Keeping a budget is a great way to keep tabs on your spending. Knowing how you are spending your money is a good idea at any time, but in these economically troubled times, it is almost a necessity. There are plenty of ways to keep a budget, anywhere from high tech to old paper and pen/pencil (which is how I keep my own budget). If you do want to go the old fashioned route, an old notebook you didn’t use up completely would work, as would any notebook or journal you pick up. You just need a ruler to make columns. There are columnar pads out there that you can buy as well. Keep in mind that you will be limited in the amount of categories you have to the numbers of columns that the columnar pads have. There are also budget worksheets that you can print out from online (example). If you prefer high tech, there are free programs out there that will help you budget your money on your computer. I would stick with free programs in stead of ones you need to pay for, just for your own personal budget. You can also create your own spreadsheets if you have Microsoft Office (use Excel) or Open Office (Calc). Open Office is a free version of Microsoft Office.
Once you have decided how you want to keep your budget, it is time to set it up. It is important to include categories that cover your spending. If you are a car owner, you should have a category for your car, and you can subtract any money you spend on gas and repairs from this category. If you have a pet, it would be a good idea to have a separate category for it. I have a cat, and I subtract any money I spend on her food, litter, and vet appointments from her category. Recently graduated college students who took out loans should definitely have a separate category for their student loan payments. If giving to charity is important to you, then include a charity category. These categories should reflect how you spend your money, so you can see just how much you are spending on say, groceries. If you need help coming up with categories, the worksheets I mentioned above can be helpful.
Once you have come up with your categories, you need to determine how much of your income should be funneled into each category. Certain categories are obviously going to take more than others. Once you have determined the percentages for each category, double check that added all together they add up to 100%. You don’t want to be spending more money than you have because your category percentages add up to 110%! Other than that, do not worry too much about your percentages. If you have too much or too little for a certain category, you’ll discover it in time and you can adjust it. You can also adjust your category percentages as the circumstances of your life change. There are going to be times when you need to add or delete categories, and tweak category percentages to filter more money into one category as opposed to another.
It is important to make sure to write each "deposit" and "payment" in your budget, just as you would in your check register, to maintain accuracy. I find that it helps to keep receipts or to make notes in a small notebook I keep in my purse. Try to not feel self-conscious about it if people ask what you are doing– they will probably be impressed when you answer that you are keeping a budget!
It might surprise you how much you are spending on certain things. Hopefully it will also keep you from overspending on things you do not need, as you will be able to see just how much money you spend on the things you do need.
Previous Articles:
Chegg vs. Bookrenter: Which textbook rental service wins in price and service?
