I’ve tried to set up a budget in various programs… MS Money, Quicken, etc… I never understood how it worked. It never made any sense to me. I had these powerful programs that, to me, were just glorified check registers. I setup my own way of budgeting in Excel and had been using it ever since, until I came up with Daily Home Planner. Now the back and forth between Brandon, Daily Home Planner’s programmer and Co-creator, and I was quite amusing as I tried to explain to him MY way of budgeting. He still says he doesn’t understand it, but it works exactly correctly in the Daily Home Planner, so I think he understands it at least a little now.
So how do I budget? And is it really that complicated to understand? I don’t think so. Let’s dive in shall we? So you have a bank account. Your bills come and you pay them out of that bank account. You go to the grocery store and again pay out of that same bank account. Now I’m not including credit in this. That’s a subject for a whole ‘nother blog! So you have all of these expenses that come out of the same account. You know how much approximately you are spending, but do you know how much you have left to spend for the month? The way my budget works is that your checking account/savings account etc is broken up into categories. It’s like having 30 different checking accounts, but only opening one. So I get my husband’s paycheck. The first thing I do is break that amount up into the categories. So he receives $50.00 (for simplicity’s sake). I put 20.00 in the mortgage category, 10.00 in the grocery category, 10.00 in the utility category, and 10.00 in the fun category. So now my mortgage bill comes for $15.00 (I WISH!!). I deduct the money from the mortgage category so now there is 5.00 remaining. Trevor and I want to go out on Friday. We check the budget and see that we have 10.00 to spend in the fun category. I guess that means a rental movie and some frozen pizza from the grocery store! This budget helps you to not overspend in categories. Also it helps you when your bills come you know that money is already earmarked in your checking account to pay that bill. My savings account is also broken up into different categories that I’m saving for. My savings account categories include vacation, emergency fund, and household (for all those projects and things I want to replace in my house). When our vacation category gets to a certain amount we know it’s time to go on vacation!
Daily Home Planner is great in that it will keep track of all of this for you. Before I had the Daily Home Planner I had an excel sheet. When I would receive a deposit I would take out my calculator and put the amount of the deposit in, then start deducting from the deposit as I added to each column. Daily Home Planner now does that work for me! I love it! Sorry for the shameless plug!
So your mission this month is to get all of your bills and receipts for the month together and figure out how much you are currently spending each month and in what categories. Then hopefully what you are spending either equals or is less then what you are receiving each month. If it’s more, then you need to start figuring out where to cut some expenses, or go get another job! Then you can either set up your excel sheet with all the columns or purchase the Daily Home Planner to do it for you.
My old excel sheet is available for you to download here.