Never had a budget before? Or maybe you’ve tried every program/app/website out there but you haven’t found a system that works for you.
Because just like Dave Ramsey, it only works if it’s simple.
And no one wants to spend upwards of an hour (or more) a week typing in expenses. Well, okay, maybe I would, but I’m not normal.
Over the last 8 years, I’ve tried it all. Microsoft Money, Mint.com, banking sites and not one of them helped me control my money. I spent more time exporting and downloading and categorizing and setting reminders than I did actually managing my finances.
So I began dreading balancing my budget. And because I hated it, I stopped doing it except for once every 3-4 months when the stack of unopened bills kept falling on the floor. Let me tell you, that is a great way to piss away a lot of money.
Then last year I got fed up with the disorganization and the overspending and decided something needed to change if we wanted to get this debt paid off. That’s how I came to use the budget template I posted last week.
And wouldn’t you know, after several months we were (for the first time in our marriage) in control of our money. And it felt pretty good. No, it felt GREAT.
(Disclosure: It has taken us nearly a year of tweaking to actually get to a zero-based budget. But managing your finances is ever-evolving, so if you think it’s a “set it and forget it” process, think again.)
Start by entering your sources of income in the top section. This is what you have to work with.
|Income||Estimate $||Actual $|
If you get paid on commission or otherwise have an irregular income, do your best to come up with an average for now.
Next turn your attention to your regular expenses. This should be fairly straight forward since your mortgage/rent and most utilities are going to be roughly the same month in and month out.
|Bills||Estimate $||Actual $|
For bills that aren’t paid every month, I like to break down the predicted amount and spread it over the time period. For example, we only pay our water bill every three months, but it is usually $90, so I put $30 as my monthly budget allocation.
Still with me? Good because now is the tough part… Determining how much are you supposed to be spending on clothes. Or food. Or going out.
Of course those numbers are going to vary household to household and I’m not going to sit here and tell you that you need to feed your family on $240 per month. That works for my family, but you may have more mouths to feed or bigger eaters. Or you may hate working in the kitchen so you choose to buy more prepared foods.
This post is not about scratch cooking or saving money. It’s about setting boundries and sticking to them.
To fill in your variable categories, start with your necessities. Food, gas, and household items. You should be able to get a rough idea of your spending habits from old receipts or bank transactions.
|Variable Expenses||Estimate $||Actual $|
If you have any looming home/car repairs or regular medical expenses, add those in next.
Now the fun stuff. Going out, clothes, personal spending, etc. These numbers come with hard decisions. And it will help if you have a list of your financial goals in front of you. Because if you don’t have a greater purpose for that money in mind, it’s going to be really difficult to say you only want to budget $120/month for going out if you are used to spending over $300.
Now look at the Remaining Funds row at the bottom of the sheet. This is what you have left to put towards savings or debt repayment. So, if you don’t have enough to meet your financial goals, it’s time to do some cutting.
Come back next week for the third installment on How to Create a Budget…