Keeping Track of Your Budget Keeps Your Budget on Track!

"Budget"; a light little word that has some heavy connotations. Conversations opening with "let's talk about the/my/your/our budget", are not usually ones that thrill us. Keeping track of how much of your money is going where and when though, can really help to not only to limit or eliminate unnecessary expenses and unwanted waste, but getting a budget organized means you can get your bills covered and spend some money on a little frivolity with confidence. We talked a little about the benefits of making sure you make room for fun-money last year. Today we'll explore some of the ways to organize and track a budget, first exploring some of the ways anyone can organize, set-up and monitor a budget for free.

Getting on Track to Track Your Budget A few preliminary steps must be taken in order to utilize any of the budgeting methods and tools that will be discussed. Getting these steps taken care of first not only streamlines the processes of recording and tracking a budget, but may be useful in determining what methods and tools will be the most useful for managing your accounts and spending.

Step 1
Determine whether you want to budget on a monthly, bi-weekly or weekly basis. Managing expenses on a month to month basis is the time-span most articles and personal finance books use to discuss creating, tracking and keeping a budget. However, some may find that tracking expenses on a bi-weekly or weekly basis easier to manage. A budget is most effective if all expenses and sources of income are recorded and tracked. Recording over thirty days worth of expenditure may seem a little daunting, especially for anyone trying to tackle their budget for the first time. Structuring a budget for a shorter time span can be less intimidating for first-timers because the budget plan "resets" every seven days instead of every four weeks. Others find it helpful to build their budget around their pay schedule. If scheduling a budget on a weekly basis appeals to you, but you have monthly expenses such as rent or a mobile phone bill, it is still easy to set up for a seven day schedule. Simply determine what your monthly expenses are, and divide by 4.

Step 2
Determine all sources of regular income.This includes things like your regularly scheduled pay, and any other form of payment you receive on a regular basis such as annuities, dividends, and account interests.

Step 3
Figure out what your expenses are, how much they cost, and then record them. It is recommended that you divide expenses into two categories: fixed and variable.

Many personal finance books and articles recommend further dividing these expenses into tiers of: fixed necessities (rent/mortgage payments, utility bills like gas. electric and water, property or council/city tax etc.), fixed goods and services you could technically live without but wouldn't want to (cable, internet, mobile phone, *car payment), variable necessities (groceries, toiletries, *certain kinds of insurance), variable goods or services you wouldn't want to live without, and so on.

Step 4
Check that your expenses don't exceed your income. If you've got more money coming in than you do going out, you're in good shape and ready to start tracking your budget, and determining if and how you can streamline expenses to reduce waste and free up some cash for a little fun. If you're spending more than you're making, it's time to either a)increase your income, b)reduce or cut your expenses or c)both a & b. While most of us would prefer to increase our income, this isn't always possible. Usually it's easier to effect change immediately by cutting or reducing an existing expense. Unfortunately this isn't always possible either.

Keeping Track

Pen and Paper
This suggestion may seem a little retro in this age of Microsoft Office, google docs, and iPhone apps, but for some people, physically writing out their expenses and accounts is the easiest and most effective way to balance a budget. If you've been balancing a cheque book for several years, this method is very similar. All that's needed for this method are things most already have: paper, writing implement(s), and some basic arithmetic skills.

Electronic Spreadsheets While most people are likely already familiar with Microsoft Excel (and already familiar with whether they love it or hate it), some may not be aware of the electronic spreadsheets available from Google docs. The electronic spreadsheets in Google docs do most of the things for which I've ever used an Excel spreadsheet. Google docs are free to use, and have the advantage of being instantly shared to any of your Google contacts if you so choose. This feature is great for people sharing expenses, like roommates, as the records are kept in one place, on one spreadsheet, and may be viewed, edited, and updated instantly by any of the contacts with access to the document.

Mobile Applications
Frequently hailed as the latest and greatest in personal technology, the mobile application has become an incredibly popular method of doing anything. Budgeting is no exception; there is a vast array of mobile applications for tracking spending and income across a variety of platforms. If you own a smartphone or tablet device, this may be the most convenient method for you. However, if you've found your experiences with these technologies to be less than intuitive, then this is probably not the best way to manage your expenses. Not all apps are created equal, but we're finding that some of the ones we've tested so far aren't as straightforward and easy to use as it seems they should be.

Free Software and Online Money Management Tools
Perhaps offering a middle ground between the solidity of writing with pen and paper and the digital ether of the mobile application, are free online money management tools. Free programs to track transactions abound, and many offer features like email and SMS reminders, expense graphs and charts, and the option to import account statements or export data to other programs like Excel.

As there are so many different budgeting apps, programs, and tools to choose from, it can be hard to tell sometimes if you've made the right choice. Fortunately, all of the options explored today are free to try!

Setting goals for your grocery list

Going to the grocery store is often a hassle: the crowds, the carts, the lines at the cashier... a trip to the market is often unpleasant enough without even mentioning the increasing costs of food which can lead to increasingly higher grocery bills. The crowds and the carts will often be part and parcel of the weekly shopping but with a little care and management, you can keep the total at the bottom of your receipt from fluctuating too wildly from week to week. One way of checking spending at the supermarket is to set a goal for the average amount spent per item when dividing the total bill by the number of items in the order. For example, if the goal for the average amount spent is set at $2.00 per item, and the total bill comes to $50.00, then there should be about 25 items in the order.

So...
Goal average amount per item =$2.00

$2.00(number of items)= Total bill amount

If I'm remembering correctly, algebra doesn't get more simple than that.


