Add 1 Cup of Budget Inspection And Watch Your Bread Rise : Our August 2016 Budget Report

add-1-cup-of-budget-inspection-and-watch-your-bread-rise

DON’T MAKE THIS MISTAKE WHEN CREATING YOUR FINANCIAL RECIPE.

 

By mistake I don’t mean turning the oven on and burning your budget either as I know some people despise using a budget. I have nothing against you because what’s yours is yours and what’s mine is mine.

Those of you who WANT to get RID of DEBT and build a thundering savings account and sizable retirement fund I have one unique financial tip for you-learn to read a recipe.

I’m not the Mike Holmes of Budgeting nor the Jamie Oliver of the kitchen but I do know how to read a recipe and I do know how to use a budget. What I’ve learned is that it’s not about just the planning stage it’s everything in between and on-going maintenance similar to being a homeowner or naked Chef.

 

Read a recipe and savour your budget

 

Once you understand the basics of a recipe especially when it comes to baking you will understand just how precise you need to be to have the best product. Finding a recipe you are interested in creating at home means you should read the entire recipe from beginning to end.

Today we are going to bake a loaf of bread. Why bread? Well we often compare Money to Bread or bringing home the bacon. Either way for bread to rise you need to follow instructions, use the right ingredients and always keep an eye on the oven.

The same goes with your financial situation because your budget will either make you happy or piss you off. The only reason a budget will fail is because you aren’t following it like a recipe and keep substituting ingredients that don’t work with it.

In the process of reading a recipe your mind starts questioning whether you have all the ingredients, cooking utensils or the skill to complete the task. Most often you may get away with missing an ingredient but the taste will never be the same or the product may look different. Always consider your options with any elimination process.

For example, if your goal is to save $1000 for the year but you keep taking money away from that savings goal eventually your bread recipe will flop.

Substituting ingredients to enhance a recipe is a better option than leaving something out completely. You see every ingredient in a recipe has a job to do even something as simple as a pinch of salt to enhance flavour. Your savings category is there to enhance your financial security and without it you may feel punctured similar to a deflated loaf of bread.

Once you decide you’ve found the best bread recipe you purchase the ingredients you don’t have on hand or you prep your cooking station using what you’ve found in your pantry. Just remember that if you tell yourself that your bread recipe doesn’t need a certain ingredient it may not rise or taste the way you want it to.

Taking the yeast out of a loaf of bread is like removing your savings category. You’ll end up with a flat pita or flat broke.

 

Give rise to budget inspection

 

Similar to budgeting when baking you need to locate the ingredients to make sure that you can complete the task. A budget requires sifting which means every month you should complete a budget inspection to see what you can add, eliminate or substitute for best results.

Keep in mind when you eliminate something from your budget just like a recipe you have to ask yourself three questions;

  • Why am I eliminating this?
  • How will this improve my budget?
  • Can I substitute it with something comparable?

Removing something from a budget that is critical may be a mistake you don’t want to make. For example: Eliminating emergency savings to pay down debt. I an a strong believer that everyone should have some savings for a rainy day that they own. That means no credit cards, line of credit or calling a life-line for support.

Paying debt off is very important but so is making sure your recipe rises or bank account grows. Don’t deflate the loaf of bread before it has risen, watch the temperature and never open the oven unless you have to. Same goes with using your emergency money, only use it for emergencies.

Everything we do requires inspection even our monthly budget which is why a budget inspection is not only critical but this simple step can speed up your debt repayment process and keep you motivated.

Your budget isn’t going to call you up on the phone every month to give you a sunny run-down of what’s been going on, this is YOUR JOB. Feed yourself because no one else will come around to make sure your recipe is a success.

How do you complete a budget inspection?

A budget inspection is NOT meant to cause you stress it simply is an in-depth look at how your budget is working for you and making changes that need to be done for a successful recipe.

What Mrs. CBB and I do is every month we sit together with our budget spreadsheet and review it in it’s entirety. There have been months where we notice we are spending too much or our receipts are showing expenses that we need to add to our projected expenses.

