If you read this earlier, please read again. There is additional info.
Okay, so I can't wait any longer to talk about budgeting. I was very disturbed by the story in the news about the man who killed his small children, his wife, and himself because of unreal debt. There are many people in our country that are in trouble and I want to help. So let's get started on the road to having and STAYING WITHIN a budget. **Keep in mind this is just advise on a blog. If you need to please seek professional help**
First things first, if you are married or have your finances mixed with a significant other, you both need to be involved. Don't get me wrong, if you are trying to make things better that is a great start. But if the other person is still spending out of control it won't completely solve the problem. It is like trying to ride a bike with one full tire and one flat. You aren't going to go very far. I am going to write this toward a couple. However, if you are on your own then just go through all the steps with yourself.
Now, this approach is different than any other approach I have seen. We are going to start with where you are, plan for where you want to go, and the have an execution strategy. My DH (dear hubby) and I use this approach with our clients and it has been very successful.
So for all of you out there lets start with tracking your budgets. This is very important because it lets you see what your spending behaviors are. I feel that you can't set a realistic budget without knowing what you are doing now.
The best way to get a snapshot is to track your expenses for 2-3 months. There are three ways to do this:
1. Keep a small notebook or piece of paper in your wallet or purse and write down EVERY penny you spend. The date, place, and amount. Both people do this. Assign the expenditures into categories.
2. Download your expenses from checking and credit cards into Quicken and assign to categories. Keep in mind this will not show where your cash went.
3. My DH wrote a Budget Excel Spreadsheet where you can look at your credit card, checking statements and write them down in the spreadsheet. You can download a copy of it from my website for $1. http://www.thecouponbinder.com/ (I wanted to offer it for free, but PayPal wouldn't let me do it. So I am charging as little as possible.)
***Regardless of which method you use, I will be using the Excel Sheet to help you plan this. I would have given it away, but PayPal won't let me do that. To be successful you need the right tools and this is one of them for the budget.
Now remember, don't let your perfectionism get in your way. I know that it is scary, but I will help you through it step by step.
**Instructions for using the Excel Sheet to look at your spending history.
First of all, enable the macros for the spreadsheet. There are formulas that link the info to the different pages.
Secondly, ONLY TYPE IN THE YELLOW PARTS. The formulas will fill in the white parts for you from the info you type into the yellow.
Now, I want you to set up your budget categories. Go to the "Plan A Budget" tab found at the bottom of the Excel Sheet. We have a list of possible categories. If you need to add more, decide if it is a fixed expense or variable expense. Then click on the "Insert Income Category" under found under the type of category.
This will pop up a box that will ask you to name the category. Name it what you need. The spreadsheet will automatically fill in this category all through the spreadsheet. If you don't need a category we have listed. Just leave it blank for now.
Fixed Expenses are ones that you have to pay every month there is no decision to make about it, ie, mortgage, rent, utilities, car payment, etc. Now in the future we will talk about purchasing things that force you to pay for them long term, but for now we are seeing what you are doing right now.
Variable Expenses are ones that you can make more decisions about, like groceries (do you have to buy that candy bar or can you go without?), clothes (do you really need that new purse this month?), gas (do you need to run that little errand or can you wait and combine it with another errand on another day?), etc. You have more power make decisions on how you will spend your money in that category.
Some categories can fit into both, like dance lessons. Do your kids really need dance lessons or can they go without? Use your best judgement to how these things fit into your life.
Now I want you to go to the next tab on the bottom which is labeled "Past Register". On this page you will find your categories on the left side. Then, there are columns to type in past expenditures in each category for three months.
Get your info on your spending. If you do most of your spending on cards, download your statements (both hubby and wife). If you tracked manually for the three months get that info now.
Go through your info and decided what category each transaction falls under and type them into the yellow squares. Make sure that you do it month by month. The spreadsheet calculates the averages of the months to help you see on average what you are spending. Once you have done this, you can move onto the next step.
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