This is just an example of course. This system of setting an average amount per item spent is merely guideline. However, by being more conscious of how the cost of each item is going to affect the total bill, it may be easier to make thriftier shopping choices. More often than not, there are enough sales and coupons in any given week that customers needn't alter their basic grocery lists too much. By simply buying the store-brand or the brand of a product that's on sale, and using coupons or the supermarket's discount-club card (all the ones I'm familiar with can be obtained at no cost) consumers can fairly easily stay on target for their goal. Other ideas to help achieve your average cost per item amount include:

-Buying produce in season. Produce tends to taste better and cost less when bought during the seasons it would "naturally" be harvested.

-Stocking up on a favorite item or pricier basic (such as butter) when it goes on sale.

-Instead of buying already prepared or heavily processed snack-food and frozen dishes, consider buying the whole ingredients and cooking or preparing the item at home. Be careful however, as making something from scratch is not always cost effective, depending on the ingredients and length of time needed for preparation.

ALLOW DAT

It's no secret that monitoring your spending helps to decrease it and it's equally well known that setting a budget and sticking to it can, well, really be a drag. However, a budget can also be a helpful tool, and allow you to allocate funds not only for savings and bill payments, but also for hobbies, socializing and personal luxuries.

Remaining disciplined and sticking with a budget is much easier when that budget makes certain allowances. Following a budget that sets aside money specifically for things like your weekly magazines, latte, or night at the Roxbury allows for some fun while still enabling you to pay bills on time and deposit periodically into your savings.

Allotting for such luxuries allows for two things: 1) it ensures that each month or week (by what ever period you plan your budget) you'll have the money for small indulgences while preventing your personal expenditures from spiraling out of control and 2) planning for these expenses means you don't have to feel bad about spending on yourself. So long as you stay within the allowance you've set, you need never feel guilty about treating yourself.

Making room in your budget for this allowance is important! No one likes to feel as though they're denying themselves. Attempting to adhere to a budget that allows no room for fun and the occasional frivolous expense, can be a bit like trying to follow a crash diet. You may make some fast progress initially, but after a short time the entire experience is so restrictive and unpleasant that afterward you may well engage in over-indulgent behavior that undoes your previous efforts.

So allow dat bruv, and grant yourself a little allowance!

SAVING SUX (AMEN)

Ah, saving. Socking your money away so that you can do something better with it in the future. Saving kind of sucks, but you just need to do it shushy.

It's never too early or too late to start saving. However, if you find yourself in debt (especially a great amount of debt) it's more important to pay down your debt to avoid the ecu-ring of further interest. If you aren't in debt, and you haven't started saving, there's no better time to start than today!

The sooner you start saving, the longer your money has time to grow. Those of you in your twenties and thirties that are not-yet raising families are in an excellent position to start saving aggressively now.

For example, if you start saving $3,000 per year (that's $250 per month) at the age of 25, and your investment sees a return of 8%, then by the time you're 65 you'd have $839,343! If you waited until 35 to start saving the same amount of money at the same rates you'd have only $367,038. Something of a difference isn't it?

Some thoughts on getting started: if you've never been much of a saver, starting can be difficult to do and may seem impossible. It's not! --Well it's not impossible to start at least. Here are three ways to start saving!

- Clean out your wallet, handbag, satchel or wherever your lose money tends to gather, --if it tends to gather anywhere. Then, take all the change and free floating single bills. Put them aside in a coffee can, jar, antique vase, cute ceramic piggy bank, new savings account, --wherever you have to put it so that you put it away for a rainy day. Unless you're real hard-up for those green backs, you won't miss the coins, be they copper or silver. It's a slow way to save, but it's a way to start and it will grow over time! Especially, if you know, you put it in a bank account or retirement fund where it can gain some interest.


Pennies by themselves are still pretty worthless, but pennies in a pile sometimes amount to something!

- Again, unless you desperately need it to pay a debt or an upcoming bill, save some of every windfall, no matter how small or great the amount. You needn't feel as though you can't go out and celebrate that raise or bonus or scratch-n-win ticket for $500 --but instead of blowing every penny from heaven on a big dinner or fancy toy, pay yourself first. Consider doing it a little differently when you do go out to celebrate a gain. Drinks and hors d'œuvres are usually cheaper than a dinner without drinks, especially if you're splitting those hors d'œuvres plates with a few friends.

- If you have a habit that's born purely of pleasure, consider giving it up for a little while or scaling back on it for a bit and saving the money you would have spent. Let's say you're in the habit of going out to lunch everyday during the working week. If lunch costs you $10 a day, that's $50 a week or $200 a month you might be spending. Even if you only cut down to where you're still eating out twice per week, that's only $20 a week or $80 per month. There is, of course, the possibility that your grocery bill will increase somewhat so that you have food to bring for lunch. Still, groceries are often dramatically cheaper than eating out. Check out this guy who challenged himself to eat well on $1 per day!

Depending on your individual situation or life-style, these suggestions may not work for everyone. Still, they may inspire you to something that will allow you to save a little here and there. It isn't important that you save a lot right away, the important thing is starting, and then continuing to save with some regularity, even if it's just a little here and there. Don't get overwhelmed, when you start from nothing saving anything, much less hundreds of thousands of dollars seems terrifying! It can be tough, but the important thing is to keep at it. Setting a specific goal, or thinking of something concrete (a house, an education, a vacation, the Batmobile) that you want to save for, can help. Remember, isn't delayed gratification the definition of maturity? ISN'T IT?