Your Two Bits

Problem

Have you run into the problem of creating a wonderful budget in Excel or some other spreadsheet software but struggled to refer to it, because it was only on one computer at home? If you’re like us, my wife tends to take care of most of the day-to-day budgeting, and by most I mean all. This means that I’m not always as aware of how much is actually left in a given category, so I call my wife to check.

Solution

My friend Troy and his wife downloaded our quarterly budget template and have been using and customizing it. One of their most ingenious steps was to upload it to Google Docs. That way either one of them can refer to it when they need to. For me, that would mean I could check it before running over to the hardware store at lunch, without having to call my wife to see if we have enough in the budget, which she may not know without looking.

However, I’m still big on communication. I will probably still call my wife, but it’s just to communicate the plans and make sure she didn’t have other more important plans with the money. But I’m able to look for myself and not put the burden on her to always know or have to go check.

Also, Troy likes that both he and his wife can be in different places, like one at home and one at the office and both access the spreadsheet at the same time. They can talk on the phone and Google Docs highlights the cell they each have selected with different colors, so it’s easy to follow each other in a discussion about it.

Document

Quarterly Budget Template (Google Docs)

You will need a Google account such as your Gmail account to access the Google Docs version of the quarterly template. Click the Use this template button. Clicking this button does two things:

1. The spreadsheet will be added to your personal list of documents (what you see when you first open Google Docs).
2. Your personal version automatically opens, and you can begin working on it.

In order for your spouse to view the document, you need to send them an invite. Either from the budget spreadsheet page or from your list of documents with the desired document selected, click the Share button and select Invite people…. A dialogue box will open where you can enter the email address of the person(s) you want to invite. You can select whether that person can edit or only view the document.

If you already have a budget in a spreadsheet and don’t want to start from scratch, you can import it into Google Docs either by using the Upload button from the Google Docs home or by opening a new Google Docs spreadsheet, clicking File, and then Import….

Spreadsheet Sharing Video Tutorial

And don’t forget, you can bookmark the spreadsheet in your browser for quick easy access.

That’s it. Now you can work together and be a team.

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I read this article, “4 Dumb Financial Moves in the Recession.” The four points are legitimate and seem to be pretty common. I just want to focus on one item in the first point, regarding emergency reserves.

The author, Marilyn Kennedy Melia, recommends setting up automatic withdrawal to move money out of your checking account into some type of liquid savings. I think this is a good idea; however, I would also recommend taking another step before this. We have our paycheck automatically deposited into our savings account. Then at the beginning of the month, we move only the amount we have budgeted to spend that month over into our checking account.

The benefit to this method is that it helps keep you within your budget and from spending all of your paycheck. If you want to use additional money, you have to move that money over to checking. This reduces (should eliminate) impulse buys. At a minimum it requires you to acknowledge that you are actually spending your money, not just swiping a debit card. It’s sort of like a macro envelope system.

Of course doing this assumes that you have a budget for the month (I’ve heard budgets can be useful). If you don’t have a budget set up or are not following your budget as strictly as you should, trying this step can help motivate you to create better budgets or follow your budgets better.

I’ve had a few people I’ve shared this with comment on how helpful it is. If you’re not currently doing it, I highly recommend you try it out.

That’s my two bits. What are your two bits? Do you do something similar that works well?

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This last weekend a friend I hadn’t seen in a long time was telling me about how he and his wife are in the process of overcoming their debt. Two of his comments really struck me. He said it was a little rough getting started with a budget but that their budget has been key to communicating so that they can hit their milestones to become debt-free and that he wished he would have been aware of budgeting principles ten years ago.

On his first point, I couldn’t agree with him more. I say the same thing about wireframes and sitemaps used for designing a website. Generally the first draft is not what gets implemented. But for web design and financial success drafting a sitemap or budget gives you a document or tool that is external to your own head. Others can look at and comment and provide feedback to help refine the document. At a minimum it helps prevent (or at least reduce) disagreements that occur from people having a different understanding in mind. The external object improves each other’s understanding and ability to talk about the issues at hand.

A written budget equals communication.

Regarding my friend’s second point, that he wished he had known more about budgeting and better understood the perils of debt sooner, again, I very much agree with him. I was fortunate and was able to learn these things sooner than he did; however, I also lament that I didn’t understand sound financial principles related to budgeting and investing earlier in my life. That’s one of the reasons why I have this blog. I hope it helps somebody discover the liberation and peace that comes from controlling your money.

Now if you don’t have a written budget, get going on it. A year from now you don’t want to regret not having acted sooner, and, even more importantly, it will make life a lot better.

That’s my take. What are your two bits regarding a budget?

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This is one of my favorites. Aside from addressing a relevant topic, and in spite of Steve Martin’s poor acting, you can’t beat the common sense or the line, “Yeah, we can put it on our credit card.”

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When it’s summer hot chocolate may not sound like a treat, but it’s still great with this story.

A few years ago I was talking to a co-worker, Sally*, about budgeting and investing. She wanted to invest but felt like her spending was a little out of control; her husband felt like it was a lot out of control. So we talked about budgeting. She laughed at me because I sang the praises of budgeting, but I really do like the control budgeting gives me and how it helps me make a conscious decision about where my money goes.

Sally and I discussed a budget, how she and her husband could set one up, and how they could have money allocated for certain things. The beauty of allocating money is that she and her husband would be on the same page and there should be no problems as long as they both stayed within the constraints they had agreed.

The next week, Sally came up to me and said, “You’re right about the budget. My husband bugs me about spending money on things like hot chocolate at Barnes and Noble, because it’s so expensive. But I really like getting a hot chocolate there. So we made Sally’s Hot Chocolate Fund a budget category. We were at Barnes and Noble last night. I was going to ask him if I could get a hot chocolate. But then I remembered: I don’t need to ask him; we have money budgeted for this. It was so great! I didn’t have to ask, and he didn’t bug me because we both knew there was money budgeted for it.”

I’m glad Sally shared her two bits with me. She had caught the vision of the power of a budget and was excited about it. Something as simple as hot chocolate showed her how liberating a budget can be.

*Name has been changed to protect the recovering non-budgeter.

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