Welcome to the start of The Teacher’s Salary series!
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Click HERE to see links to some of my posts from this series.
Before we really dive into this series and today’s topic, I feel like I have to put this whole budgeting topic in perspective. While I certainly have moments of frustration with the fact that The Teacher has not seen a pay raise in 6 years and that teaching in general is an underpaid profession, I know one thing.
WE ARE RICH.
I’ve had to give myself some reality checks through the years. Compared to the rest of the world, a teacher’s salary is very wealthy. It’s a tough pill to swallow some months when I sit down to pay the bills, but it’s a good reminder. Keeping things in perspective is important.
Now, onto the first topic and one of the most important ways we are able to live on The Teacher’s salary. Today, let’s talk about the basics of budgeting. There is no way we could survive each month without planning our spending ahead of time….or in other words, creating a working budget each month.
What is a budget?
A budget is nothing more than a plan for how you will spend your money. Rather than your money just quickly exiting your account, a budget is your way of telling your money where it will go in advance. There is nothing magical or mystical about it. It can be written out on a scrap piece of paper if you wish. It doesn’t have to be complicated.
Setting up a monthly budget might sound strangling and stifling, but I’ve found that it does the opposite. By telling ourselves where our money will go ahead of time, there’s no guilt in spending it. And if we’ve budgeted accurately, then there should be no wondering about whether or not there will be enough at the end of the month.
How It Works for Us
The nuts and bolt of how to set up a budget is very personal. Depending on your personality, you may choose to use a software program or maybe you are a pencil and paper sort of person. Here’s what has worked for us.
If you are married, it’s important to talk through who will prepare the monthly budget. At some point during our engagement, The Teacher and I began talking about who would be the money manager. Since I’d always enjoyed balancing my own checkbook and The Teacher didn’t seem interested in starting to balance his, we decided that I might be better suited to take on the role.
From what I understand, it’s fairly common for one person to be better at budgeting. While that might be true and work well for many people, we’ve found that it can sometimes be overwhelming for that person doing the budgeting and the other person can sometimes feel left out of the process.
I typically plan the preliminary budget for the upcoming month, but The Teacher and I will sit down together to review it and make any adjustments as a team (I don’t always know when his car needs maintenance, etc). He feels like he’s part of the process and I feel like I’m not carrying all the weight either. We’ve also implemented a weekly budget check-in meeting to ensure we are both on the same page as the month progresses.
The main thing is that you find out what works for you as a couple. If it works better for one person to do it, then great! But maybe you’d prefer to rotate back and forth each month.
Since The Teacher gets paid at the end of every month, I sit down to start the budgeting process a couple of days before he will get paid. We don’t finalize everything until his paycheck has actually hit the bank (in case there were some differences that we weren’t expecting), which sometimes means that I have to mail bills out very quickly to avoid late fees or pay them online.
I use a handmade Excel spreadsheet for our monthly budget. It might sound complicated, but it’s really pretty simple. I set up the spreadsheet so that it has numerous tabs along the bottom.
The first tab is labelled OVERALL and is where I do the budgeting for each category. This sheet has a list of each category, along with any subcategories, line by line, so that I can make sure I don’t miss any foreseeable expenses. You can add as many or as few categories as you need.
Our categories include:
– Giving: (tithing, charitable giving)
– Housing: (mortgage, utility bills, home maintenance, etc.)
– Transportation: (car savings, gas, car maintenance)
– Food: (groceries, household products, hygiene products, etc.)
– Clothing: (clothing, any dry cleaning, etc.)
– Personal: (haircuts, gifts, etc.)
– Entertainment/Recreation: (eating out, recreational activities, vacation savings)
– Medical: (doctors co-pays, medical bills, prescriptions, etc.)
– Debt: (any balances we might have on credit cards) **We pay these off each month
– Savings: (anything we are saving for that is outside of retirement)
I have the spreadsheet set up so that I can see a running total of what money is left after I have entered a value for each category and subcategory.
Some lines are firm based on what bills are owed, but the remaining categories/subcategories are often flexible each month. I tweak those values based on what I think we will spend or what history has shown me we will need to spend.
Once I’ve entered everything that I can foresee, I check to see my total at the bottom. I make adjustments to the categories based on whether I’m over or under. If I’m negative, then I may have to cut something. If I’m positive, then I have extra money leftover to allocate somewhere else! I don’t like to leave the value positive, so I actually put that overage in a category somewhere.
When I’ve finalized the budget on the OVERALL tab of our spreadsheet, the category totals will automatically populate each of the CATEGORY tabs that I have set up on the spreadsheet. Once the month begins, I track our spending under each of the specific CATEGORY tabs.
It’s not important which tool you use to set up your budget. The most important part is that you choose a method that will work for your family and that you are likely to use. It needs to be easy and something you can actually implement. My mother and grandmother use ledgers books, my brother-in-law raves about Quicken, and someone else might use a Smartphone App. The method is not as important as the process itself. If you like the idea of a computerized method, just ask someone who is tech-savvy to help you.
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