A realistic budget is more than just a numerical listing of your income and expenses. It reflects personal choices and values. The ability to see past the numbers is essential to understanding more about your personal spending habits and/or behavior that impacts your quality of life. Learn to use a budget as a guide for knowing more about your spending habits and ways to change habits that keep you from achieving your financial goals. Use your budget to organize monthly bills, identify priorities, meet obligations, and plan for financial success.
Pencil & Paper: A simple budget can be written on a piece of a paper with a pencil, and optionally, a calculator. Such budgets can be organized in three-ring binders or a file cabinet. Simpler still are the pre-formatted household budgeting or bookkeeping forms that creates a budget by filling in the blanks. You can access our personal monthly budget form by clicking here. Once you access the form, you’ll be able to enter and keep track of your monthly budget.
The Envelope System: This traditional method of budgeting involves creating a single paper envelope for each budgeted expense, such as entertainment, housing, and transportation. Each time you are paid, allocate a portion of the cash to your expenses by placing the required amount into each envelope. To pay a bill or make a purchase, simply use the designated envelope.
Spreadsheet software, like Microsoft Excel, iWork Numbers or OpenOffice.org Calc, helps to arrange budgets according to need and performs calculations easily with rudimentary formulas. For example, budget spreadsheets are used to keep track of income and expenses. The major reason most people discontinue using budget spreadsheets that don’t offer date-shifting is that the information needs to be reentered or moved at the end of each month. Spreadsheets are still excellent for complex budgets and planning.
Money Management Software: Some software is written specifically for money management. Products such as Quicken and Microsoft Money are designed to keep track of individual account information, such as checking, savings or money-market accounts. These programs can categorize past expenses and display monthly reports that are useful for budgeting future months.
Spending-management software such as You Need a Budget (YNAB) are a variation of money-management software. Unlike typical budgeting that allocates future personal income towards expenses, savings and debt repayment, this type of software utilizes a known amount of money, the cash you have on hand, to give the end-user information regarding what’s left to spend in the current month. This method eliminates some of the guess work associated with forecasting what a person might receive for income when it comes to allocating jobs for budgeted money. Like money-management software, some spending-management software packages can connect to online bank accounts in order to retrieve a to-the-minute status report of the current monthly budget.
Online Budgeting Calculator: Many banks and financial service companies, such as Morningstar or Fidelity, T. Rowe Price, offer online budgeting calculators to help you work on your budget. Visit Google and use “personal budget calculator” as a search term and you will find a lot of user-friendly sites for personal budgeting and investments.
Basic Checking Account: This is perhaps the most common way to pay bills– you can track your spending and pay bills through online billing or by mailing in checks.