It’s been a while since I’ve written a post like this, but there are a few questions that keep popping up in my inbox and in comments: Do you budget monthly or per paycheque? If you have money leftover in your account before your next payday, what do you do with it? Do you keep a buffer in your chequing account? And how do you really track your spending?
When I first started reading these questions, I thought, “haven’t I already answered these!?”. But in looking at my budget template and posts on how to write a budget, it doesn’t look like I have – at least not in one post! So, for those of you who asked, I haven’t been ignoring your questions; I just decided to answer them here, for all first-time budgeters (and financial voyeurs) to read.
Why I Budget Monthly
After posting nearly 40 monthly budgets here, the answer to the first question is that I do, obviously, budget monthly. The reason I budget monthly is because there are so many fixed expenses that pop up once per calendar month. I pay rent monthly, internet and Netflix monthly, all my insurance policies monthly, healthcare monthly, make donations monthly and I also go to massage therapy monthly.
Based on a number of conversations I’ve had recently, I get this sense that people think budgets are these big scary monsters that are going to control all your money. That’s not true! I promise! My monthly budget is just this awesome guide that I use to a) remember what all my fixed expenses are, and b) review and tackle my savings goals. It’s not in control of me – it puts me in control of my money!
Why I Also Budget Semi-Monthly
Now, even though January’s budget looks nice up there, I still also budget semi-monthly. I get paid on the 15th + 30th of each month (so there are no 3 x paycheque months for me) and it’s important that I use that money wisely. Like I said, my monthly budget is just a guide to keep me on the right track. If anything, payday is when I do my real budgeting…
On Payday #1 (the 15th), I set aside half of my rent, then pay all my utilities, insurance policies, healthcare, etc. Basically, every fixed expense filed under “Living Expenses”. Then I tackle my “Planned Spending” savings goals, because they are all small. On Payday #2 (the 30th), I set aside the other half of my rent and tackle my “Long-Term Savings” goals. (This payday is my favourite!)
The few hundred dollars leftover, after I pay and save for all of these things, is what I use for groceries, gas, entertainment, personal care items, etc. You’ll notice that I give myself a small buffer with Payday #1; that’s something I consciously do, knowing that that payday is technically all my spending money for the rest of the month, so I like to have a little wiggle room.
Now, up until a few weeks ago, I used to login to my online banking the night before payday and move whatever was leftover in my chequing account over to one of my savings accounts. I don’t do that anymore. I’m not sure if it’s because I feel safer with my topped up Emergency Fund, but I just prefer to have a buffer (~$250) in my chequing account for the “what if’s”. So, that answers two questions.
Why I Also, Also Budget Weekly
Finally, I don’t actually budget weekly, per se, but I do still track my spending weekly. This is a habit I built into my life way back in the day, when I first started this blog and posted a weekly spending report every Sunday. Today, my Sunday morning ritual still includes making coffee, logging into all my accounts and adding new spending into my monthly budget.
Tracking my spending weekly lets me see where I’m at, and if I’ve gone over anywhere, so I can plan for the weeks ahead. As you can see, I’m having a pretty good month, so far! (And this was updated last night.) The somewhat impulsive decision to chop all my hair off set me back $60 (under Personal Care), but fortunately, there’s still lots of money to eat with… and that’s all I need!
To recap, I budget monthly and per paycheque, I do keep a buffer in my chequing account and I track my spending (in Excel!) every week. If that sounds like a lot of work, I must repeat that my monthly budget is just a guide! It’s like a checklist of all the things I have to pay for, with an extra list of what I want to save for. And I wouldn’t be where I am today without these little spreadsheets of mine.
I hope that answers all of your questions! If you have more, ask away! I could talk about this stuff all day.
Long-time budgeters: Any personal techniques you want to share!?