matter how you do it, make sure that you are, in fact, tracking your budget each month!
  8. Be a team! Lastly, for those who make decisions with an S.O., remember that this is a TEAM effort. While we’ve heard that some couples have one designated person who handles all the “money stuff,” we highly encourage you to approach financial planning as a team. This allows both of you to have an equal say in how money is spent and also equal responsibility in keeping within the budget. Also, it’s really rewarding to set goals and accomplish them as a couple. I could actually give you like 50 reasons why we love doing this as a team (*more to come in future posts*), but for now, we’ll just say it’s all-around a great relationship move!

One last note about our system: our budget has changed often over the years. We will increase or decrease individual categories, add new categories, and reevaluate overall spending when our annual income changes. It’s important to do this periodically – at least once a year, if not more. If you find yourself really over or under-budget in any category, that’s great! You’re learning more about yourself and your spending patterns, and can adjust accordingly. Remember, stick with it!!! YOU’VE GOT THIS!!!!

So there it is – the basics of how we put together our budget and continue to stay within it. These are the Bjorndal Building Blocks of Financial security. We’re really excited to continue sharing our best budgeting stories and tips with you! Feel free to comment below with questions!

  1. Don

    April 24th, 2019 at 3:20 am

    Very wise advice!!

  2. Hannah Bjorndal

    May 1st, 2019 at 12:40 am

    Thank you papa! 🙂 – Hannah

  3. Jessica

    May 11th, 2019 at 9:40 pm

    As someone who equally loves budgeting, grateful for you sharing your best tips and tricks – *and* making budgeting less scary. Good budgeting creates freedom!

  4. Hannah Bjorndal

    June 7th, 2019 at 7:23 pm


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