Budgeting 101

Did you know that only 40% of households have a monthly budget?

Isn’t that a little terrifying?  How do you know if you can buy something if you don’t know what you can afford?

I can’t preach and I’m sure there’s a few guilty pangs for anyone reading this because we’ve all been there.  I’m supposed to be the responsible and frugal one of the family and have waves of “where the heck is my budget?” months.

But, 3 months tested, 3 months strong.  I’ve finally found a tool that can’t fail me.

I’ve tried Mint.  I’ve tried Personal Capital.  I’ve tried writing them down. I’ve tried carrying only cash.  Nothing stuck.  Here’s a little bit about each.

Mint.com

Mint started it all for free online tools.  It’s very convenient in that you can link all your financial accounts – savings, checking, credit cards, loans – to Mint and it will automatically track your spending.  You can create budget categories, amounts, and set goals.  I’m a visual person and the graphs and reports were very easy to use.

But what if you have accounts that you aren’t the lone spender on?  Such as a “His, Hers, and Ours” setup with your spouse or significant other or a family account that each member can tap for emergencies?  That will heavily skew your spending activity and net worth.

Overall a great product.  I’d highly recommend, especially if you are just starting out.  I stopped using it because it stopped syncing with my accounts properly and it became a big hassle to fix.  There’s rumors they sell your email information though so keep eye on any spam lists you find yourself unexpectedly on.

Personal Capital

Personal Capital adds to the basics and adds more tracking of investments.  It has a great dashboard that shows the big picture of how you are doing financially and where you are towards your goals.  I always appreciate the weekly emails where it lets me know how much I spent that week compared to the same time last year, how my investments have changed that week, and where my net worth stands.

They provide a lot of tools and investment advice to get started.  Plus the regular service is free.  And who doesn’t love free?

If you want help actually managing your portfolio, you can pay a 1% fee to receive personalized ideas and advice.

Definitely a great tool for those with investments to consider on top of their normal budget.

Here’s a great article with the best suggestions of different apps if you’d like more ideas.

Cash Only

Is it just me, or does anyone else hate seeing that sign on store windows?

Don’t get me wrong, if you are breaking up with credit cards and protecting yourself from getting yourself into debt by overspending, this is a great detox method.

You literally can only spend what you have in your pocket.  You can fully experience the transaction process and handing your hard-earned cash over in exchange for what you are buying.  It definitely makes you think about what you want to pay for.

Hi, my name is Carolyn and I’m addicted to credit card points.

Okay, not fully addicted, but definitely hate the idea of spending the same money and missing out on bonuses.  I take at least a trip a year from points alone.

If you can manage the credit card – and not abuse its limits –  take advantage of the free benefits.  You have my blessing, for whatever that’s worth.. (hah get it?)

Back to the Basics

So besides the apps and cash, I’ve also tried writing down everything that I spend to be more cognizant of where my money was going.   I would write them into my planner each day and total it up.  Can you see how this would get tedious and time-consuming?

We are in the digital age.  Why waste time writing down expenses on paper?  You can’t total everything easily.  You can’t see trends in your spending.  And keeping track of receipts or carrying your planner with you all the time isn’t convenient.

So I took the digital route… and like Goldilocks, I found one that finally worked!

It’s so simple yet useful. One of the tools you wouldn’t always think of but is everywhere.

Have I built up to it enough?

It’s GOOGLE!

Google Sheets offers a template specifically for budgeting.  It has graphs, categories, monthly progress.  And you can access it anywhere to update easily.

You can use their basic template or use mine.  Mine is very simple but works for me.

With 3 key pieces:

Key #1 is using the credit card I love so much (Chase Sapphire, if you’re curious).  Not only am I all about the points, but it, like any other credit card, keeps track of all of my transactions.  I update my google sheet during downtime or my work lunch hour for transactions from the previous day or export the report from Chase if I’ve missed a few days.

Key #2 is knowing your Fixed vs. Variable expenses:  what do you HAVE to pay each month vs. what can you be flexible on.  This will help you find how much you actually have to spend each day.  (Hint: it’s not your monthly pay divided by 30!)

Key #3 is, of course, creating a budget and specifying how much you want to spend in each category each month.  And sticking to it!  It’s only as good as the information you put in it so add it to your Google Docs, or anywhere you can access it on your cell phone and update it easily.

Take a look at my template. Download it, change the categories, make it yours.

Free Download of Budget Template

Happy budgeting!