BBP Real Life Budgets - Biweekly Budget

- Welcome to the economical mom YouTube channel. I'm Kumiko Love from Budgetmom.com and today we're doing another

real

-

life

budget

. This is where we show and I show and demonstrate how I would organize and

budget

a

real

reader's budget. So this is a reader who submitted their real numbers, their real debt, their real savings goals, and then I walk through the budgeting process using the paycheck method of how I would manage a budget that collects money and income from it. Then let's get started. (upbeat music) Alright, today we are going to talk about a reader, he is a husband and wife.

They do their finances separately, but both contribute to a joint checking account. So the first step in my budgeting process is to discover and establish the why. So here's why for my readers. It's to show your kids good money management skills and going on vacation without relying on debt. And here's a little more about his personal story. So she says, I've always tried to save since I started working at 16, but it never happened. I have never been able to save more than $500 at a time. Something has always come up. I am currently married and have two children, the youngest is four years old and the oldest will finish high school in a few years.

So this is a little bit about the reader who sent me her budget and her information, to show me how she would manage and budget her money using the paycheck budgeting method. So with these real-

life

budgets

, I'm already assuming my readers are tracking their spending. Because in my eyes to present the information that they give me, to show these

budgets

. They had to know, they had to know where the money was going or a little bit about their finances. So, the next step is to track and categorize your expenses. So let's talk about the income of these readers.

So, this reader. We are only going to document this reader's budget, not her husband's budget or income, because they do things separately. So let's show her paycheck. He is paid 955.54 weekly. We're rounding down to 955. So in April she actually gets, April is one of those months where she gets three paychecks. Days 2, 16, and 30. So, track her spending, and if she does, you'll identify her regular bills, which is step number three in my paycheck budgeting process. Here are the invoices of these readers. Now, some of these I don't know what they mean. Like Noggin or Bill-Me Simple or Tanger.

I don't know what they are, but I included them because they are bills she pays every month. Okay, so her regular bills equal $1,040. And that's the first thing I want you to figure out when you're tracking your spending. What are the recurring bills or fixed expenses that you have to pay every month like clockwork? So, like I said, her bills equal $1,040. If we subtract that from the income she gave us, you can see we have some money left and a little room to work on savings goals, debt, and sinking funds. Then, the variable expenses of it.

Your variable expenses will be your cash envelopes. Now, cash envelopes are my #4 step in my budgeting through the paycheck process. It's really important that her spending becomes tangible and real and one of the ways that came into my life was by using cash and becoming a total cash spender. So if you want more information about my budget by paycheck method, or my steps to financial freedom. You can find it in the description of this video. So she has five different cash envelopes that she uses and she gave us a monthly amount that we're working with that she would like to have for those cash envelopes.

These are her savings goals and what I loved about this reader's information is that she is not trying to go over her budget. She was very realistic about her savings goals. So she wants to make an emergency fund. A cushion or buffer on her checking account. Now, your checking account buffer is something I implement in my own life. It's just on you, especially as a zero-based budgeter. You'll want to have that checking account buffer in your checking account if higher-than-expected bills appear or perhaps a bill appears that you weren't aware of. It simply saves you those overdraft fees and stress.

So she also has two sinking funds. Now, she didn't provide us with the holidays she's specifically saving for. She just said that I have a holiday in July and September that I would like to save for and that she would like $500 for both holidays. So what we did was take the annual amount that she wants to save. How many months does she have to save for that goal starting right now. And then we said, "she's okay, if she wants 500 dollars by July." That means we technically have April, May, and June, because every time she saves for a sinking fund, she has to make sure she saves that amount of money before the actual target date.

We would like to have that in June at the end of June so she can spend it in the month of July. She would be earning $167 a month and then $100 a month for another vacation. Now let's look at her debt. So with her debt, she's dealing with a couple of different things. She has a couple different credit cards. Her car, which is her biggest debt. She is dealing with two different target credit cards. One is a joint card where she pays half the expense and the other is just her target card. And then she owes her cousin $64.

We submitted it as a one-time payment because we set up that we could pay it with her first paycheck which we will document today. So what does this look like in the budget by paycheck method in process? So the first thing is your budget calendar. It's receiving every paycheck or payday on her calendar. As well as any holidays, events or bills you have to pay. The same goes for these real-life budgets. We don't know what kind of vacations or events they may have in her life, but we do know her bills. So each payday we highlight it in a different color and then we have our little color chart here for what each color represents on our calendar.

