A step up from the Padawan Budget is the Jedi Budget, which is a more structured budget. This is probably the most common budget format out there and it’s one that can be used forever, with updates of course.
What is the Jedi Budget? (wtf is a Jedi?)
In the Jedi Budget, you list out your monthly expenses and set some spending limits for some of your variable expenses. You track your income and make some guesses (hopefully you’re making educated ones because you’ve already tracked your spending) about how much you should be spending in each category. Let’s jump in and get started.
How to Create the Jedi Budget:
- 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 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.
- 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.
- 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
- 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).
- Add your other monthly and planned expenses, if you plan for things, 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.
- 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, then you’ll just have to guess. Keep in mind that you only have the difference between your income and commitments to allocate between these. That’s it, you’re done. Remember that all budgets take a while to get used to but after a little while it will become natural to follow. Also, if your budget just doesn’t work out, feel free to tweak things until it fits you better—no budget works for everybody and no budget will work forever.
*If you choose to use your actual paycheck amounts instead of your Root Income, you will need to either update your budget with each paycheck or make a plan for any additional amount over.
*For planned expenses, such as car tags, property insurance and so forth, you should probably put the money into a separate account to keep it from getting spent on other things. The bank I use lets me create sub-accounts, so I could make a separate savings account for car tags, property insurance and whatnot; it’s wicked awesome.