If you are just getting started and do not have a budget created yet, be sure to check out my plan out my budget each month.
Getting in the habit of checking in with your budget and your spending on a weekly, or even daily basis is going to take some practice.
When I was first getting started in tracking my budget, I used a spreadsheet. I still use a spreadsheet to plan out my budget each month alongside my calendar, but then once I have completed the planning process, I transfer the numbers to my preferred tracking software so that I can easily track and manage my spending and keep up to date on my budget.
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My choice of budgeting software is mint.com.
I used them for a while just out of college and ended up going back to exclusively using my spreadsheet because I felt the software was too limiting.
I have started using them again in the past two years and I think they have definitely made some improvements.
There are some really great features that mint.com offers, but first and foremost it is FREE to use!
And not free in the sense that you can get limited access to some of the features but then have to pay for a premium account – free through and through.
But maybe you aren’t ready for a software program yet, I will let you decide. Here is how you can use both a spreadsheet and software to track and manage your budget.
Using a Spreadsheet to Manage Your Budget
I have one large spreadsheet that I keep in Google Docs that has multiple tabs tracking different aspects of my finances.
Here are the items that I track in different tabs:
- a basic template of our expenses and income
- our “extra” income each month from overtime and side gigs
- detailed budget for each month
- our debt snowball
- our Christmas expenses
- comparison of overall spending from year to year
Hopefully, you have already started a tab with your monthly income and expenses.
If you choose to keep a spreadsheet for your finances, I would go ahead and create a tab at least for the next month (if not every month). Copy your expenses from the current month, and make sure there is a column for you to put in the monetary amount next to each expense.
I divided my budget spreadsheets into four sections:
- income sources
- fixed expenses
- savings and investments
- discretionary expeneses
At the end of each “section”, I have a running total for each section and I have a grand total for all expenses at the end up my spreadsheet.
Finally, make sure you have another section that subtracts your expenses from your income so you know how your budget looks for the month.
Sound complicated? If so, I have a copy of my own spreadsheet available for FREE to download!
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Using a Budgeting Software to Manage Your budget
Once you play around with your numbers for the month to balance your budget to zero using your calendar, it is time to transfer your budget to your software, if you choose.
This is where mint.com comes into play for me.
When you first set up your account, it will have you link all your accounts. You can add your bank accounts, investment accounts, loan accounts, your mortgage, cars, etc.
It is truly a place where you can see ALL of your finances at a glance!
Once you have linked all your accounts and created your profile, you can create a budget.
Their budget creator is fairly straightforward. You can use one of their many many categories that are pre-created or create your own.
Once you pick a category, it will allow you to choose whether that category is a monthly expense or some other frequency.
The categories and their expense amounts will roll over each month but once the next month starts you can go in and change anything that you need to.
If I do not have a certain expense one month then I just change the amount to $0 instead of deleting the category altogether.
There is also a place to put in your income for that month as well as add any financial goals you may be working toward.
Once you create your expense categories and add the expense amounts for the current month, you are done and can now start using the software to easily track and manage your budget and spending.
Why is a software better than a spreadsheet?
Some people love their spreadsheets, but they can take a long time to set up to be perfect for your needs.
Spreadsheets are great for recording information or planning, but if you can find a software program that does the automating of the tracking of expenses for you, why not?
There is a section called transactions that will pull in any financial transactions related to the accounts that you have linked up.
These transactions will update in real time every time you log in. Every couple of days or once a week I would make it a point to go in and go through the transactions and label them with the correct expense category.
Make sure each and every expense gets a label that you have in your budget for that month – if you need to tweak your budget at any point in the month to add a new category or modify an expense amount (within reason) that is okay!
Once you have gone through your transactions, you can easily check on your budget and how much you have spent in each category.
There is even a great visual on the Overview page that shows you exactly where you are for each budget category and how much money you have left to spend.
It will take a few months to get used to budgeting and tracking everything and most likely there will be some hiccups along the way, but don’t let that cause you to lose momentum.
Just like anything else in life, the more you practice and create a daily or weekly habit to manage your budget, the easier it will become.
If you have a love for organizing, then once you start tracking your spending by assigning categories, you will not want to get behind and be unorganized!
Once you are comfortable with a system to track and manage your budget and spending, check out my next post that will help you automatically manage your money as soon as it hits your bank account.
Do you use a budgeting software? And if so, which one?
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