Monday, May 4, 2009

Budget part 2 of 3

Okay, so some of you have probably already downloaded three months worth of transactions and are waiting for the next step. So this is for those that are ready to jump ahead. If you have chosen to write everything down for 3 months you need to finish that before you start this step. You need to know where you are before you can move forward. The first step is sooooo vital. Do it right and you will be glad.

One thing I want all of you to keep in mind is that this is a step by step process. Most people I know don't budget. They run their finances like yo-yo dieting. It is either feast or famine. Or, when their own feast runs out they turn to someone else's table and keep consuming. NO MORE!! You are taking control!!! You are going to be successful and I am going to help you!! (Little side note here, it took me being married for seven years and failing at budgets before I became successful. Now, if I can do it, you can do it too.)

I can't remember exactly what I wrote in the first episode. I might reiterate things, but remember I am trying to let go of my perfectionism, it is late at night, and I want to get this up. So please bare with me. It is probably good that this info be repeated anyway.

With that said, the first goal of building any budget is to see how you are spending. Many people and programs I've seen, sit down and try to make guesses at what they think their category amounts should be. With this they are saying what they HOPE that category will be. However, it is important to see what you are actually doing. That is why step 1 is so important.

Now, step number two is to make your budget. Now, if you are using the spreadsheet my DH wrote. You have typed in three months worth of expenses on the "Past Register" page. Now if you click on the "Plan a Budget" page (look at the bottom of the spreadsheet for the tab) you will see your category averages for three months.

If you are like me and most of my clients, some of your spending will surprise you :). This info give you an accurate "snap shot" of your spending behaviors. You will probably need to make some budget cuts, but now you can realistically make those decisions. For example, if you spend $500 per month in Dining Out, cutting it to $0 probably isn't realistic. You are used to eating out and going cold turkey without it may not be realistic - unless you are willing to be drastic.

This is the part that I think is fun. You need to take your gross income and subtract the amounts of money that you assign to your budget categories, so that money in, equals money out.

If you are planning on saving - and you should - that needs to have money assigned to it as well. The most powerful part of having a budget is telling EVERY dollar where to go -including to your goals.

So let me step you through this "Plan a Budget" page. Up at the top in yellow you will see columns B,C, and D places to write down your Gross Income. Type those in for the three months. The spreadsheet will calculate the averages in column F. In column H (in yellow) you type in the average amount you see in Column F. (Remember - ONLY WRITE IN THE YELLOW).

Keep going down column H typing in the amount you want to assign to each category. Remember column F tells you on average what you are spending. The last cell in column H should be $0. Keep working the numbers until this happens.

Please email me at if you have any questions.

Keep up the good work!

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