Comments on: Budgeting 101: How a Simple Budget Helped Me – And Can Help You, Too

By: The Thrifty Shopper

The Thrifty Shopper — Tue, 31 Mar 2009 14:32:31 +0000

This is exactly what people should be doing – making notes and keeping track of their spending every month – how else can you keep on top of your spending and live within your means!? Don’t forget that being thrifty is all about being clever with your money NOT being tight!

By: Holly

Holly — Fri, 16 May 2008 15:38:37 +0000

We have just started to commit to a budget and the first thing I did was audit all our “subscription” types of expenses. Admittedly, we had been pretty lax about controlling our money but I found almost $100 in monthly outflow going to services, websites and publications we weren’t even reading/using. For people who may not yet feel they need a budget I would at least recommend a periodic audit like this. It will save us almost $1200 this year.

By: Just Simple

Just Simple — Thu, 01 May 2008 23:22:34 +0000

One of the best way is to make sure the balance is always zero at the end of the month, after subtracting income with expenses.

By: Jim

Jim — Wed, 30 Apr 2008 02:42:32 +0000

I am a psychologist who works with people with severe mental illness. One of my patients right now is struggling with excessive spending and your method is so perfect because it is simple and do-able. I’m going to teach it to him AND try it myself too! Thank you so much. PS: Found you on lifehacker.

By: Cyde Weys

Cyde Weys — Sun, 27 Apr 2008 01:15:16 +0000

Haha, that’s funny how Internet is not a “required utility” but gas is. Frankly, in this modern age, I think it’s the other way around. The Internet is absolutely essential to many of the things I do. When I lived at a rental house in my last year of college, the heater broke for two weeks during the winter. It got cold, but I survived. Now if the Internet had been out for two weeks, I wouldn’t have put up with it. And since the stove there was electric, gas was more of an optional utility to me than Internet was.

I think it’s just because the Internet is still relatively new that we can get away with calling it optional. Just remember though, electricity, running water, gas, and sewer were all once new and optional too, but now they are essential. I think the Internet has already crossed that threshold, and within a decade, there will be very few left who will disagree.

By: JReed

JReed — Sat, 26 Apr 2008 00:09:16 +0000

Mol; Yes…debt payments are part of your fixed expense; you don’t have a choice about whether you make the payment or not. Additional principle money (put towards your highest interest rate loans first) is a variable expense that should be a priority right behind or parallel to emergency fund build up.
To me, building a budget based on alot of receipts that show what you spent before you decided to reform your ways can be enlightening; sort of like looking at all you ate for 6 months before you went on a diet. The shocking truth of what part of your paycheck is truly available for discretionary spending is revealed by this paycheck budget method. Until then, you are fooling yourself by living beyond your means… right into the debt hole.

By: Bert

Bert — Fri, 25 Apr 2008 19:04:30 +0000

I use my debit card exclusively. My electronic receipts are often posted to my Bank of America account before I get home. Using the free “My Portfolio” feature, Bank of America puts most, if not all, of my receipts in the proper budget catagories automatically. Many reports are aavailable that lets me know how I’m doing in any month. This makes 95% of my budget and expense tracking a “hands-off” matter. I mostly just check to see how I’m doing on my budget instead of slinging paper receipts and messing with spreadsheets. When constructing a budget, BOA even pulls all my receipts in each catagory for the last 6-months to show me what my spending has been so I can make good decisions on how much to budget.

By: Personal Money Tips

Personal Money Tips — Fri, 25 Apr 2008 16:48:37 +0000

You know this is some great advice and I would agree works well. I think that tallying up the receipts daily might spread the work into shorter pieces that would be more manageable.

One thing that I would recommend is to get a small notepad (2.5″ x 4.5″ or so) and simply write down what you spent periodically during the day. Keep the receipts and compare them to your notes. You’ll get a more accurate picture of your spending habits.

By: M

Fri, 25 Apr 2008 14:41:21 +0000

Using clearcheckbook is a real easy way of making a budget. I just put my receipts in clearcheckbook probably twice a week, assign it a category, and it can tell you how much you are spending in each category and give you an average for multiple months. For me it’s much better than taking all of my receipts and sorting them into piles.
It’s free: http://www.clearcheckbook.com

By: Mol

Mol — Fri, 25 Apr 2008 11:36:44 +0000

Question, if you allready have debt, do you include that in your outgoing money?

By: Kelli Myers

Kelli Myers — Fri, 25 Apr 2008 11:28:42 +0000

Budgeting is very important both to stay away from debts and to save money. I have started budgeting my monthly finances very strictly as i have a plan to take a loan for new car. If I can continue with this for some more time i hope i will be owning the car very soon.Kelli

By: gr8whyte

gr8whyte — Fri, 25 Apr 2008 08:32:46 +0000

@ NED (comment #15) : I think savers budget by looking at their paychecks first instead of their bills. Savers want positive cash flow — spending no more and preferably less than what they earn — to be sure to end up with some savings out of every paycheck. Knowing how large my paycheck is to start with and how much my necessities are allows me to limit my discretionary spending and never overspend as a result (touch wood), save a little every paycheck and never have to worry about bills. JReed’s suggested budgeting method makes sense to me.