We make notes as we go along and decide whether we need to make changes now or in the new year when we revamp our budget for 2017. Sometimes you need to change your budget numbers because your bills increase or decrease. You may also notice that you have a budget category that doesn’t get used or one that is missing.

Whether you are single or budgeting with a spouse completing a budget inspection not only encourages you to keep budgeting but eventually you become your own budget expert. You should know everything you need to know if I were to ask you questions about your debt and budget. This my friends is budget success!

 

Get to the point where budgeting becomes a habit and not a chore that you despise.

 

If you’re one of those people who want to get rid of debt and are excited to use a budget but call it a day once you have it set up and hope it will work it’s magic, you will fail.

A budget is not complicated nor is it easy but what it takes is a bit of elbow grease to get the right elasticity to help increase your knowledge base. Watch it rise the more stretch you put into it and soon enough you’ll be buttering your bread with a smile.

I’m not afraid to be blunt about budgets because I’ve talked to so many people who either don’t budget or put very little effort into keeping a budget on tap. Some people get so excited to start budgeting and things start heating up, the budget is cooking and then they let it sit on warm for too long and eventually it’s forgotten.

This is when the excuses debut…

  • I didn’t have time to budget
  • I didn’t understand how to budget
  • My spouse won’t budget with me
  • We don’t earn enough money
  • We will never pay off debt
  • It’s easier to go bankrupt and start over
  • Parenting is too stressful to budget

It would be interesting if you could film yourself so you could listen to what your mind is telling you. Most often we act out what we tell ourselves unless we fear the outcome. We have more conversations with ourselves then we do with real people and often we are our own enemy because we forget to fight back for what we want. Don’t let this happen to you because you’ll end up with a flat loaf of bread.

Don’t fear your Debt but most of all Don’t fear Budgeting. You too can be successful even if you are working with low-income. It’s not about how much money you have it’s how you save it. Put that on your refrigerator.

Every recipe needs tender love and care as does your finances so complete a budget inspection often and clean up any mess that’s trailing behind. Don’t be afraid to butter your bread especially when you’ve worked hard to keep it in your pocket.

How often do you complete a budget inspection?

 

Where our money went in August

 

august-2016-month-income-and-expenses

In August we spent a little more on life by going out and doing something as opposed to staying at home. I was also working less over the summer and really enjoyed the time off at home with the family.

I’m back at my second job now but have opted to get fewer hours than I did earlier this year so I can focus on my family and getting the renovations done around the house.

With our budget inspection this month we started talking about increasing our grocery budget in the coming year. With the rise in prices, the little one eating more and the wife eating low-carb we likely will have a small increase.

Mr.CBB

 

Pick a budget that’s right for you

 

I’m currently offering 2 versions of our budget and the reason behind it is simple. Firstly, read the CBB blog disclaimer because what you do with it is your own business so if you mess it up you need to sort that out.

I have not closed off any cells so you can make all the changes you like to the budget to reflect your lifestyle which is what you asked me for in your emails. (See I do listen and read your comments and emails)

Although I would love to help every single fan with their budget I am unable to do so but I am always willing to answer any emails you send me so don’t be shy.

This was after all meant to be our personal budget and although I would love to customize it for every fan that wants to use it but, I’m afraid I cannot.

I’m not selling this budget or hope to make any money from it so enjoy this free budget and I hope that it works for you as much as it does for us.

 

Our free budget spreadsheet

 

cbb budget screen shot compressed

You can download the free budget spreadsheets here.

  • Budget 1– You can use the pre-existing categories or you can use your own if you wish and you have the option to use projected expenses or not. Please read all notes left around the budget for tips.
  • Budget 2– Everything is pre-set so you have to use the pre-defined categories but this budget will generate year-end budget figures where the other one won’t but you must use the categories already in this budget. If you change anything you will mess up the formulas and year-end figures.
  • Please read all notes left around the budget for tips.

Test the budget for a month and see how it goes.

 

Our family budget plan

 

How we budget our monthly expenses?

I often have fans ask me how to budget money on a low-income or they simply have a high debt load and want to kill it like my friend Tony who got rid of over $100,000 worth of debt by using a budget.

