Now that you’ve created a budget and mapped out your savings plan, it’s time to put it into action by paying bills. This is a guide to using the budgeting spreadsheet to organize paying bills on a bi-weekly basis. It will help you keep track of how much your bills are each month, your bank balance after paying bills and what areas of your budget you may be overspending in.
*This post was originally published on August 15, 2013 and updated on January 28, 2020.*
*This post was written by my husband Jesse, the builder of our budget. This is NOT professional advice.*
So we’ve built our budget and started saving money using T accounts, now it’s time to get dirty and start paying bills! But first, we need to add two more sections to our summary spreadsheet. First, we will add a spot where we can total the bills that we are paying. In D1 put “bill” and E1 put “Amount”. When we do the bills we will put the name of the bill we are paying and the amount so we can keep track of what we paid.
Next let’s put a spot for “Bank Balance” and “Balance Less Bills” in cells D13 and D14. We want to program “Balance Less Bills” to show our bank balance minus the bills that we are paying. So we will use the function “=D13-D12” in cell D14 to subtract the total bills from our bank balance.
Finally, time for paying bills. People pay their bills in many different ways. Some people do it when they get paid every two weeks, while others do it every month. Also people pay for groceries, gas and other things differently. Some use cash or check, others may use credit. Each way is a little different and you have to find what method of paying bills works for you.
Personally, I do the finances every 2 weeks because it only takes 30 minutes every pay day. I’d rather do that than spend on hour once a month. Additionally, we use our credit cards for expenses during the month. We’ve found that it’s easier to track plus, we get rewards points. We pay the credit card balance in full every 2 weeks when we’re paying bills and treat the same as any other bill. The only difference in the process is that we have to pay the credit card bill, whereas with cash or a debit card, the money would already be subtracted from your bank balance.
For this example, we will assume J&J are paying bills every two weeks and use a credit card for expenses and pay them off in full. Okay, let’s get started!
It’s the second Friday of the month. First, J&J check their bank balance they have $2275, which is their paychecks of $700 and $675 plus their remaining balance from last time they paid the bills. So let’s enter that into our summary spreadsheet in cell E13.
Next, we need to decide what bills to pay. Since we are paying bills twice a month, we should be paying around half of our monthly expense, around $800 (which is around half of $1,625 from our budget). J&J decide to pay all of their monthly bills with this paycheck except for rent, which they will pay with the second paycheck of the month. Water, phone, student loans, cable, electric, and trash should be around $725.
This part really depends on your household. I split our mortgage payment and save money from the first paycheck to add to the second of the month to make the mortgage payment. In the end you have to find what works for you and your billing schedule.
J&J pay each bill and record it on the summary page. Bills can usually be paid by check or online bill pay. We find that online bill pay is easiest, but it’s about what works for you.
Next J&J review their credit card statements. Their total bill was $402.79. After reviewing their statement they found they spent around:
Entertainment: $ 80
Now wait a minute, that only adds up to $360, where did the other $40 come from? Well J&J’s car needed an oil change. But oil changes aren’t in the budget! This is why we only budget 90% of J&J’s income because everyone has non-recurring expense or expenses that don’t happen every month.
Next, J&J make sure they paid all the bills that are due and check for any outstanding checks in the checkbook that haven’t been cashed, which there are none. Bills are paid for the first half of the month! Now we can allocate money that is left over. Let’s make it easy for ourselves and let the spreadsheet show us how much money we have left.
In cells A7 and A8 put “Balance Less Bills” and “Left to Allocate”. In cell b8 put the formula “=B7-B6”. What we are doing is taking the total money that we have and subtracting the total money that we have allocated to show us how much we have left to allocate.
What we are doing here is taking our bank balance that is left after we pay all of our bills, and moving it into the allocation columns to see how much money we have left to move around. As you can see we now have $253.07 to allocate. Now the choice is yours to allocate that money now or wait till the end of the month when all the monthly bills are paid.
We’re going to do it now! J&J decide to put:
If you entered everything correctly you should now have $450 in the house fund and $500 in the emergency fund. “Cash to allocate” still has $3.07. For this example, we aren’t going to bother allocating that $3.
Now, let’s add some formulas to our budget so we can see how our spending is going. We want the difference column to show us if we are overspending or under spending at all and if we need to make adjustments to our budget. So in cell E1 enter “=C3-D3” this shows us the difference between our budgeted amount and our actual amount.
The difference column should now show how much you have left budgeted for the remainder of the month. It looks like they overspent in grocery and entertainment, so J&J will have to take it easy the next couple of weeks. They don’t want to overspend for the whole month!
How do you pay your bills? Are you a bi-weekly person, or once a month? How long does it usually take you to do all your bills?