By: JReed

JReed — Fri, 25 Apr 2008 01:00:36 +0000

You can play with the numbers and philosophy and hopes and goals all you want but the fact of the matter is until you realize how much of your money is ALREADY SPENT out of each paycheck, you won’t have a realistic idea of exactly how much money you actually can make a decision about. This isn’t top down budgeting, it is bottom up. Many of your expenses are already set just for you to exist legally. I’m not tallying up latte receipts, I’m dividing up car registration fees, rent, insurances, prescription co pays,utilities etc. Unless you realize what it costs you just to wake up every Monday morning, you won’t be able to understand how little money you do have to play with, eat out with, buy magazines with etc.
This isn’t a theory, it is a simple fact.

By: NP

NP — Fri, 25 Apr 2008 00:44:04 +0000

Meg, I’m a credit card person too, and it’s helpful that they categorize expenditures for me. I am alarmed how much we spend on fuel and eating out, but I guess that’s life in the fast lane.

By: Meg

Meg — Thu, 24 Apr 2008 18:51:09 +0000

I have never really tried to create a budget, I just use my credit card (paid off every month if not more often) for the majority of purchases and look at my spending report frequently. I know what my basic expenditures are, what is fluff and unecessary, and what is for savings. I have fairly good spending habits and it works for me (probably because it is just me). I still save my recipts just in case.

By: Donna

Donna — Thu, 24 Apr 2008 18:30:49 +0000

Hi Trent,

Love your blog and read it daily. Full disclosure: I work at Mint.com, the free online money management service.

Completely agree with you that it’s critical to understand what your spending as a first step toward spending less than you earn…and starting to save. But disagree that you need to do all the manual paperwork you suggest to get to that understanding. In my experience, the work involved actually prevents most people from following your good advice. I joined Mint, part of a 20 year career in personal financial services, largely because it solved the problem of helping people understand their money quickly, easily and automatically. Mint, and other choices, offer an alternative to collecting and analyzing physical receipts for months. For some, online personal finance tools will be a better solution, enabling folks who wouldn’t otherwise build and maintain a solid budget to get that done for the first time.

If that means more Americans are able to better live within their means and start saving for retirement, we’re all better off.

By: JB

JB — Thu, 24 Apr 2008 16:52:14 +0000

I highly recommend the best budgeting software I have ever used (I’ve used Quicken and various spreadsheets over the past 25 years). It’s called You Need a Budget (youneedabudget.com). Dave Ramsey recommends it.

The philosophy is simple and includes creating a buffer of one month’s living expenses so that you always have a cushion (this doesn’t include emergency savings/investments)in the bank.

The software is far less expensive and MUCH easier to use than Quicken. Since I have been using it, I have the clearest/cleanest picture of my budget that I’ve ever had.

Check it out! You will be glad you did:)

By: MJ

MJ — Thu, 24 Apr 2008 15:37:38 +0000

Hi,
I am married and find that it is hard to get my better half to commit to a budget. I pay for all the bills, and he pays for a car payment. How do you get your spouse to want to help out in budgeting?

By: Coupon-Nut

Coupon-Nut — Thu, 24 Apr 2008 15:36:08 +0000

One way I have found to save money is to go to the different websites for coupons, rebates etc.
I just found http://www.internetdrugcoupons.com/ and saved on Lipitor and Nexium, I highly recommend using the net for savings, I just printed 2 coupons for $2 off Liveactive cheese and hear they will make them almost free at Wal-mart. Wal-Mart does accept computer printed coupons, I carry this with me everywhere. http://walmartstores.com/7655.aspx . I send for free samples because many times they have great coupons http://walmart.triaddigital.com/Free-Samples.aspx . I also go to http://www.bigbigforums.com for grocery shopping deals, matching coupons with sales and/or rebates and links to free samples. I use my CVS card when I purchase prescriptions and every quarter I have CVS bucks to buy shampoo, soap etc. I also learned which stores have $4 prescriptions, Wal-Mart, County Market etc and see if what I need will be even cheaper there then at my pharmacy. Spending a little time online has really helped my budgeting. I also use http://www.Ebates.com when I shop online and get a check at least once a year, using my Citi card I also rack up the rebate dollars, but to make it worth it you need to pay off the balance every month. Trent have you thought about doing an article about all the money saving sites on the web?

By: AC

AC — Thu, 24 Apr 2008 15:23:44 +0000

I highly recommend using http://www.pearbudget.com for this process. I’ve never been able to keep and track daily expenses for longer than a couple of days when using the notebook and spreadsheet method. I’d forget to track for a day or two and poof, the next thing you know, it was next month. But pearbudget is easy to use, web-based and can be accessed from any computer. It’s been working great for me. I just set up a simple budget, entered receipts throughout the month, and voila, I know what I am spending. Not even a full month and already I can see areas where spending needs some adjustment. Simple, no tie-in to your financial accounts at all, very useful.