Budget 2

A few of you asked for more tips on budgeting, so first I will share your ideas, and then I'll add a few of my own.

• Andrea suggested using a program specifically designed to track your expenses, i.e. Quicken.
• Jill suggested using spreadsheets in Excel. The first sheet tracks the current amount in each fund. The second sheet tracks expenses and is linked to the first sheet to keep the residual funds current. This makes it easy to see, as you go, how much is left in each budget.
• Sherry suggested using handwritten spreadsheets. She also keeps the budget on her fridge to help remind her to write her expenses down. She makes a list each month based on her "master budget."
  
• Megan suggested that quarterly or yearly bills be incorporated into each monthly budget. When it comes time to use that money, it is still in the account. She also has a "buffer" fund, which is used for unexpected expenses. When she goes shopping, she adds up the prices as she goes so that when she gets to the register, she knows she has not gone over budget. They also get a personal allowance for fun things.
• Patty suggests after taking out tithing and fast offering, to put 10% into savings. She also subtracts expenses immediately from the budget. Patty keeps the budget on the fridge as well.
• Kaila suggests the "Dave Ramsey technique" where you pay for everything with cash. If you see the money disappearing, then you stop spending.
• Angela also uses an Excel spreadsheet where she keeps track of every expense. Once a week they review the expenses. She also uses a monthly "allowance" that she can do whatever she wants with and not have to explain it.
• Whitney likes to use paper and pencil. She used to keep a poster board with an envelope for every expense with cash in each. She also recommends online banking.
• Dallon suggests being frugal.

Okay, now for my suggestions:

• First, and hardest, keep track of all your expenses. I'm not great at this. I keep a basket right by my computer labeled receipts. We really try to help our receipts make it to the basket. I also use online banking to track my expenses (I know this is backwards, but I told you I'm not great at this, didn't I?). This is particularly helpful when you don't get receipts for things like online bill pay. I make sure to compare this to my checkbook. But the thing I keep receipts for is not usually to keep track of expenses in my checkbook. Most of my expenses show up online. I keep the receipts, for instance, because shopping at Wal-mart does not always necessarily mean that I bought groceries. So the receipts help me know how much was spent on groceries, household items, entertainment, etc.
• Which brings me to my next suggestion. When creating a budget, it is good to label all the different sections in your budget. Then, it is good to define each label. For instance, what does "grocery" mean to you? To me, it means food and diapers. I usually put cleaning supplies under "household," separate in my budget. The idea is that once you've defined your labels, it will be easier to track over time how much you've spent on each label in your budget.
• Which brings me to my next suggestion: Budgets have to evolve. For instance, with the rising gas prices, our gas budget has changed dramatically in the last year. But also, we went from one car, to two cars, back to one car again. So you have to allow your budgets to evolve according to the changes in the general economy and in your personal finances.
• Next, when you transfer funds or pay bills online, write down the confirmation number in your checkbook. Just in case you ever have to dispute a mistake.
• I also use a spreadsheet on my computer. One page keeps track of all the expenses (based on my online banking and receipts as mentioned above), and is linked to a second page of "projected" or "budgeted" expenses versus "actual" expenses. This helps me see how much is left in each section of the budget. This spreadsheet also includes "projected income" versus "actual income." I have a third, unlinked sheet where I keep track of the next projected year. Here I list all the money in my checking accounts plus projected income, minus all the expenses I plan to pay in each month. Even though I have already budgeted for "savings," if there is any money left over at the end of the month, I will put that into savings as well. This helps me see how much money I will have in savings by the end of the year-ish. This, in turn, helps me know what large expenses I have money for, such as down payment on a house, a van that we might need sooner than later, medical bills, etc. Obviously, this has to evolve over time as well, since you really can never know what will happen in a year. But I just like to see it. It makes me feel in control, as I am a control freak.
• Keep track of the due dates of your bills so you know when you will need to pay them. I actually like to keep track of the date the bills arrive in my mailbox or my inbox. I like to pay them as I receive them, if possible.
• Go paperless wherever possible. Fewer piles. Less filing.
  
• Pay your bills on time, and pay off your debts as quickly as you can. Pay more than the minimum on your debts. Don't take on unneeded debt. Paying interest is not smart if you can be earning interest.
• A word about cash: if you like to use cash, it is all the more necessary to hold on to your receipts. It may show up online as a withdrawal, but the bank won't be able to tell you where the cash went. We like to use cash for two things in particular. First, the closest gas station, also the cheapest in the area, charges a fee to use credit or debit cards. So we like to pay for gas with cash. But you do get a receipt, so you still know how much you spent on gas. I'm not sure exactly what to do about leftover change. Any suggestions? How would you track it? The second thing we use cash for is babysitters. You don't get a receipt for things like this, so make sure you write it down in your checkbook or on the receipt of the ATM.
  
• I really loved Angela's idea of reviewing the budget once a week, so I thought I'd mention that again. This is really great to keep up on where you are.
• I would also really like to second Dallon's suggestion of being frugal. The better you are at keeping within your budget, the more you'll have in savings for a rainy day. The idea is that millionaires become rich by living poor. You really have to ask yourself, is this something I "need" or just "want." And if it's something you "want," either take it out of your "personal allowance" and/or think about it for a while until you decide if you really want it (then get it) or if you don't really need it after all.

Well there you go. And I do have to repeat that my budget-tracking has evolved over time. When we were first married, we didn't really have a budget at all. Eventually it came to be what it is now, and it may continue to evolve as I see inefficiencies.

Love,
Your hyper-budgeter friend

P.S. My next post will be about Mommy Tips. My sister-in-law Shalissa polled several of her friends and family about things they do to simplify motherhood. I will include those, and my own suggestions, but I would also like to include your suggestions. Please leave a comment about anything. Dishes, laundry, organizing, cleaning, getting your kids to ____, getting your kids to stop _____, etc.