Comments on: Preparing a Budget? Ten Tips for Making That Budget Successful

By: Tyrone | Millionaire Acts

Tyrone | Millionaire Acts — Sun, 19 Jul 2009 23:37:52 +0000

Preparing a budget means that you prirotize the needs and less on the wants. There is no definite budget on a yearly basis as we all have varying needs every month so we need to prepare a budget every month alloting every dollar to either spending or saving.

I would say in budgeting, savings is the most important expense so we need to pay ourselves first before spending. Savings buys our future.

Also, it would be helpful if you prepare the budget as a family with your wives and children cooperating on the budget preparation. In this way, each would know where bulk of the expenses go and would try to make an effort to lessen those expenses considered as wants.

By: Amit C

Amit C — Tue, 22 Jul 2008 23:21:16 +0000

Useful & practical tips. About managing, I found mint.com to be pretty good, automatic expense categorization and simple budgeting with initial values based on the current expenditure.

By: Debbie

Debbie — Sun, 20 Jul 2008 13:55:21 +0000

I think folks should write down what they spend for at least 30 days to get a good basic idea of where their money goes. Then take a year’s worth of utility bills and get the average monthly payment. Put the average payment down for all individual utilities. Then most folks forget the yearly payment of say the Termite letter, car tags etc. I try to put everything into my budget that I know I will have to pay over the year. It’s much easier to put $11 per paycheck away for a car tag renewal than it is to suddenly come up with almost $300 when my bill comes in.

Also add a “Murphy” savings account for unexpected events that occur. The added bonus of budgeting is when you run out of money in that category (say eating out) you know you can not spend anymore till next paycheck comes.

By: Jessica

Jessica — Fri, 18 Jul 2008 00:54:17 +0000

I personally beg to differ on this one, Trent. My thought is the first thing Mike should do is track his spending for a month. Once he knows exactly where his money is going he will know where to cut back a bit. As time goes on and his savings build up he can plan/budget ahead for those things.

By: Jules

Jules — Wed, 16 Jul 2008 19:34:56 +0000

Good old pencil and paper–yep. When I actually accumulate enough to make investing possible, I might consider going electronic, but I think odds are I’ll probably just get a good calculator.

By: Kelsey

Kelsey — Wed, 16 Jul 2008 17:02:30 +0000

you could also consider a local credit union instead of a bank, they generally offer more personable service and better rates, plus like the FDIC, the NCUA insures deposits up to $100K at most credit unions, try: http://www.findacreditunion.com/ to find one in your area!

By: Leisureguy

Leisureguy — Wed, 16 Jul 2008 15:36:01 +0000

For unearthing the hidden/surprise expenses that destroy the planning, I highly recommend the free Excel workbook Within Your Means. Filling out the workbook is fairly easy, it's easy to update as you think of things omitted in the first pass, and you get a clear idea of the amount of money available to spend vs. the amount already committed. You can download it (for free) at the link.

By: Nancy

Nancy — Wed, 16 Jul 2008 15:27:33 +0000

All great tips. Here’s how I implemented the second part of #4. Years ago a friend taught me how to set up what she called an escrow account. It is a separate savings account. I had to have a couple hundred dollars to start(to cover bills coming due soon). I have 10 different categories such as dog, car insurance, car repair, life insurance, vacation, christmas, extra taxes (since I have some self employment income), water bill(we are billed quarterly), gifts and misc. I keep track on a tablet. Across the top I list the 10 categories and a total. I divide each bill by 12 and that amount is how much I deposit each month. Some categories don’t get a bill so I guestimate the amount for the year. For instance Christmas, I put $100 each month. Each month I put a designated amount in this account. Sometimes I am withdrawing and depositing in the same month. I set up my escrow account at a different bank from the bank where my checking and regular savings accounts are so it is not easy to move money because in the beginning I didn’t want to be tempted to “borrow” from it. It has worked well for many years. This could easily be done on a spreadsheet. It is a comfort to look at the columns and know that you are preparing for the bigger, irregular bills. I do the same with property taxes and home insurance in another account.

By: Ryan McLean

Ryan McLean — Wed, 16 Jul 2008 13:34:32 +0000

This is honestly one if the best articles on budgeting I have ever read. It is so helpful and rings so true to so many people who struggle to stick to a budget they make. You have done amazingly with this article. Thanks

By: Jody

Jody — Wed, 16 Jul 2008 13:11:24 +0000

For a few years now, I thought I was doing well financially because my budget was done up on a lovely spreadsheet and I balanced out my money each pay. Earlier this year, I discovered personal finance blogs and clued in to two major errors:

1. I wasn’t paying myself first so wasn’t consistently putting anything into savings, I had it set up so if anything was left unspent that pay, then it went into savings. Duh! How often do you think I had something left at the end of the pay? Switching this around forced me to address my second error…

2. I had an amount allocated for groceries but never bothered to track how much I was actually spending. For the past three months I’ve recorded every purchase (easy to do, I just save the receipts) and low and behold I am spending significantly more than I had in my budget. The beauty of tracking my purchases is that I now know where I am overspending…turns out I bought more ice cream, chips and pop then I would EVER have believed. Now I am extra aware of these items when shopping and can really work to avoid them in the grocery store – my waistline will be happier too.

