Budgeting rules are not laws that will strip you of your financial independence. They are your guide to financial success.
Your budgeting rules may not help you get out of debt in 12 months but it will help you get out of debt according to your payment schedule.
The more money you can pay on your debts the faster you will get rid of them.
Earn more> Pay Debt> Save More>Rinse and Repeat which also means for some people that a second or even third job is needed.
I can’t tell you what you SHOULD do because I don’t know your numbers this is why it’s crucial to have an in-depth look with your financial planner.
Since Mrs. CBB and I do our monthly budget together we were talking about what we’ve accomplished and continue to do to make our budget work for us.
Besides being on the same page financially we both follow budgeting rules that we feel have been crucial to our zero debt success.
This month will mark three years of us having total debt freedom since paying off our mortgage.
Often we wonder how we managed to pull that off before the age of 40 when so many of our friends are still trying to conquer their own.
Lots of faith, hard work, and continuous learning.
We understand that everyone has a different situation and at any moment everything could change.
Yes, but you earn more money then we do.<<<<< That’s NOT the point.
I believe some people feel desperate when they have exhausted all avenues of lowering debt.
There’s no magic budgeting disappearing app but what you will find is that good ole’ perseverance will be the difference between being financially free one day or living the rest of your life struggling to get ahead.
Preventing Budgeting Mistakes
We make mistakes with our budget once in a while, everyone will. It’s not bullet-proof but we look back at our mistakes and ask ourselves…
Could we have prevented this from happening?
Most often it is yes unless we have a projected expense pop up that wasn’t taken in account for when we created our 2017 Budget.
For example, you will see that we spent $661.36 in April for our 2003 vehicle with 147k and almost mint condition (a bit of rust starting).
Considering we only have our diaper viper valued at $2000 that’s a hefty amount of money to put into a vehicle.
I valued it on the low-end but considering the low mileage and state of this beast, I’m sure we could sell it for more.
Here’s the thing though, not everyone can afford to rush out and buy a new ride.
You can’t always project what will happen to your vehicle which means even though you may be saving money monthly for surprises it may not be enough.
Ideally, the reasoning around saving as a projected expense for this type of bill is to help ease the financial burden when you see what you owe.
I’m in the process of looking for a second-hand vehicle for us right now as we plan to gift our vehicle to my mother-in-law so she can get out on her own.
She currently has no vehicle and can’t afford to buy a second-hand car but could afford insurance and petrol.
In doing so we want to make sure everything is repaired for her and in good shape.
This is why we had no issue making the repairs and paying for them.
We hope she can get another 5 years or so out of it, increase her happiness and just feel free to come and go as she pleases.
So don’t panic about having to be perfect because life happens.
What you can do is make sure you do your best to project what may incur and save for it all year or until you have to dish out some cash.
Some people even roll their projected expenses into the next year if the money is unused which helps increase the pot and decrease stress.
Budgeting Rules 101
Our most important rule…. don’t forget the budgeting rules we set up for ourselves.
I’ve talked to couples and even single folks who start using a budget and then just forget about it.
YOU have let yourself down, no one else. Your money, your control.
When we got married and I moved to Canada I did not have a job so I was earning $0.
There were no government handouts coming my way subject to what some believe new immigrants to Canada get.
I wasn’t collecting welfare either because I couldn’t. Living on one income is all we had plus our savings.
My first Canadian job earned me $15 an hour which was more than I had ever expected but I needed to work.
Thankfully it was during my studies as I went back for more schooling and upgrading so I could enter a new career path.
Consider Your Options
If I was single I could have easily lived on my net income from that job which I am currently still working at but higher capacity and role.
I wouldn’t have rented an apartment but instead, a room and I would most likely budget my money very carefully.
I would avoid any debt and if I wanted anything I’d need to budget for it and pay cash.
These seem like simple budgeting rules to live by even though we didn’t use a formal budget back then.
This is the way I lived in the UK when I was single and earning around $20 Cdn and owned a two-bedroom house.
Find Your Feel-Good Moment
Whether you follow a budget or not there must be rules in place for you or your spouse/partner to abide by in order to reach your financial dreams.
