Family Budgeting That Works

BUDGETING THAT WORKS
When I left employment to be a SAHM (stay at home mom), I quickly realized what an impulse buyer I was. At the time, I was helping a friend run his businesses and got a stipend on a weekly basis. I was going through my savings faster than I was getting any income.

If you are like me, the challenging economy caused me to take a look at my personal finances and consider making a budget.

Your budget tells your money what to do for you.                                                         - Pastor Oscar Muriu

If done correctly, budgeting will provide you with more financial freedom than most can imagine. Keep reading below to find the free budget spreadsheet (from Microsoft Excel) that worked for me. No two families will have the exact same expenses, therefore there is no one-size-fits-all approach to this.
You can use one of the below softwares to open the document:

• Microsoft Excel
• Google Docs
• Libre Office
• Kingsoft Office

TIPS ON BUDGETING
Just like having regular workout session, having a budget requires absolute discipline. Otherwise, you’ll do it for two months, then forget about it….only to remember after three months.

People who budget are the ones who create wealth.                                                         - Pastor Oscar Muriu

The following tips will help you fill your spreadsheet faithfully.

1. Always Carry A Small Notebook

Seeing that the budget spreadsheet is on your computer or laptop, it’s quite unrealistic to keep filling it every time you make a purchase. It’s also unrealistic to expect to remember all your purchases off head – especially the small purchases. So buy yourself a small notebook / journal to note down your expenses. Whenever you’re at the restaurant waiting for someone or waiting on your food, write down how much you used for fare or cab or how much you shared with the homeless mom on the street.

2. Keep All Your Receipts

Make a habit of keeping all your receipts, yes, even for purchases that cost 50 bob! Note them down in your notebook at the end of the day.

3. Set Goals

To help on keeping the discipline for budgeting, set some goals for your money. For example, set a goal to save Ksh. 2,000/= per month for your child’s secondary/university school fees. Also, set a secondary goal for fun like going on vacation in Diani or taking your LO to the Mara to see the Wildebeest Migration. You can involve the younger ones on this one. To remind you of your goals, I recommend writing them on a piece of paper, then taping it to your fridge, so you see them every day. From the get-go, involve the whole family in the decision-making process. Children as young as seven can join in discussions about saving and may have some ideas of their own.

4. Monitor Your Progress

Revisit you budget at the end of each month to see how well you are adapting, saving and/or spending. You can also take a further look at the itemised purchases and see what can be tweaked in favour of your savings.

5. Live Within Your Means

Do you always find yourself hanging around the finance office on the 25^th of every month? Do you call your accountant to confirm if the salary check has been deposited? Do you require a salary advance every month? If so, then you are definitely living beyond your means. You are spending money that you do not have. With the numbers in black and white, you can approach the monthly budget more realistically. Discretionary spending might be the only way you can find and divert money toward debt reduction and saving.

If you are living on more than 60% of your take-home income, you are living beyond your means.
                                                         - Pastor Oscar Muriu

Check out the Nairobi Chapel YouTube page for more on Pastor Oscar's sermons on Financial Freedom.

HOW TO USE THE SPREADSHEET

1. Start with your income.

The overall spreadsheet looks like this. Hopefully, you will have more more positives than the negatives shown....

Add up your expected monthly income, plus any side income. If you are paid at odd intervals, just get as close as you can. If your income is uncertain, then choose an amount that is realistic, but conservatively low. You can always adjust it later.

2. List Your Expenses

Using the categories in the spreadsheet, list all your expenses. The categories include Housing Expense, Transportation, Insurance, Food, Children, Pets, Personal Care, Entertainment, Loans, Taxes, Savings or Investments & Gifts and Donations.
Modify the spreadsheet to include all your expenses. The amounts that you think you will pay go in the Planned Amounts column. During the month as you go through your receipts, you will update your budget with the Actual Amounts. The main goal is for the expenses to be less than the income.
For Groceries & Home Supplies, fill the SHOPPING LIST in Row 140 (for Home Supplies) and Row 207 (for Groceries), this automatically fills the respective slots on the budget. In other words, skip the amounts for home supplies & groceries in Rows 57 & 34.

3. Find Out Where the Money Goes

It can be very eye-opening to find out how much you are spending on eating out, clothing, or other things. As you get a sense of where your money is going, then you can decide if you have areas you want to cut back on. Making adjustments is a normal part of the budgeting process.
Stay motivated by celebrating small successes, like the fact that you were able to save something, even if it’s just Kshs. 300 more than you did before the budget was in effect.

WHAT NEXT

1. Pay Off Debt

Write all your debts (HELB, Credit Card, Loans etc) down on a piece of paper. Rearrange these debts from the smallest to the largest. Start by paying off the least amount and crossing it off when fully paid.
When you finish paying off a debt, move on to a bigger one. After paying off debt, any money left over should go into savings and investments instead of thinking of it as “free spending money.” Why? Putting extra money away during months of excess will carry you through the lean times.

2. Invest

If you already have a handle on basic savings, consider starting an investment portfolio

SPENDING GRAPH
To maintain a healthy financial lifestyle, one has to live within their means and at the same time save and invest. The table and graph below depicts the ideal percentages for expenses. Remember that priorities differ....tweak the percentages to your preference.
Download the Spreadsheet Below. Financial Freedom is only a Click away!
Family monthly budget planner
What tips do you recommend when doing monthly home budgets? Comment below.

UPDATE: Contact me if you need help configuring the spreadsheet. 

Xoxo,

Miss Cherono.