Honestly, I wouldn’t recommend this budget to anyone who is: new to budgeting or can’t seem to stick with a standard budget. This budget is pretty advanced and requires not only commitment but strict discipline. The benefits can definitely make it worth your while but you get what you put into it. The Grand Master Budget is the highest level of budgeting.
What is the Grand Master Budget? (wtf is a Grand Master?)
The Grand Master Budget is the big daddy of budgeting. You’re tracking every cent you spend and you’re planning for all upcoming expenses as well as including an ‘Oh $hit Fund’ because not everything can be predicted. If you’re making this budget, then you should already have a good idea about your spending habits from tracking your spending. Also, you’ve already mastered the Jedi Budget, which is what we build upon to create the Grand Master Budget.
How to Create the Grand Master Budget:
1. Income- You need to know how much money you bring in with each paycheck, for this make sure to use your net income (take-home pay). If you’re paid a salary, then this should be as simple as looking at your last paycheck or direct deposit.
If you’re paid on an hourly basis, then you need one of your recent pay stubs to find your Root Income. To find this, you should find a recent pay stub that is closest to your “guaranteed” schedule. Meaning, each week you will be scheduled for at least 20, 35 or 40 hours, this is best since most overtime is rarely dependable once you depend on it.
For example: say you are scheduled to work 40 hours per week, you want to look through your recent pay stubs and find the closest to 40 paid hours per week, bi weekly might show 80 and so forth. Ours is about $2,200.00 per month (using 2 bi-weekly paychecks with 40 hours per week). I recommend you use this amount for your budget even if you often get overtime. For more information about the benefits of budgeting using your Root Income, check out my post here.
2. Commitments- Gather all your monthly committed expenses that you intend to continue. For example, using my own: rent, renter’s insurance, electric, water-sewer-garbage, Internet, cell phone, Netflix, the evil credit card, monthly fee for my oldest credit card ($3 a month, but it would really mess up my credit score to get rid of it), automatic transfer at U.S. Bank, ING transfers to cover car insurance (save to pay in full), automatic ING transfers to our Emergency Fund and video game subscription.
3. Make a list (or spreadsheet) of each item and the amount you must pay each month. You should probably throw up a total for these as well.
Our Monthly Commitments:
Renter’s Insurance $17.00
Electric (averaged out over the year) $121.00
W/S/G (using the 1st bill still) $65.00
Cell phone $50.00
The Evil Credit Card (min.) $64.00
CC monthly fee $3.00
U.S. Bank auto-transfer $5.00
ING transfers to save for car insurance ($2 each day M-F) about $44.00
ING transfers to Emergency Fund ($1 each day M-F) about $22.00
World of WarCrap (needs updating to GameFly) $17.00
Total $1,310.00 or $655.00 for 2x monthly or bi-weekly paychecks
4. Now you subtract your monthly commitments total (ex. $1,310.00) from your monthly income, not including overtime (ex. $2,200.00) and that leaves you with what’s left to be budgeted (ex. $890.00).
5. Add your other monthly expenses to the bottom or side of your commitments. These should include gas, transportation, retirement contributions, savings, groceries and whatever else you spend your money on.
6. Now, if you have been tracking your spending, you can use your average monthly spending to fill in the numbers for your “other monthly” expenses. If not, you could try guessing but having actual numbers would be the best for this kind of budgeting. Keep in mind that you only have the difference between your income and commitments to allocate between these.
7. Now comes the crazy part. You’re going to budget for all your irregular expenses, I’m talking all of them. Christmas, birthdays, wedding and shower gifts, saving for car maintenance, car tags, emissions, co-pays for dental/medical/optical visits, clothing. Pretty much everything you spend money on each year (or every other year) that isn’t already taken into account so far. Using a bank with the option to create sub-accounts could be a very useful tool for you because you can name the accounts after each item.
8. No matter how hard we try, we just can’t predict everything. So you’ll also want to start an ‘Oh $hit Fund’ to cover the bewildering expenses that you haven’t budgeted for that seem to come out of nowhere. That’s it.
More than likely, you need to make adjustments to your budget until things work for you and then update it here and there to keep things accurate and aligned with what’s important to you. This is a great budget but requires a lot of attention to detail and dedication to reap the rewards.