Ever since before we got married Sarah and I have been money nerds. When we launched Couple of Sense we had an outlet (besides each other) to talk about money. This outlet lets you read into the inner money dork in us, our concepts and habits that really drive our voice. We may not be completely unique in our dweebing out (1st paragraph and I already have used three variations of nerd). What is important to us in our budget is analytics. In order to have pertinent stats, we need to gather data. This is where we really rev our engines.
What makes every part of our budget file work is the data entry. Every dollar we spend gets entered as a line item. This can be tiresome sometimes but we try and not let the pile of receipts go too high so our data is up to date. Sometimes we do since we are only human. The only exception is our allowance, which is a small amount of money each month we take out in cash to spend on whatever we want. The data we input for each receipt is as follows:
- Date of Purchase
- Which Card Was Used (Credit, Debit, Etc)
- If On Credit, What Month the Bill is Due
- Description of Purchases
- Budget Category
We also have a few other columns but those are mostly used to consolidate our credit card bill when payment is due.
One often used spreadsheet in our household budget is the spending analysis chart. This is pretty simple but has some great data. We have a list of every budget category (mortgage, taxes, groceries, etc) and a column for each month that pulls that data from the data previously entered to tally up spending. This gives us a snapshot of what we spend on a monthly basis, what percentage is on savings vs needs vs wants, and provides averages spent over the course of a year.
This is extremely helpful information when we do a budget review. A lot of people fall into debt because they have no idea where their money goes. Through cash purchases and racking up lines of credit, eventually the spending plus interest ends up outweighing your income. As soon as you make this turn, debt is right around the corner. Having the information in front of us lets us make informed decisions based on real numbers. It isn’t helpful to say things like “We are overspending, we are going to cut our gas to $200/month” if that isn’t a realistic target.
Another valuable part of the data we gather is that we can see and graph trends in our spending. Throughout the year some fixed costs may vary. Natural gas for example may be a bit higher in the winter due to the use of the furnace. Water consumption may go up in the summer due to lawn care. Fresh produce is cheaper when it is in season, but if you like BBQ as much as I do you might have an increase in your propane costs. These trends are important for making and for changing your budget. You’ll need to save more when costs are low so you can afford the things you need when costs are up. Seems simple but a lot of people feel the need to spend every dime they make whether they need to or not.
Amount On Hand vs Amount Available
I mentioned earlier in the post that we include additional columns in our data entry that are used for bill consolidation. If we make a purchase on a credit card, we consider that money unavailable from our account. To help us keep on track, on our summary page we have a calculation that shows both the actual cash on hand as well as the amount that is actually available. If we have $100 in groceries, and then spend $40 on a credit card – this gives us a visual representation of what we have left to spend. If you just look at your chequing account balance and don’t take into account credit card spending you may end up in the red.
Of course you can do the same thing if you use debit cards or cash instead of credit. If you have trouble with keeping your spending in check it is probably best to ditch the cards until you form better spending habits. Cash back and point cards are great – but not worth going into debt over.
Every weekend we write out a to do list – it keeps us on track to make sure we don’t blow entire weekends. On every to-do list we have the words “bill payments”. This isn’t only to actually pay any bills that are coming due. We take the opportunity to enter any receipts that haven’t been put in throughout the week. This is also a great time to check in with each other on the budget. It is important to us as a couple – and as personal finance bloggers to keep the lines of communication flowing when it comes to our joint finances. Communication is one of the greatest tools to avoid disputes. Communication makes us a Couple of Sense.
Do you have any geeky money habits that help you with your finances?
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