Home Budget and Life Style Expenditures
Personal Lifestyle Expenditures
This workbook contemplates three household bank accounts. One being a savings account, to which the net pay is deposited, another being the chequing account from which the household expenses are paid, and the third being a second savings account to hold the "Pay Yourself First" funds.
Using the categories set out on the lifestyle sheet, an individual/couple can determine the monthly operating cost of their home. This sheets determines the monthly amount that should be withdrawn from savings to cover normal household operating expenses
Using the categories set out on the Events Sheet the cost of Birthdays, Christmas, Vacations and other annual happenings are costed. The monthly event cost is carried forward by month to the Lifestyle Sheet, and suggests an additional amount that can be withdrawn from savings for that particular month.
Originally, the Lifestyle Sheet had an annual column, but no one knows when their car needs work, or an appliance has to be repaired or replaced. The car may need winter tires put on in November and taken off in May, and registration is due on Dad's birthday, but when will the brakes need new pads or rotors. In the sample sheet, vehicle tires and registration were entered when reasonably expected to be incurred, but guesstimates were entered in December for home and auto repairs not identified. The worksheet can be amended when the actual events occur.
The sample worksheet is prepared in round numbers. This is a "back of envelope" approach. I have found that getting into great detail does not create great accuracy, and often the work is started with good intentions, and left unfinished.
At the bottom of the Lifestyle Sheet the total of Lifestyle expenditures and Events costs is matched to the Net Pay of the individual/couple. If there is an excess of expenditures, than the need to revisit the expenditures is required.
John Lennon in the song "Beautiful Boy" wrote "life is what happens to you, while your busy making other plans". He was not referring to short term and long term goals, but more to Friday night's party. Most just bumble along, but to be successful when preparing a budget you need to set short term and long term goals. That is what you are saving for.
Pay Yourself First
This is a simple concept, but tried and true. My father, when I was eighteen, gave me a brochure entitled "Pay Yourself First". Now in my seventies, I wish I paid more attention to its lessons. Wise people move a constant amount form the savings account to a second savings account or in Canada, A Tax Free Savings Account. This should be done on regular a basis. Skipping a few coffee breaks and adding $25 weekly to this account would accumulates to $1,300 a year.
To view the wokrbook click on the link
To make a copy click on the following link
Useful Links
This list of Useful links will help visitors who wish to explore these concepts in greater depth.- Simple Planning Templates This page features a number of spreadsheets that build on the simple back of envelop envisioned with our approach. Some visitors may find them useful, but I suggest starting with a simple approach first.
- Canada - Making a Budget Anyone asking why make a budget? Should read this article. It discusses the need and asks readers to set goals. It asks users for annual expenditures which many will find daunting. Perhaps completing our worksheet as a preparatory exercise will make their tool more meaningful. They do present the results of your work in nice looking charts and graphs.
- How to make a budget in 6 easy steps This site has a great number of articles and is definitely worth a visit.
- Better Budget Habits - Creating a Budget Bank of America presents a short article that is well written and well worth a read.
- Pay Yourself First Investopedia's article on "Pay Yourself First" is also worth a read. It points out that many households do not have a rainy day fund. Having such a fund will reduce stress.
- Nerd Wallet - How to Budget Nerd Wallet introduces the 50%-30%-20% concept. Your needs, your wants, your savings and/or debt repayment. Nerd Wallet suggests the old glass jar approach (they use envelops) to segregate funds into areas of expenditure. This site is worth a visit.