CBB fans want to know what we do in order to save so much money and the reply I give is simple>> It’s not about the money it’s about the process involved.

We are both money managers of our finances and with our relationship compatibility we have been able to get to where we are in 2016, debt free.

It doesn’t matter if you are using a cash only budget or you use your debit and credit cards, if your budget doesn’t balance you have budget issues you should check it pronto.

Learning how to be your own money manager is important because no one else will care about your money more than YOU!.

We don’t always save as much money as we would like every month but most importantly we are not going into debt but only because we are budgeting our money. In fact we are currently debt-free including the mortgage which means all we pay for is our monthly bills and expenses.

One of the most important things we did for our personal finances was that we never let the budget deter us from reaching our goals.

Sure we’ve had crap months but we’ve made up for it or we learned from our mistakes just like we should. Budget failure only occurs when you give up on your budget which should not happen as long as you truly want to reach your goals.

We didn’t always earn the income we do today but made do with what we were earning so we didn’t go into debt. That my friends is called “living below your means”. The only science to becoming rich!

Sometimes fans email and ask me if living on a budget in Canada is any different from living and budgeting in other countries. To be honest I’m going to say, probably not.

If I still lived in the UK I could use this exact budget spreadsheet to meet all of my needs however the budget needs to be reviewed monthly.

Below are links to the budgeting series which I wrote while designing our excel budget spreadsheet which will give you an idea just how we designed our budget.

I’m not a financial planner/advisor so I can’t tell you how you should budget but I can show you how we budget. I’m just a regular guy just like everyone else; some might call me a budget or numbers nerd.

 

Learn how to budget with Mr.CBB

 

Our Budgeting Series

Do you want to learn to budget like we do?

We explain everything we do and more in this mini-series below all about budgeting.

Please take the time to read through our budgeting series plus read Budgeting in the New Year. I hope the information will help stop you from making common budgeting mistakes that I hear of often and that you take something away from the information and apply it to your financial situation.

If you have any questions about what we do with our budget money tracker feel free to email me.

  1. How We Designed Our Budget Step 1 Gathering All the information
  2. How We Designed Our Budget Step 2Budget Categories
  3. How We Designed Our Budget Step 3– Tracking Receipts
  4. How We Designed Our Budget Step 4- Note-taking
  5. How We Designed Our Budget Step 5– 5S Organization
  6. How We Designed Our Budget Step 6– Who Does What and When?
  7. How We Designed Our Budget Step 7– Balancing Our Budget
  8. How We Designed Our Budget Step 8– Knowing our Coupon Savings
  9. How We Designed Our Budget Step 9– Reading Our Bills
  10. How We Designed Our Budget Step 10 Projected Expenses

 

Budget percentages August 2016

 

august-2016-household-percentages

Our savings of 28.30% includes savings and investments and emergency savings for this month. If you include the projected expenses savings, we actually saved 52.65% of our income. That’s $4146.61 going into savings or investments of some description or another.

The monthly totals comes to 100% which shows that we spent our income this month and used the rest as emergency savings.

The other categories were well within the defined percentage limits. Our projected expenses this month is at 24.35%.

 

Budget percentages month by month

 

august-2016-month-by-month

 

Breaking down expenses

 

This is simply a breakdown of our expenses which has helped us to understand where all of our money goes. Since May 2014 we have been mortgage free so much of our money will be directed at savings, investments and renovations.

I appreciate that you enjoy this budget update each month but I do hope you view this as an educational tool rather than comparing your own financial numbers as our situations are all unique.

Although I encourage your comments and love to hear what you have to say about our budget categories and expenses please don’t tell us to donate our money to charities because we have too much or are fortunate. We are hardly out of the clear with finances for the rest of our lives and have worked and sacrificed to get where we are. We do plan to enjoy the money we’ve saved now since we haven’t over the years with our son.

What we do with our “extra cash” is our business and although we do donate to a charity we won’t be putting it on display for the world to see as it defeats the purpose in my eyes. It is part of the budget as you see it. I hope that clears that up for those of you who had concerns about our extra money.

