Budgeting 101 : How I MOMage My Day to Day Expenses

I have had a TON of questions asking me to share how I organize my finances and I've been putting this post off for a while, mainly because the way I organize my finances is not necessarily a "one size fits all" kind of solution like my file planner system is. That point aside, this way of managing money is another one of those big-lightbulb-over-the-head-life-changing-sanity-saving kind of things. 

Lets first start this out with me stating this: I'm broke :) 

No seriously, we live on a very tight budget with little room for extravagance or errors. I have a REALLY hard time managing money...I was fortunate enough to grow up in a very financially comfortable home where money was never discussed and I really didn't understand that there was a "Bottom of the pot." Let me tell you what a giant shocker it was that first time I reached my own "bottom of the pot" ..... and my electricity & water got shut off....not because I was living beyond my means, but because my financial management skills were just plain awful. I had no idea how to prioritize my expenses and I would constantly talk myself in to purchasing things I didn't have money for with ridiculous justifications. When the BF and I moved in together, Money was a hot topic for us (as well as the source of our first argument) as goes the typical relationship standards: hes a saver, I'm a spender....you can see how this can be hard for someone like me who pretty much never heard the words "no." After one too many arguments about money, and one too many times of having to ask to be bailed out we decided something needed to change because these money fights were getting pretty brutal. So last year when we got our tax return in, instead of doing what we had done every other year (Take a vacation...buy new furniture...go on a shopping spree... basically live like kings for 6 weeks until the money ran out and we were back to living like paupers) we decided to do something different: We saved the money. By saving our tax return money we were able to completely revamp our household budget. We both wanted a feeling of control over the money so we decided the best way to split things up was for the BF to manage the Bills (Mortgage, utilities, car payments, etc) and I would Manage the day to day expenses (Groceries, Gas, Lunch money, Clothing, etc) 

This system has totally changed our outlook on money. We stopped fighting. Bills were paid on time. I felt like I had freedom to spend my money at my own discretion without having to ask permission (which would then make me feel resentment towards him) And he got to pay the bills in a timely manner and allocate the money to paying off debt however he wanted to. 

Now I'm not saying you need to have a sit down with your hubs and say "your paying all the bills and I'm keepin my paycheck" but maybe you sit down and figure out how to manage your money best...Maybe your the "saver" and you like to pay bills and your man is the one who buys groceries and fills the cars up with gas. To each their own. 

The key to making this system work is that you mustn't meddle in each others financial management....as long as you are both upholding your end of the bargain, then how it is handled is not on the table for argument or discussion. Another key element: you have to give yourself realistic expectations. Yes I would absolutely love to feed my family of 4 on $100 every week but that's just not happening and having to keep to those kinds of boundaries full time would put a lot of unnecessary hardship on me (This is not saying that it can't be done...there was a time when I was young momma and just getting started and I remember thinking we were doin' pretty darn good if we had a full $60 to spend on groceries for the week) Take a look at your family budget and figure out just how much you want to dedicate to "day to day expenses" also decide what you consider to be "day to day expenses" Is getting the oil changed part of your money or his? What about paying for date night? TALK THESE THINGS OUT AHEAD OF TIME!!!

Once you settle on a number for the day to day expenses for a month, head to the bank....and take out that amount of money (Again...you might not be able to do this right away, having that kind of back up cash or up front money isn't always possible, you could certainly make this system work for you if you break it down to weekly increments until you are able to grab a big windfall check around tax or bonus time) 

I always leave $40 in my bank account on the rare occasion that I have to send a $12 check to school for picture day or what not or if for some strange reason my bank decides to charge me a random fee....this is my NSF buffer money.

Then I do something silly....I tell the bank teller to give me the full amount in 20's except for $100...and to give me the $100 in $5's and $10's.............she gives me a crazy look then hands the cash over. and I'm out the door and done with my banking for the month.

Once I get home I sort out my money in another one of those silly ways...I separate the $20's in to piles of $100, then the $10s, then $5s.......After figuring out how many weeks are in this month (typically 4) I start dividing the money evenly in to 4 separate piles....placing the "remainder" money in to a 5th pile (for example, if I had $60 in $10's...I would put 1 $10 in each of the 4 piles, then the "extra" 2 $10's would go in the fifth pile...get it?) Once my money is evenly divided I count it all up. This 5th pile is my Stash....Through the month, its not to be touched unless its for an emergency...but If I can make it through the month without needing it I get to put it towards a treat :) Knowing the money is there if I need it is great for piece of mind, but its even better knowing that if I DON'T need it, I can get a new out fit or go out for an extra nice dinner at the end of the month. 

As for the 4 piles of weekly money...they get put in to individual envelopes that are placed inside each weeks planning folder.This also keeps me from spending impulsively, or digging in to next weeks money because its all the way back home.

Wanna add weekly money envelopes to your file folder planning system? Check back next week for a tutorial on how I make mine :)