The point of including things in your budgeting calendar is so you can determine what expenses you want to pay for with each paycheck. So, we decided that with the things that were due on April 1st, we paid for them with his March 19th check. So every time she worked several paychecks in a month. It is important to plan. As you can see, we didn't just make plans for April. But we also went into May and we did it because some of his April paychecks cover May expenses. So we went ahead and figured out how much I was going to pay with each paycheck in April.

And each bill is color coordinated, so everything in blue we'll pay with our paycheck on the 2nd. Everything in yellow is on the 16th and then green is on the 30th. But also Please note that paychecks for the 16th and 30th are yellow and green. We are also paying for things in May. This will allow us to have a more equitable amount of income left over after each paycheck to put towards our cash envelopes, our varying spending or saving goals, or paying down debt. So let's see how this translates into an invoice and paycheck tracker, which is essentially our budget.

So we'll take care of your paycheck on April 2nd. We have your paycheck and then what it does is it literally translates the invoices that you highlighted on your calendar into your invoice tracker. So with her paycheck on day 2. She is paying $513 in bills, leaving us $442 left over. So what do you do at that time? Then you deal with your variable expenses or your cash envelopes. You need that cash to buy food, gas, entertainment, clothes, and sundries. We took the monthly amount she gave us and divided it by two. So, all of her variable envelopes equal 267, which gives us 175 leftovers.

Then you pay your bills. You deal with your variable cash envelope or your variable expenses, and then you deal with your financial goals. Then you have your sinking funds. You can make an extra debt payment or extra savings. Now, normally what I would do. You would establish that emergency fund first and then make additional debt payments. So that's what we're going to do, especially now that what we're seeing in the world is that emergency savings are more crucial than ever. So we put the extra remaining amount into your budget to put toward emergency savings. And you would literally repeat this process for every paycheck.

This way you can see the paycheck for April 16. We literally took everything in yellow and don't forget, we will also include those bills in yellow here in May. We have to have that in our budget for our April 16th paycheck. Your invoices for this paycheck equal 527, giving us 428 left over. Then we will pay your variable expenses. We will take care of those sinking funds. You have some vacations you want to prepare for with cash if you don't rely on credit cards to do it. That gives us $28 left over in your budget, which we will use to fund your emergency fund.

And then you'd do the same thing again with his last paycheck in April. So we're talking about your April salary, your April 30th check. That's all you see here in green. Including some expenses that are occurring in May. And you can see I wrote down, in your budget here, if you're going to pay it for next month, I only put in 53. And as you can see, everything from your April 30th paycheck is going to go toward next month's expenses. We're taking care of those variables, and the good thing is that by April, we're taking care of our sinking funds.

Then, the rest can go toward emergency savings of $239. Now if we look at May. So for your 514 salary, it will pay for everything you see in this dark purple. Plus things happening on June 1st. She is paying expenses from May to June. We take care of those variable expenses again with your cash envelopes and then your sinking funds and then everything else goes into additional emergency fund savings. And you can see when you follow the steps in my budget template, my paycheck invoice tracker. Down here, income minus all of these different areas of expenses should be zero.

And we are adding that. We're adding that down here at the bottom. And for the last paycheck example. We need to take care of your salary for the last day of May. And you can see we've covered everything, we'll pay all your bills in June. So, we take care of those bills. The variable cash envelopes and then again your sinking funds. And this time he has $106 left over for emergency savings. This is another example of a real-life budget, using the paycheck budgeting method. Now, as you can see, it may seem like there is a lot of work in this, but it could take a long time.

But we have what we call a transition month. When you transition, budgeting will be done using the paycheck method. Because at any moment you are changing your budget schedule or the way you budget your money. There will be a little more initial work that you will have to deal with. And not only that, you may see and discover that when you start budgeting using the paycheck method, your first month or two may be a little unusual, because you have to work with what you have before getting more into a routine. regulate or schedule with your salary budgets and that is completely normal.

I think that's the first thing we should focus on. It is honesty and financial awareness. When you are working on budgeting using the paycheck method. It's all about being aware of where every dollar goes and then making sure you put a plan in place. So that your money is spent on the things that are really important to you. So if you found this video helpful. Give it a like and don't forget to subscribe. (upbeat music)