Just because you earn minimum wage or even a few dollars more doesn’t mean you can’t become debt-free.
YOU have to make the changes.
An increase in the minimum wage won’t make a huge difference either as everything else will just go up in price and then you’re back at square one.
Baby steps in budgeting and paying off your debt is always better than convincing yourself that you will never be debt-free. Ditch the negative attitude and create a plan even if it’s the $5 a month to riches schedule. <<< That means it’s better to save something than nothing.
Stop thinking that debt is normal. You shouldn’t have the mindset that debt is a normal part of life, because this leads to thinking it’s okay to use debt to pay for everything instead of focusing on living debt free.- Michelle S. Making Sense of Cents. (Stop Normalizing Debt)
The same rules apply with debt.
It’s better to pay something than nothing but even better to pay more than the minimum payment which keeps you in their control.
Take an extra $5 and put it on your debt and you will see a difference.
It’s not going to be massive but it will be something.
Once you get the hang of it and see improvements or payment schedule decrease hopefully that will encourage you to keep going.
Compare the feeling of losing weight which is a huge burden to so many people but when pounds disappear, man does it ever feel good.
Your health and your financial health are two parts of your life that you don’t want to mess around with.
If you plan on budgeting with us without a spouse/partner consider incorporating some budgeting rules that you both agree on.
This holds you both accountable to the budget and will motivate you both to learn more about where your money is going.
Our Budgeting Rules for Financial Success
I’m not going to complain that we aren’t millionaires or earning mega bucks every month.
No, No just the opposite. I’m young, debt-free and earning a decent living. Nothing can take away that debt freedom not even someone who says budgeting sucks!
Our 5 budgeting rules are simple, straight-forward and always up for discussion.
- Always talk about purchases before we spend money
- Always discuss our monthly budget numbers, success, and failures with an Action-Plan.
- Always ask for a receipt
- Always keep financial information in one spot
- Always document our purchases in our spreadsheet (no cheating)
If you need debt help don’t be afraid to ask for it but remember that the owner of the debt is the person in charge of it.
How long does it take to pay off debt?
As long as how much your debt is and how much money you are putting down on it.
That’s pretty much the gist of it.
Your debt elimination plan is based on the rules which you set to get out of that hole.
If you don’t plan to see it through don’t waste your time trying until you’re ready to commit.
Budget or not rules are rules if you want something bad enough you’ll do whatever it takes even if that means date night in front of the budget spreadsheet.
Discussion Question: What are some of your budgeting rules and have they worked for you? What hasn’t worked?
Where our money went in April
If you read my blog post you’ll know where a nice chunk of our money went this month.
However, If you didn’t read my post, tis-tis!
I had a date with our vehicle this month and she cost me over $600 just for parts.
I had some help from a mate to cut down on repair time.
This means I saved on labour and tax on top of the labour.
April was a great month for us as we earned a bit more but we were also staying away from shopping as much.
We found that we are going to less and fewer grocery stores these days which means less temptation.
It’s so hard to say no to food… our worst budgeting enemy in the CBB house.
How was your budgeting month?
Pick a Free 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, 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.
Get Our Free Budget Spreadsheet
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 the 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 few months and see how it goes. Trial and error, remember that.
Our family budget plan
How we budget our monthly expenses?
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 are the rules of “living below your means”.
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.
Learn how to budget with Mr.CBB
Our Budgeting Series
Do you want to learn to budget as 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.
- How We Designed Our Budget Step 1– Gathering All the information
- How We Designed Our Budget Step 2– Budget Categories
- How We Designed Our Budget Step 3– Tracking Receipts
- How We Designed Our Budget Step 4- Note-taking
- How We Designed Our Budget Step 5– 5S Organization
- How We Designed Our Budget Step 6– Who Does What and When?
- How We Designed Our Budget Step 7– Balancing Our Budget
- How We Designed Our Budget Step 8– Knowing our Coupon Savings
- How We Designed Our Budget Step 9– Reading Our Bills
- How We Designed Our Budget Step 10– Projected Expenses
Budget Percentages April 2017
Just ignore the fact that I forgot it was 2017.