Almost 9 years ago I started working in Canada making a bit over minimum wage and have since moved up the ladder. I’m now working very hard to secure my dream job with one foot in the door. We aren’t all lucky but if you do the best you can at least you can look back and say you gave it a shot.

Sometimes we wish we had more money to budget with but understand that we only have what we earn and if we want more, we need to earn more. Spending less than we earn and budgeting our money has been the easiest way for us to pay down debt and save money.

  1. Chequing– This is the bank account where all of our debt gets paid from.
  2. Emergency Savings Account– This is a high-interest savings account.
  3. Regular Savings Account– This is a savings account that holds our projected expenses.
  4. Monthly Budgeted Total: $5093.64
  5. Monthly Net Income Total$7875.81
  6. (Check out our Ultimate Grocery Guide to see where our grocery money goes)
  7. Projected Expenses: These are expenses we know we will pay for throughout the year = $1917.68
  8. Total Expenses Actually Paid Out$4983.06
  9. Total Expenses Actually Paid Out: Calculated is $7875.81 (total net monthly income) – $1,917.68 (projected expenses) – $975.07 (emergency savings) = $4983.06
  10. Actual Cash Savings going into Emergency Savings: Calculated is $7875.81 (total monthly net income) – $4983.06 (actual expenses paid out for the month) – $1917.68 (projected expenses) = $975.07

 

How to save for future expenses

 

What are Projected Expenses? – We project expenses throughout the year so we have the money saved. PE= A projected expense is money automatically saved each month so it is ready when the bill comes in or when you need it as in the example below.

We review our projected expenses at the beginning of the year to set up our yearly budget and adjust as we go along if a new projected expense arises and needs to be added to the budget. Sometimes we remove a projected expense as well so it’s very important to keep an eye on your expenses.

This has happened on many occasions but it’s bound to happen as we can’t predict everything we have to pay for over the course of the year. The important part for us is that we are saving for these expenses and we no longer have to stress about taking money from our savings to pay for them. To learn more about projected expenses read Step 10 in my budgeting series.

When we spend the money in a projected expense category we move that money to our chequing account in order to pay for that incoming expense. So this means the numbers go up and down in the projected expenses account based on what we need to pay for that we saved for in the account over time.

The only thing you need to do is track your projected expenses each month manually as I can’t customize that for you in the excel budget spreadsheet as I don’t know what you will use for projected expenses.

For now we will have to manually track which means month after month we add up what we save in each projected expense category and minus what we spend so we know how much we have and what is left in each category. I have updated our personal excel budget spreadsheet for 2016.

We pay money into the projected expenses account continually throughout the year even when bills come due as its revolving so as one bill gets paid the money continues to come in from the other categories all year-long. This ensures that money is always available. It may not always be enough but having something ready is better than having nothing at all and having to use credit.

So the $1917.68 gets paid into the projected expense account every month no matter what. It seems to be easier to track our money this way but you can do what works best for you.

Sample Projected Expense

If our clothing category was a projected expense we would have a budget of $50 per month for the two of us. If we spend $30 on clothes for the month that means we need to pull $30 from the projected expenses account to pay for this expense or we move only $20 to projected expenses for the month and leave the $30 in your chequing account.

It’s up to you how you do it as I mentioned above. My plan is to create a projected expenses spreadsheet to track the expenses all year-long otherwise you need to do it manually which we currently do in order to make sure we don’t overspend what we haven’t saved or will save over the course of the year.

It’s a fairly easy process and becomes a lifestyle change for your finances but the most important part is that the money is available and saved, which means potentially less stress.

This means we should have $600.00 per year for clothing to spend. We have to track that expense as we spend it manually but hopefully for our 2015 budget I can incorporate that into our spreadsheet so it tallies the numbers up as we go along. That way we will be able to know exactly what we’ve spent as an ongoing total.

(Note: I am working on this but slowly as I wasn’t anticipating all the extra hours with my second job)

 

Budget Results

 

Time for the juicy category numbers and to see how we made out with our monthly budget. Below you will see two tables, one is our monthly budget and the other is our actual budget for the month of July 2016. This budget represents 2 adults and a toddler plus our investments.

