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Amy Northard is a certified public accountant who lives with her husband and 1-year-old son in Indiana. She owns her own firm with three employees and about 500 clients. We asked her how she budgets.
Northard owns her own accounting firm. Most of her income comes within a four-month period, around tax time.
"The rest of the year it's pretty solid, but it's not money that I'm able to live off," she said. "So I have to use that money from the first quarter of the year to live off and run my business throughout the rest of the year."
To do that, Northard maps out her personal and business expenses on a spreadsheet and spreads her income out to pay herself a steady salary throughout the year.
The cost of the CPA exam and educational materials can run into the hundreds of dollars, depending on the state. Some firms cover these costs for employees. Northard's was not one of them.
Northard also pays fees to a professional association (around $300 a year). In Indiana, accountants must undertake training to maintain their licenses. She pays for the courses and the required tests. Online courses can cost in the hundreds of dollars while in-person courses can run into the thousands, Northard said.
Northard recently started using You Need a Budget for her personal budget. (Use our template to create your own budget.)
"I'm still getting the hang of using it, but I like the initial process I run through of assigning all the dollars to their jobs and look forward to tracking those transactions when they come in, which I never thought I would do," Northard said. "I never thought I would look forward to budgeting."
For her business, Northard uses QuickBooks.
"I export that information from QuickBooks for my business into a spreadsheet and then that's what I use to play around with the numbers for budgeting expenses," Northard said.
"Right now the only debt that I have is a mortgage," Northard said.
The Northards pay off their credit card balances each month and have paid off their car loans.
"My husband didn't have any student loans, but I did," Northard said.
They used a combination of personal savings and money from their wedding to pay off her student loans. Northard started her business without any debt. Some accountants start out by purchasing an existing business, which often requires a loan.
"If you just want to slowly build up clients, you can definitely just start with your laptop," Northard said.
Northard has car insurance and recently purchased life insurance for herself. Her business has errors and omissions insurance, which protects the firm in case a mistake costs a client money. Most accountants should have this insurance, Northard said.
Northard and her husband, who works with Northard full time at the firm, buy health insurance through the federal marketplace.
"I used to be able to have health insurance through him and his workplace," Northard said. "Now that he's working with me full time, we go through the marketplace and it's very expensive."
Their premiums are around $1,000 a month for their family of three with a deductible of $10,000. They hit their deductible this year and Northard expects to hit it every year going forward. She was diagnosed with Crohn's disease earlier this year, which required her to undergo surgery. She'll also have to take an expensive medication for the rest of her life. The Northards have freed up the funds for their deductible by cutting back on vacation.
"We are doing little short weekend trips instead of longer week-long vacations," Northard said. "We also have cut back on eating out."
Luckily, Northard loves to cook.
"Meals that we might want to eat out, I'll make those at home for us," she said.
"Before I got married, I definitely would fall into the spender category," Northard said. "It's still kind of a struggle for me to not fall into that."
Northard's husband was the saver in the relationship and sets savings goals for the family.
"Right now I am falling into the saver category and I think twice before I go out and make impulse purchases," Northard said.
"I started budgeting probably a couple of years ago when we started hiring employees and contractors for business," Northard said. "I wanted to make sure that I could pay myself and pay others a fair wage and not be stressed out about it."
On a personal level, Northard was motivated to start budgeting because she and her husband want to buy a home. They hope to save a $20,000 down payment as well as extra money to customize the house and buy new furniture.
"We already own a home, but we want to move into a better school district and that is pretty expensive," Northard said. "So I wanted to make sure that I was being held accountable for a lot of little random purchases I would make on Amazon or whatever. By budgeting and using the YNAB app now I'm accountable to myself as well as my husband who will review it with me every month."
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