Tag: planning

Happy Wednesday! This is the third post in my money planning series. The first post covered our budget tracking system. The second post discussed how we integrate Mint into this system. Today’s post combines the two to some degree. I’ll start by sharing the budget template I created that models our budget tracking system.

The first thing my husband and I did when we set up this document was determine how much we wanted to have in each virtual envelope (Column B). These were definitely goal amounts in the beginning (like making sure we have a fully-funding emergency fund). It gave us goals though and helped frame our conversations about money and our priorities.

I also needed these goal amounts because I wanted to know when we should stop filling some of these envelopes. If we put a set amount of our income into our health: medical/dental virtual envelope each month, I wanted to know when it’s full and can stop putting money in there.

Next, we had to set up a plan to get to these goals without surpassing our income. We accomplished this by documenting how much we wanted to spend or save each month within each virtual envelope (Column F). This was best guess, wish list level planning at this point. (For instance, if we want to go on vacation next year to Disney World, it’s going to cost about X. There are eight months left so X/8 is how much we need to save per month.)

Next, we wanted to compare our spending and savings plan with our monthly income. Luckily for us, my husband and I are both salaried, so we have set and regular paychecks, which is our only income. However, since we are paid every two weeks, most months we receive two paychecks each and some months we earn three. I wanted to look at our budget with and without those “extra” monthly paychecks. Once we entered our take home pay per paycheck into the budget (Column H), our planned monthly payments were subtracted from our monthly incomes and we saw how much was left over or overspent.

Armed with this information, we revisited our monthly payments (Column F) and made adjustments. We decided which expenses to eliminate or reduce or discussed how we could raise our income. When we’re saving for something in particular, like a new home project we’re planning, then we may decide to cut back or temporarily stop funding some virtual envelopes (like vacations or our fun money).

Personally, I like to plan to live off 24 paychecks from each of us per year so the two extra are surprise money we can drop into any virtual envelope we want, often more dinners out, paying down debt, or gifts/charity. So, at this point in the budgeting process, I’m making sure every dollar of our monthly income is allocated to one of our virtual envelopes (Cell H17).

The first time we used the Excel budget tracking document, we had to determine how much money to put in each virtual envelope to start. We could only put money in these virtual envelopes if we had actual cash or money in the bank for them. To figure this out, we documented how money we had (Cells B42-B51) and how much money we owed (Cells C42-C50). Whatever was leftover was free to put into any virtual envelope we pleased (summed in Cell C51). Some envelopes were easy to determine. We knew our cell phone bill would be X, so we better have X in that envelope for the month. Others were more variable, like groceries or restaurant spending. (Over time we’ve used Mint’s trends feature to see how much we spend in these categories to set better targets.)

Once our virtual envelopes were filled, we double checked to ensure everything balanced out. Every month, the money we have (Cells B42-B51) has to equal the money we owe others (Cells C42-C50) plus what we owe ourselves/what’s in our virtual envelopes (Cell C51). Mint tracks how much money is in each account, so I can easily grab numbers for the spreadsheet here. If the money we have doesn’t equal what we owe others and ourselves, then the amount in each virtual envelope has to be adjusted.

So, at this point, we have goals (Column B), a plan for monthly payments (Column F), and a way to track that the amount we have doesn’t exceed the amount we other others and ourselves (Row 53). Now we’re in execution and maintenance mode. Each month we track what’s coming in and out of each virtual envelope and how we’re tracking against our goals.

Some months will have no expenses but have a monthly payment plan. In those cases, you can decide what to do with this “found” money. For instance, some months our pet expenses are $0. We are well stocked on her food and meds and there are no vet appointments. However, every month we plan to spend $67 on her care. In this case, we keep that $67 in her virtual envelope until we get to the envelope cap. This covers us when her $350 vet bills come around. Once we meet the envelope cap, the extra money goes wherever we want (typically other virtual envelopes that overran or savings categories).

And, the best part is, when I know there’s money in the budget for it, I won’t hesitate to spend it according to our plan. I can enjoy an extra night of takeout when I don’t want to cook or splurging on a gift for someone. And I feel mighty proud of us when we meet a savings goal or pay off a major debt, even if no one else ever hears about it. As Hannibal often said on The A-Team TV show and is captured in my budget template, “I love it when a plan comes together.”

Photo by Sharon McCutcheon on Unsplash

Disclaimer: I’m not sponsored or compensated in any way by Mint.com. These opinions are all my own.

Mint.com is one of the popular tools out there to help people manage their budgets and plan their finances. We’ve been using it for 10+ years and have incorporated into our Excel-based budgeting system. And, the best part is, it is free!

Essentially, Mint is a way to connect all of your financial accounts in one location so you can get a comprehensive look at your financial status at a glance. Mint has a variety of features built into the site that help with tracking bills, setting financial goals, managing investments, analyzing savings and spending trends, and checking your credit score.

