I doubt that paying bills is on anyones list of favorite monthly activities, but the fact of life is that it cannot be avoided. When Chris and I bought our first home back in January, I was completely clueless on how to manage and budget our two sets of income. Much less on where to even begin on creating an efficient system in our home and life to get the job done. This lack of knowledge left us living pretty paycheck to paycheck the first few months of homeownership. When we finally found a budgeting system that worked. Our entire financial situation changed and we are now living much more freely.
I am in no way saying we are experts, but I thought these tips might come in handy for anyone who might also be struggling in the budgeting department. I know many people our age are now in the same boat as us, so I wanted to share a few tips I’ve found to be super helpful along the way.
Step 1: Make a detailed list of all living expenses:
This is the step that requires the most attention to detail. I’ll be honest, it can be a little overwhelming at times. The point of this step is to see exactly where you’re putting your money each month. I like to separate our “fixed” costs like bills and debt from our “house hold wants” such as groceries, entertainment, etc.
Step 2: Find your monthly income-
I am a paycheck to paycheck budgeter and I also like to use a method called the Zero-budget method. I budget this way because I get paid hourly so each paycheck slightly differs from the last. However, for many people (like Chris) work off salary and know the exact number you will make each month. So in order to find our bi-weekly & monthly budget I look at past bank statements and find the average of what we have made combined, and then go in and tweak it a bit when I get my exact paid amount.
Step 3: Decide on a pay schedule-
Pay your bills according to your monthly paycheck. I live by this bill motto “If most of your income is solely focused on each of your paychecks, shouldn’t your expenses also be focused on each of your paycheck too?“. Aka organize all of your bills based on each paycheck/ bi-weekly average in my case. Look at your bills and their due dates along with the average cost of your “household wants” from step #1, decide what bills must be paid using your first paycheck, and what bills need to be paid using your second paycheck. Below I have provided a mock calendar to give you guys a visual of what I am talking about.
Step 4: Make adjustments-
This will be different for each household but in general you’ll want to start prioritizing where you’re putting your money. You’ll need to play around with your budget and priorities to see where you can add and subtract from within your budget.
Example: Chris and I didn’t have room in our budget to pay for both cable
and internet, so we opted for internet and invested in an apple tv.
I was introduced to a super helpful budgeting app called Everydollar. This budgeting app helps you get your personal finances on track. It uses the zero-budget method to better help you follow a daily, weekly and monthly budget. It also allows for easy adjustments.
Step 5: Monitor-
Just because we have paid our bills, does not always mean it actually happened. I find that this is usually the case with online bill-pay and auto-pay. You never want to assume a bill was paid until you have verified that it was deducted from your bank account. As a banker I see this happen on a daily basis. With online bill-pay there can sometimes be internet glitches that cause payments to be missed or never fully processed. With auto-pay sometimes we forget the read the fine print and miss the part where it states that it needs to be renewed every year, and if it isn’t renewed, it simply stops drawing from your checking account. So always monitor your bills and checking accounts.
No household is alike, and I totally understand that. This exact system may not work for everyone, but I do think that everyone can take something away from 1 or more of my budgeting tips. Weather that be a helpful budgeting app like Everydollar or an easy and efficient system like the Zero-Budget Method.
I would love to hear about your budgeting tips and tricks that help keep your household running! Leave me a comment down below or feel free to email me!