My wife and I have ambitious mustachian goals and have spent the last couple years incrementally improving and fine-tuning the process. After a rough month in June 2022 (due to my medical bills), we decided to simplify the system even further. I began targeting a minimum viable budgeting system.
In our old system, like so many people, we would categorize every transaction. We tried different ways of doing this: automatic-but-inevitably-sometimes-wrong apps like Mint, fully manual apps, spreadsheets, and even variations on the envelope system. When starting a new system, we realized that we had never gone back to look at categories and they created a lot of work. So that was the first thing to go.
My old spreadsheets had lots of pretty graphs showing categories of expenses and types of income and percentages of budgets and on and on and on. We would look once, think “neat!”, and move on. Chuck it.
And so it went, getting rid of what wasn’t useful and keeping only what we actually care about. So where did we end up? Well there is a little bit of pre-work we did, a handful of rules, and a single, simple Numbers spreadsheet.
The Pre-Work
- Write out a list and calculate a total for all monthly fixed costs
- This includes things like rent, subscriptions, cell phone bills, etc
- Create a plan for unplannable, spur of the moment things (mostly going out to lunch with friends for us)
- Pick/calculate a monthly total budget and a budget for non-fixed costs
- Make the spreadsheet
The Rules/Process
These are the rules we set for ourselves. Only four rules to keep it simple.
- Use what we have before buying something new.
- For most of the month, we only spend on necessary purchases.
- At the end of the month, we can choose if/how to spend any remaining budget together.
- This means we keep a list of things we want to buy.
- For every purchase, attempt to stick to the most cost-effective option
- Yes this means research. For short-life items, this is often the cheaper choice. For long-life items, it may actually be more cost-effective to pick something with a higher upfront cost.
The Spreadsheet
We use the spreadsheet every time the month changes. It has two tabs.
The Net Worth tab is where I input the value of all of our accounts/loans on the last day of every month.
It has 8 columns for accounts and rows for each month.
The Summary Tab has 7 columns, but only two are inputs and the rest are calculated.
Income has to be manually compiled, but isn’t that hard because it’s only a handful of paystubs each month and occasional stray money.
Our primary bank is has our credit card and checking account so knows >99% of all our expenses.
I use the simple tool on their website to fill in the Expenses column.
Savings Rate is calculated from the first two columns.
Net Worth, Stash, and Liquid Cash are all calculated from the other tab.
Now, of course, I had to have a little fun with it. So on my iPad I added a form for each tab, which is one of my favorite features on Numbers.
And that’s it! Our entire budgeting system explained in ~550 words and less than three minutes!