The Grown Up Piggy Bank

I spent four years earning my undergraduate degree only to not go with a career in finance. I call my degree my "life degree" because it has helped me out with various "adulting" phases of life. One of the biggest ways my degree has helped me? Budgeting. In college my focus was personal financial management. How do people use the money they've earned? How do they spend it? How do they save it? How should they? What did I learn was the answer to those questions? It depends.

That's right - it depends. It depends on the person (or people). It depends on their own personal goals and situation. I've read the various approaches to finance - the Dave Ramsey, the Suze Orman...and they each have their own way of going about it. My own personal way of managing my month to month has come about in various iterations. I currently have two checking accounts. One is my "fun money" and the other is my "bills money." Prior to coming to grad school, I got paid every two weeks. When my paycheck would come in, I gave myself a $200 allowance for "fun money" (which had to last until the next paycheck), and the rest went into my bills account.

Imagine my bank account as the below image, and for my sake, and yours, pretend that instead of whatever is in each of those jars it is actually money:

Those larger jars in the back would represent some of my larger expenses: rent, savings, and gas. The jars in the front might be food, phone bill, electricity, water, and insurance. Every two weeks, I would divvy up my pay check to add money to each jar. When it came time for a bill - say my cell phone - to be paid, I would open the cell phone jar and take out the money I needed to pay that bill. Because my bills and my pay checks would not always line up perfectly, it allowed me to always be able to pay the bill and then refill the jar on a regular basis.

In this example budget - I walk through the two simple steps: budget creation and budget use.

Budget Creation: On the first tab, I have various expense types. These aren't identical to mine (and neither are the numbers), but they are similar. Feel free to change these to match your own or add additional ones by inserting rows. Make sure to enter your Monthly Income in cell B18. The cell next to it is coded to turn green when you are within your income and red when you are outside of it. If it's red - try again, see where you may need to trim your budget. Only change the numbers in the monthly column (column C, highlighted in blue) and the rest of the numbers will change accordingly. This will be helpful if you get paid weekly or every other week. Once you have your monthly budget set, you are ready for the next tab.

Transactions Example: The first line of this tab has the column headers - you want these (starting in column E) to match your budget categories from the previous tab. If you need more categories, just insert columns. The next line is labeled "Budget Start." Look at the amount of money in your bank account. Take that amount and divide it among the "Jars." The jars in this case are the categories. The sheet will do the math for you so that as you type amounts in the budget start row, it will add money to the "account balance" column.

Let's walk through a few transactions

1/1 - Pay Day: in this example, you get paid twice a month. So, on the first pay day, fill your jars up according to the "bi-weekly" amount calculated on the "Budget Creation" tab. Notice, your account balance will now be your starting balance plus your pay check. The individual category amounts can be found at the bottom of the page.

1/1 - Rent: Rent is due! For this type of transaction, you simply find the category it belongs to and subtract that amount of money from that category. Each transaction is its own line, so you'll have a lot of blank cells.

When you need more, simply insert more rows to continue filling in transactions. You may have to drag the formulas down to get them to all fill in, but your account balance line should always match what your actual bank says your account balance is. While you could start a new one each month, I simply like to let it keep rolling all year. That way, if I have extra in the "gas" category one month where I don't drive much it just rolls right on over to the next month.

Make sense?

If you have suggestions, questions, or ideas - send me a message on the 'gram @somethingliketwenty

Cheers!