Oooo you said the B word... Budget
A budget is telling your money where to go instead of wondering where it went."
There are many great budgeting solutions available on the web, including You Need A Budget (YNAB) and Mint.com. However, you do not need to spend a lot or use fancy software. The best budget is the one you actually use. You can set up a simple budget using Google Sheets, Microsoft Excel or any other spread sheet software. Here I will step through the process of setting up your spreadsheet based budget. This type of budget works best with the Envelope System of expense tracking, which will be briefly discussed here with links to more detailed information.
Step 1: Gathering your Income
In this step you need to track down all your sources of income for the month.
Step 2: Savings Goals
Step 3: Monthly expenses
Step 4: Occasional expenses
Step 5: Putting it all together
Step 6: Tracking expenditures and income
Tracking expenditures and income used to mean recording everything in a checkbook register. However, many people these days use debit cards and credit cards instead of checkbooks. Here are some alternative methods of tracking your income and spending.
- Write in a ledger/ journal
- Bank statements
- Envelope System
With this method you will record all of your transactions as they happen in a ledger. This ledger could be a simple piece of paper you carry around in your wallet or pocketbook. Alternatively you could use another spreadsheet you access from your mobile phone. You just need to write transactions as they happen, or keep receipts to record them later.
If you have access to your bank accounts online, you can use this to update the running totals of your budget on a daily or weekly basis. Usually online bank accounts allow you to see posted and pending transactions.
This method works best if you mostly deal in cash. With this method you take physical envelopes and label them with your budget categories. You then put the cash amount you allotted in your budget into the corresponding envelope. Then when you need to make a purchase you take the money from the appropriate envelope. If you do not need to use all the money, you put the remainder back in the envelope. This system allows you to easily keep track of what has and has not been spent. If you run out of the funds you need in a particular envelope, you can physically move money from one envelope to the next, but you will have less money to use in that category.