If you’ve been putting off creating a budget for months because you dread digging through a bunch of papers (or signing up on a bunch of web sites) to see what all you owe, there’s a relatively painless way to get started.
The catch is, it’s also slow.
But slow is faster (and better!) than never doing it at all, and slow is better than continuing to put off creating a budget for several more months.
Here’s all you do:
- Get out a piece of paper or open up a blank spreadsheet. (OpenOffice’s Calc is free, if you need a spreadsheet program.) and label it “Budget” or whatever floats your boat
- Write today’s date on it so you remember when you started.
- Every time you pay a bill, write the amount you paid and the name of the bill down on your paper or spreadsheet.
- Every time you make some money, write down how much you made & where it was from.
That’s it.
At the end of a month, you’ll have a record of all your regular monthly bills and your income.
You’ve come that far…
Once you’ve come that far, you may as well finish up the last bit. Be brave and subtract what you’ve been paying out each month from the income you wrote down.
Now look at what’s in your bank account.
Do you have money left? If so, you spent less than you earned, which is an excellent thing. If not, figure out what you bought with the rest of the money or what happened to your income.
Guess, if need be. You don’t have to be perfect. You just have to be honest, and not leave something off the list because you think it doesn’t count because it was “unusual”. Everything counts, because every month is an unusual month.
Rinse and repeat
Now write everything down on another piece of paper (or just rename your spreadsheet), putting what’s listed in the order that’s most important to you to get done.
Pay those things first next time, checking things off that are already on your list as you go and adding new thing as you come across them, think of them, or decide you want to do them.
Voila, a budget that will get you to where you want to be.
Including out of debt.
that’s exactly how i started my budget spreadsheet. It was so simple when I first started, but every time I updated something, I had new ideas and kept on improving the spreadsheet. Fast forward 8 years and I STILL use the same spreadsheet, all in one single file.
I did pretty much the same thing to create my spreadsheet, except I got as much info as possible from my records instead of writing things down as they came in. I guess impatience finally hit me ;)
Of course there are people who can’t budget because they are lazy. Very cool way indeed.
Well, I know the feeling of putting something off for forever because I’m not really sure how to do it and think it’s going to take a long time/be a lot of work. Usually I kick myself afterward once I finally do whatever it is :)
You’re right – The budget starts by listing your bills and then fine-tuning it from there. My budget has grown to be a tool I can use to predict how much money I’ll have for all 12 months of the year. Here is my template:
http://www.mymoneydesign.com/personal-finance-2/how-to-budget-download-my-excel-template/
Thanks for posting the link to your spreadsheet. I’ve got one just about ready to post too, and it’s kind of similar. (But not as pretty!) I guess there are only so many ways you can list income and expenses :)
Wow I just did a similar topic on using Excel. Seriously I think people have forgotten how easy it is to just write down numbers. Then again, I wonder if that would also force them to remember what all those numbers mean.
It does make you think every month, and consider your spending!
What’s exciting to me is to see the budget develop. It may start here, but once people see the application of even this simple method, I am sure they will want to see more stats (or maybe that is just me?).
I started with tracking spending, and then added net worth, so you’re at least not alone :)
I do use budgets. Because they are sexy. lol I love budgeting and then comparing to see how I actually did in real life. It shows a big picture. But some people are lazy to budget. It surprises me on how much they actually miss out.
Well, I don’t think that many people are actually too lazy to budget. The Procrastinator’s Guide to Creating a Budget might have been a more accurate title, but I didn’t think it made much sense.
I’m a total money-geek so I actually enjoy budgeting. I also try to use technology to make it as easy as possible for me. Mint.com is a huge help, along with a custom spreadsheet I created in google docs.
The important thing with budgets is to keep at it! You can learn a lot about yourself by looking at the trends in your spending.
Yup you sure can! (And it can be fun, as you mentioned.)