Everything you need to build your budget
Updated post: 9/5/23; Original post: 11/10/23
Table of Contents
Collect your transactions over the past year
Choose your tool to organize your transactions
How to start to build your spending plan
The most useful resource or tool spouses can use to build a budget is a complete history of your past financial choices. Before we get to that, let’s have an understanding of what you and your spouse hope to achieve.
I prefer to look at a budget as a spending plan. Planned choices to spend money are not a guilty pleasure; it’s planned happiness. A budget (spending plan) is not a long-term diet. It might be necessary to tighten your belts to pay down damaging debt obligations. After this is worked through, the approach to planned financial decisions should be a thoughtful balancing act between financial security and happiness now and saving for the future.
Every household has a different financial circumstance, but it can take hours to pull together what is needed to build a spending plan. Schedule time in your calendars for you and your spouse to get organized. Set alert reminders so you remember.
Collect your transactions over the past year
Credit card transactions. Most credit cards allow you to download transactions into a CSV file. Doing so will save you time and headaches when you organize your transactions.
Checking account transactions. Most banks also allow you to download transactions into a CSV file. If not, you’ll need to download the monthly statements in a PDF. This will capture all transactions through your checking accounts, such as debit cards, checks, and ATM withdrawals.
Savings account transactions. You can likely download your records just as you did with your checking account. Be sure not to double account. For example, if you moved money from checking to saving and then spent that money from your checking, this should only be one total withdrawal.
3rd party mobile wallet transactions. Download withdrawals from contactless payment options such as Apple Pay and Venmo. You’ll need to cross over transactions to ensure they are not double-counted between the app and the connecting bank account.
Brokerage account transactions. These accounts are typically viewed as investment accounts commonly used to buy and sell securities (e.g., stocks, bonds, mutual funds). There are no penalties or limits for withdrawing, and some brokerage accounts have services similar to checking accounts.
Cash on hand. Whether it is the penny jar or piggy bank, you’ll need to estimate how much you spent using cash that is not reflected in any bank account withdrawals.
You’ll need to categorize each transaction as a debit (money out of your account) and credit (money into your account). Do not double count credits, such as paycheck deposits and transfers between accounts.
Choose your tool to organize your transactions
Mint According to Mint, “...you can effortlessly manage all your finances in one place. In just minutes, you’ll see where your money is going and get ideas on how to stretch it farther.”
The Mint Quick Guide is easy to follow for beginners.
Mint does NOT allow for you to import downloaded transactions from other accounts such as checking and credit cards.
YNAB Per the YNAB webpage, “...The YNAB budgeting app and its simple four-rule method will help you organize your finances, demolish your debt, save piles of cash, and reach your financial goals faster.”
The YNAB Ultimate Quick Get Started Guide has easy to follow setup instructions.
YNAB DOES allow for you to import downloaded transactions from other accounts.
Honeydue “...a free mobile app that makes it easy for couples to stay on top of money - whether you just moved in together, or celebrated your 25th anniversary.”
The app itself guides you through the setup process. Unfortunately, a CSV file cannot be imported into the app.
Excel Spreadsheet / Google Sheets: My wife is in the payments industry and lives in Excel, and I love to customize tools for us. We have tried each of the above apps, but Sheets works best for us. 10 Best Free If you're a novice, look at Courses to Learn Microsoft Excel for Beginners in 2022.
Additional budgeting apps to consider include Quicken and Personal Capital.
Categorize your expenses
To reduce your spending, categorize your expenses: fixed expenses, variable but automatic expenses, and variable expenses.
Fixed expenses do not change from payment to payment. Common examples of fixed expenses include fixed-rate mortgages and auto loan payments.
Variable but automatic expenses will be a great place to start cutting costs. These expenses are often paid automatically, but the costs can increase over time. Examples include subscriptions, insurance, and cell phones.
Variable expenses can vary day by day. Think about how frequently you or your spouse order from Amazon, eat out, or attend a sporting event.
Schedule a Money Date
You and your spouse are not spreadsheets. You are people with emotions, and it can be potentially contentious if financial infidelity has occurred.
Put time aside to build out your budget together. You will need to be in a comfortable and peaceful environment and schedule enough time not to feel rushed. Look at my previous post if you need to familiarize yourself with what a Money Date is or how to go about it.
How to start building out a spending plan
When you start to build out your spending plan, begin with what you each enjoy spending money on the most and work backward. Consider writing your preferred spending choices down separately and then coming together to find what you have in common. And that is the best place to prioritize how you should spend your money.
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