Tuesday, October 28, 2008

What's a Budget For?

One dollar here, one dollar there, and one dollar EVERYWHERE! This is what happens when you don't have a budget. At the end of the month, you just don't know where all the money is gone.

During our engagement, CJ and I wrote out a rough budget, but we did not follow through it during the first two months of our marriage. Only after we started attending the Crown Financial Ministry classes http://www.crown.org/, we started strictly adhering to the spending plan, and we cannot overstate the benefit of having a budget.

I. Know Where Your Money Goes

When we first got married, CJ and I had a rough draft of a budget which we had to write out during a finance workshop at a church during engagement. However, it turned out the budget was not very realistic as it was written when both of us were living without budget as singles.

To come up with a realistic budget this time, CJ and I started from the scratch. For two months, at the end of each day, we logged in all our spendings in a note, and kept all the receipts in an envelope.

II. Set a Budget

By the end of May, after two months of following our spendings, we were able to come up with a very realistic budget for each category: Income, Giving, Savings/Investment, Mortgage, Utility, Health, Food, Entertainment, Gas, Car maintenance, Bus, Clothing, School, Gift, Miscellaneous.
And this is when we started attending the 10-week long Crown Financial Ministry class at our home church. I believe the accountability we had with other attendants of the class gave us a strong motivation to stick to our budget.

III. Develop Your Own System

We continued our paper and pen system of logging in all our spendings daily, but we also created an Excel budget worksheet. Two or three times a week, whoever is in charge that month, that person will transpose the entries from the note to Excel table. The Excel table shows us how much we have spent for each category by a certain date of the month. It also shows if we are in surplus or deficit at a specific time of the month.