If it is highlighted in blue that means it is a projected expense. You will also see our budget does not include the emergency savings as this is factored in at the end.

 

Budget for August 2016

 

august-2016-monthly-budgeted-amounts

 

Actual budget expenses for August 2016

 

august-2016-actual-monthly-budget

 

August 2016 Goals

 

Here are my September 2016 goals along with whether I completed tasks from August or not.

  • Call around to lawyers to talk about getting a Will written up- Nope big fail again.
  • Finish sanding and stain our sons kitchen table and chairs Fail. We’ve decided to just give it away as we have enough kiddie furniture.
  • Start revamping old blog posts (2 a month)- I completed 1 in August.
    Finish the master bathroom shower- Fail, however the wife and I started talking about getting it done as we’ve bought more renovation materials.
  • Pick out new tiles for bathroom and accessories (mirror, towel bar holder etc.)- Pass We picked out tiles and accessories.
  • Buy a new blind for the garage- Fail It’s just not a huge priority but it’s hanging on. I’ll get there.
  • Finish the walls in the baby room- We moved almost all of his toys to his room to eliminate distraction for him. Now we need to either sell or giveaway what he doesn’t need or use and finish the room.
  • Write down what we want in our new kitchen- We may end up targeting the basement first. We’re still talking about this.
  • Start looking at pricing for a new insulated garage door- Fail
  • Buy a pressure washer- Fail but I’m looking and waiting for the one I want to go on sale.
  • Start researching vacation spots for 2017- Looks like we may go to Spain and England.
  • Hang paintings and wrought iron decor on the walls- Fail 
  • We will be making basil pucks for the winter staring in September.
  • Sand and protect the deck for the year- We will be adding a pergola to the deck so I’m going to be working on this for the rest of the summer. I’m in the planning stages now and am hoping to buy the materials from Home Depot in August.
  • Purge our clothes little by little– We managed to give away 1 box of clothes in August.
  • Clean out the entire garage- I cleaned the garage again this month but only half as the other has our second vehicle which is collecting tonnes of dust. I am considering selling it and banking the cash until we need to get a new vehicle.
  • Kill the ants- Gone!
  • Cut open the central vac system so I could remove part of our son’s train set that he fired down the chute.- Pass and hope I don’t have to do that again.
  • Tidy up the office (or else)- Um, nope.
  • Order new plugs and leads and replace them for the vehicle in August– Pass
  • Fix the strapping on our second-hand 3 seat swing– I was looking into costs to get new vinyl and they want over $100 for a roll. We had 2 straps break due to sun damage which was a bummer since we had just bought it used this summer. The other day while out walking with the boy a neighbour had the EXACT same lounge chair as our swing with the same cushions. I picked it up for free on the curb so I’ll strip the vinyl and use it to repair our swing for FREE.
  • Dusted the ceiling fan which is about 25 feet up in the ceiling as well all of my travel decor.
  • Installed my dash cam that the wife got me for my birthday, finally!
  • Take a look at the Christmas lights as some of the bulbs aren’t happy
  • Start Fall tidying up outside

What did you do in August?

 

Budget updates month by month

 

In case you missed our budget updates and want to do a quick search I’ve compiled them all on one handy page: monthly budgets. For the 2016 Year I will also keep track of each month below and update the monthly budgets page.

That’s all for this month check back at the beginning of September 2016 to see how we made out with our October 2016 budget.

Happy Budgeting CBB’ers!

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Cover Images: Image courtesy of lemonade at FreeDigitalPhotos.net

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Mr. CBB
Mr. CBB was born and raised in the United Kingdom who then moved to Canada where he is a permanent resident. He recently became a father to a very busy toddler who allows him to be a kid at heart. He bought his first house at the age of 21 after University and his second at the age of 24. Both Mr.CBB and his wife are Debt and Mortgage Free and they did it all in under 5 years using a Budget. Canadian Budget Binder is a place where he shares their financial experiences with his readers and hopes to learn about theirs. Welcome to CBB!
Mr. CBB
Mr. CBB

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