So for me, the fixed costs on the budget were easy (be sure to work with actual costs not estimates) but the one true variable had me off the rails big time.

By: realtychic

realtychic — Wed, 16 Jul 2008 12:48:46 +0000

Hi! I have a question. I have tried many, many times over the years to do budgeting, and I have always let it slide after a month (once I made it a whole two months!) However, I have my spending well in check (I save/invest about 1/3 of my monthly income) and am not prone to splurges. Also, I can tell you a very accurate estimate of what my bills will be each month – including the irregular ones. Is there a compelling reason for me to continue this budget fight? Frankly, I’m not a detail-oriented person, and I just don’t enjoy it, and since I don’t feel like I get a lot of benefit from it I’m more inclined to just let it go. So the question is: does anyone see any major drawbacks to that or any major benefits of budgeting for its intrinsic value?

By: Stacey

Stacey — Wed, 16 Jul 2008 11:54:28 +0000

We’ve been keeping budgets for awhile now, but in the beginning it was easier to work some “fudge” factor into our budget. We set aside $100 each month for small emergencies, until we really got a grasp on our monthly expenses. (It was our first marriage, first house, first budget.)

We don’t need this $100 buffer any more, but it came in handy a few times! My favorite was the time that the windshield wipers flew off the car into a store parking lot… from the road as we passed the store. We turned around and bought wipers, but we were able to laugh about the sitation because we knew the money was there.

By: Joyce Jarrard

Joyce Jarrard — Wed, 16 Jul 2008 11:03:04 +0000

I agree that it is difficult to budget with the financial software. I tried to budget with Quicken, but it treated the principal paid on my debt payment as transfers, rather than deducting them from my cash. Therefore, I had to do the “real” budget on Excel. (I’m very good with Excel, so that wasn’t a problem.) I also find it impossible to update my 401(k) information in Quicken. So I end up taking information from Quicken, and tracking my Net Worth by month in Excel.

Trent, last week’s articles were especially good; the best whole week I have read so far. I e-mailed the links to your articles to several friends.

By: Sam

Sam — Wed, 16 Jul 2008 09:22:22 +0000

Love this post! I’ve written a post about doing financial planning during tough times, it can be found here–> http://fixmypersonalfinance.com/2008/07/15/doing-financial-planning-during-tough-times/

Another thing to do and is most fundamental when it comes to doing budget is to reduce expenses to be able to set aside funds for savings and investments.

By: tiffanie

tiffanie — Wed, 16 Jul 2008 06:16:23 +0000

excellent tips for the beginning budgeter! :) i plan on writing a detailed post on why i use Microsoft Money to keep me in line in the upcoming week or two :)

By: Hogan

Hogan — Wed, 16 Jul 2008 01:39:38 +0000

Do you fall off the frugality wagon when you are ill?

By: Frugal Bachelor

Frugal Bachelor — Wed, 16 Jul 2008 01:14:28 +0000

Outstanding. I don’t usually like “List of tips to …” blog posts but this is wonderful starting with the question of what you want to achieve (the first two tips I have ever seen before in a budget how-to post), going on to execution, and ending with how to keep following it, and keeping it flexible. No matter what type of budget you need to create, these guidelines are very solid and universally applicable. I think I follow all of them in my personal budget. Well done Trent.

By: Wonko Beeblebrox

Wonko Beeblebrox — Wed, 16 Jul 2008 01:03:51 +0000

I’m surprised you listed WaMu as well.

As much as I like banking with them, I am seriously reconsidering changing my account to a more stable bank…

By: Anne Anne

Anne Anne — Wed, 16 Jul 2008 00:49:33 +0000

http://www.gettingfinancesdone.com/blog/archives/2007/02/the-easiest-way-to-organize-your-budget/

I recently started “budgeting” and found this link which has really helped me.

Solid advice, as always, Trent.

By: April

April — Tue, 15 Jul 2008 23:51:55 +0000

Trent… I just wanted to say — I really appreciate your Budgeting advice. The last few posts on this topic have been among the most lucid I’ve ever read. Thanks for the clarity.

AND– great pic. Made me laugh! :)