That’s a typo as I manually change the date on my charts each month. Oops… see we all make mistakes.
Our savings of 39.51% includes savings and investments and emergency savings for this month.
If you include the projected expenses savings, we actually saved 60.12% of our income. That’s $5739.58 going into savings or investments of some description or another.
The monthly total comes to 100% which shows that we accounted for all of our income.
The other categories were well within the defined percentage limits. Our projected expenses this month is at 20.61%.
Budget percentages 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.
Just 10 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.
- Chequing– This is the bank account where all of our debt gets paid from.
- Emergency Savings Account– This is a high-interest savings account.
- Regular Savings Account– This is a savings account that holds our projected expenses.
- Monthly Budgeted Total: $5187.39
- Monthly Net Income Total: $9546.87
- (Check out our Ultimate Grocery Guide to see where our grocery money goes)
- Projected Expenses: These are expenses we know we will pay for throughout the year = $1967.68
- Total Expenses Actually Paid Out: $5048.83
- Total Expenses Actually Paid Out: Calculated is $9546.87 (total net monthly income) – $1,967.68 (projected expenses) – ($2530.36) (emergency savings) = $5048.83
- Actual Cash Savings going into Emergency Savings: Calculated is $9546.87 (total monthly net income) – $5048.83 (actual expenses paid out for the month) – $1967.68 (projected expenses) = $2530.36
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 removing 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 2017.
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 $1967.68 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.
Example 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 essentially becoming 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 when I find some time I can incorporate that into our budget 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.
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 February 2017.
This budget represents 2 adults and a toddler plus our investments.
Budget colour chart
If highlighted in blue that means it is a projected expense. You will also see our budget does not include the emergency savings as it’s factored in at the end.
Budget for April 2017
Ugh… I forgot to change my allowance to $50 again. I better put this on my to-do list below.
Actual budget expenses for April 2017
June 2017 Goals
Here are our May 2017 goals along with whether we completed tasks from April 2017.
For the months of May and June, we will keep our goals small because of our future plans in June and July coming up quickly.
Once we are home for the summer we can tackle a bit more possibly hiring people to come in and get some of the renovations started.
- Our WILL is done.
- Start revamping old blog posts: I completed 2 in April.
Finish the master bathroom shower- As soon as we are back from a holiday in July I’m starting renovations.
- Buy a new blind for the garage- I looked at Value Village and on Kijiji but nothing yet. Ideally I would like to find one for free. I don’t need anything fancy, it’s just a garage.
- Finish revamping our son’s room- Would you believe we are almost done!! YES. All we have left to do is sort out his closet and peel stickers off the wall from his baby days theme.
- Start researching vacation spots for 2017- Booked and still looking for a kid-friendly vacation spot possibly in Spain.
- Hang paintings and wrought iron decor on the walls- Waiting for renovations;
- Purge our sons clothes and sell- Almost 90% done and sold some already. I can see across the basement again.
- Find some nice friendly personal finance bloggers to guest post while I’m gone- So far we’ve got 4 personal finance bloggers who will be supporting CBB on vacation and I’d like a couple more if anyone else is interested.
- Start cleaning up the soggy property from April showers- I’ve done this here and there but it’s been raining so much. I have weeded the front and back garden, raked and taken out any dead stuff. I’m a bit of a weed-a-holic as I like a thick lush lawn.
- Take the winter tires off the vehicle and put the all-season back on- I need to buy a set of all-season tires now… more money!
- Clean out the vehicle and detail the outside- done by yours truly.
- May- Change allowance on the budget sheet and remember it’s 2017 not 2016-
- Start thinking about new deck designs for July-
- Find the wasp nest or hire someone to do it –
- Clear out the garage
- Repair all window cranks in the house- One broke so I ordered all new cranks as the windows are in great shape. The one that broke just so happens to get played with by the little dude. I decided that if one could break they all could so I’m just replacing them all. $$$ but worth it.
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 2017 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 June 2017 to see how we made out with our May 2017 budget.
Happy Budgeting CBB’ers!
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