We have used many of these features, but I’ll focus today on how we use Mint to manage our budget. The first thing to do is to log in and link views of each of your financials accounts to Mint. By linking views of each of your accounts (e.g., savings, checking, investments, debts, etc.) and listing your assets (like real estate or vehicles), you can see your net worth.

NOTE: You are not able to manage any accounts through Mint, only view them. So you can’t transfer money from your savings account to your checking account, but you can see transactions in and out of each account.

To align Mint with our Excel-based budgeting system, I then created a “budget” for each virtual envelope we use and set a monthly amount to be spent within each. Then, as each transaction posts to one of our financial accounts, it shows up in the global list of transactions. I can sort through the transitions and assign each of them to one of the “budgets.” The best part is, I can establish rules that automize a lot of this by auto-assigning purchases from certain vendors to particular categories (e.g., Wegmans purchases are always classified as groceries). It’s to the point now that I can quickly scroll through the list of monthly transactions and just double check that it’s right in a matter of minutes.

As an aside, I used to sort through receipts from big-box stores and split transactions among multiple categories (e.g., part of a Costco transaction would fall under groceries and the remaining portion household goods). I’ve moved away from this because it was too time consuming and our spending wasn’t variable enough that we were changing our spending. I now put all of the Amazon, Target, Costco, etc. purchases into one generic shopping category.

Now, you may be asking, isn’t the act of having what Mint calls “budgets” with set spending and savings amounts that you track over time essentially a budget? Well, yes. You could exclusively use Mint for your budgeting purposes and be completely set. My Excel-based budgeting system came first though, so I’ve incorporated Mint into my system. I like my system better for tracking savings though.

I use Mint as a shortcut and grab totals. For instance, I take the total monthly amount spent listed in Mint for each virtual envelope (what Mint calls “budget”) and put that number into my Excel-based budget file. Back in the day, I would enter each receipt total manually in Excel, which would take a significant amount of time. Using Mint has saved me at least an hour a month.

I think I’ll leave it there for now. I highly recommend checking out Mint to see if it will benefit you and meet your money management needs. If you have specific questions, let me know!

Photo by Abby Boggier on Unsplash

I’ve given some thought and space here to time tracking, but money is another limited resource that gets a significant amount of my intentional planning efforts. I want to give this topic the attention it deserves, so every Wednesday for the next several weeks, I’ll cover a different aspect of financial planning and budgeting.

Now, I’m not a certified financial planner. This isn’t a place for me to discuss or offer advance on what you should do with your money. That’s not the point of the series and certainly not my expertise.

In this space, I will share the systems and planning we use to manage our financial resources, in case it is helpful to others. It is a bit of a look under the hood. (And I know I would naturally just be curious how another family makes it happen!)

To start the series, let me share how we set up our budget. Our budget is organized in an Excel file that is managed essentially like a set of virtual envelopes. All of our envelopes (a.k.a., budget categories) are listed along Column A. There are about 40 envelopes capturing all of the regular expenses we’re paying (from homeowners association dues to utility bills) and things we’re saving for (including Christmas presents and retirement). Anything we can think of that costs a “significant” amount of money that we can anticipate and reoccurs gets its own envelope. There’s an emergency savings envelope for those expenses you can’t just plan on.

Then, each month gets its own column (Column B through infinity). For each month, we denote how much money is in each envelope. Every new month starts out with amount the previous month ended with, and we subtract any expenses and add any additional money we put in the envelope. For example, we know our mortgage payment is X. We make sure to end each month with X in the envelope.

Some budget categories are more variable, like automobile gas. We start out with what is in the envelope from the previous month, subtract out receipts for gas purchased, and add a set amount each month. Basically, since I’ve tracked our expenses for years, I know our average amount spent per month on gas, so I always put at least that much in the envelope every month. Some months we have extra in the envelope, which just carries forward to the next month in case we need it (like months with long road trips or heavy commuting).

Many of our budget categories are for various items we’re saving for. Now, we could always have one pot of money called savings and then spend it on whatever we wanted if and when we have enough money saved. That’s a fine strategy, but I like saving for something specific. It allows us to better set savings goals and see how long it will take us to save for it.

For our savings budget categories, there’s typically not much money coming out of the envelope. We just keep adding a designated amount month after month. This is how we pay for our vehicles. We act like we have a car payment and pay ourselves every month. We don’t buy a new car until we have enough saved to buy it with cash.

The key to the entire budget is all of the money in the envelopes has to equal the total money we have available. To check this, I compare the sum of all of the money in our virtual envelopes to all of the money available in our financial accounts. Luckily, in Excel, I set up simple formulas to do this comparison for me.

So that’s the basics. I’ll cover additional topics later in the series, like how we leverage Mint and how we use this budgeting system when an emergency occurs.

Photo by Fabian Blank on Unsplash