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The Budget: A verdict
Posted on September 28th, 2009 19 commentsDo you have a budget? Use the jar or envelope system? Or just try to live within your means?
I’ve been using a budget very carefully for the last two months and the verdict is… I love it! In August, I started by tabulating all my costs - writing down every single thing I bought and putting the number into a spreadsheet. I didn’t use the “jar system” - I still used my debit and credit cards - but recorded everything I spent. I lived as frugally as possible, and then at the end of the month, used those numbers to draw up my September budget.
Here’s how I wrote my September budget:
1. Averaged out my expected income for the next 4 months (until the new year) to give me an expected monthly salary
2. Deducted fixed costs
3. Created a budget for my variable costs. I used categories inspired by Gail Vaz-Oxlade: food, clothing & gifts, entertainment, transportation and other.
4. Using a spreadsheet, I inputted a formula so that at the end of each column I would be able to see how much money I’ve spent in each category, as well as how much I have left to spend. I also created a formula that would show me how much I have spent overall and how much I have left to spend in total. (This is especially helpful when you take more from a particular category.)
The budget is a big stress-reliever. It provides a sense of control. There is an excellent article at Fighting Foreclosure - Conversations on the benefits of having a budget - which is a terrific read. Contrary to what most people say (that budgets deprive you) I find that my budget has helped me to relax and enjoy my spending more, because I know that the items are already accounted for. It’s a bit like dieting - if you focus on all the foods you can’t eat, you’re doomed to be miserable. But if you make a list of all the meals you could possibly enjoy using only healthful ingredients, you’ll feel as though you have an abundance of options. A budget gives a similar feeling - it’s putting focus on the money that you do have to spend, as opposed to what you don’t have.
I recall an episode of Till Debt Do Us Part when one woman asked “do people really have time to [write down everything they spend?"] What’s funny about that comment is really how little time it takes. When I come back from the store, I open up the spreadsheet on my computer and type in the number. That’s it! Done! It’s literally seconds of time for a big pay-off. Like many things in life, it’s all about changing habits. Writing down your expenditures as opposed to just stuffing the receipt in your pocket and forgetting about it does take some energy, but overtime it becomes natural.
Please share - do you use a budget? What’s your system for keeping track of your spending?
19 responses to “The Budget: A verdict”
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I don’t have a budget per se, but I do keep track of everything in I spend in a spreadsheet that sounds very similar to yours. I have monthly spending “goals” or amounts that I want to keep my spending around. It really helps me to consistently track the spending and change my spending accordingly when I notice more going out than I want.
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Michelle B :) September 28th, 2009 at 10:32
I absolutely love it! Can you forward me a template of your excel document or where to find one.
Also, congrats on your one year anniversary! I love to read your blog and I’m happy to see your continuation and great ideas. You have also inspired me to get back into the kitchen with the pita pizza, yum!
Chat soon, Michelle
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Love it too! Also, if you don’t have time to write everything down just keep the receipts and record them when you have time later in the day. Great blog!
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I use the jar system, but I don’t feel the need to write everything down. I have a set amount that goes into each jar (I do this bi-weekly) and that’s it. When the money’s gone it’s gone. Because it’s already in categories, I know where my money went.
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I don’t currently budget (though I should!) but when I need to track my expenses, I find that using Google Docs is a great method.
I like Google Docs because it allows me to enter my expenses from any computer. I often forget the numbers by the end of the day, or lose the receipts, etc. but I found that if I had the spreadsheet available to me both at work and at home that my tracking went much smoother!
I also discovered that there are a lot of great free budgeting templates on the Google docs suite now. I use the MS Excel-type program to enter my numbers.
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I have budgeted, but mostly I track my spending after the fact. At the end of every month we monitor our income from all sources and our expenses. Because we are not prone to spending outside of our means in general, and because we know how much we have and discuss and plan our purchases in advance, this works. I have used budgets and enjoyed them, but after a while I always seem to fall off track. But we’ve been able to maintain our current system for almost 4 years.
I think it’s important to keep your personality, strengths and weaknesses in mind, and find something that works for you. As long as you’re living within your means and aware of where your money is going, you will be OK.
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psychsarah September 28th, 2009 at 13:03
I never felt better than the few months after I implemented the budget “a la jars”. It was amazing how much stress evaporated once we did this. I’m still not sure that DH is as thrilled with the jars as I am, but he understands how much happier it makes me, so he cooperates. We do the same categories as Gail suggests, but there is some play between them. DH finds the categories counterintuitive, while I love them. I figured that I can be flexible on this, since he’s buying in on the jars and all. Therefore, if there is no entertainment money left and we don’t have any gifts or clothes to buy, we may go out again from the money in that jar. I also couldn’t get him to buy into writing down his spending, but since we only spend the cash in the jars, I try not to let my anal self worry about the nitty gritty.
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I don’t use jars or envelopes, but I do have a budget that I use - although it’s loosely used one at that. I keep track of every expense, no matter how small, in an Excel file, which then tells me how I’m doing so far for the year in each of my categories. Because I don’t have debt and have automated savings, I don’t have to be too strict with my budgeting, but definitely good to have that reference. For example, according to my tracker, I need to ease up on my “eating out” budget as I’m over how much I’ve alloted. It doesn’t mean that I’ll stop going out to have a coffee/ice cream/what-not, but I’ll make sure I significantly reduce the frequency until I get closer to my target as each month passes by (if that makes sense).
I do have to disagree though about it being less stressful. I find that with the tracker I’ve become hyper-aware of how I’m spending money and that’s no fun really - keeping in mind that I’ve always been “sensible” with my money (As Gail puts it) even before using a tracker.
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I’ve been reading your site for quite a while, but haven’t commented I don’t think.
My husband and I felt the need to start a budget after the birth of our first child 2 years ago when I wasn’t planning to go back to work. We have a template in Google Docs that we use to update budget numbers should we think they need changing. We also have a “Savings” area where we save for items that are more on an annual basis: vehicle insurance, house insurance, some personal ‘allowance’ for both my husband and I, etc. There is a new sheet each month with the income listed and it calculates how much is leftover, etc.
We just get receipts for everything and put them in our wallets, then every week or two (or however often one of us has a few minutes) we go through and put them into our spreadsheet.
Our categories include: Groceries, Clothing, Health, Vehicle, Property, Dining, Hobbies, Children, Donations, Investments, Gifts (actually a savings category), Utilities, Home, and Garden.
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The freedom that comes from having a “retroactive budget” – what I call tracking expenses – is amazing. I would never have believed it. I know other people don’t when I tell them.
Panic has gone, decisions about money have lessened, feeling out of control has gone – feelings of control and empowerment have replaced them.
We laugh with lighthearted amazement at the difference tracking expenses - and its follow-on, conscious spending - has made to our lives.I love love love my two spreadsheets and my jars.
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Just read your Fighting Foreclosure link – this sums up perfectly the power of the budget.
Gotta say it again – I love love love my conscious spending retroactive budget. -
I love to budget too, welcome to the club. Budgets liberate you from debt and overspending and help you reach your goals. What’s not to love!
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It is de-stressing not distressing, to have a budget. This way we Know.
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Saver Queen September 30th, 2009 at 20:11
Thanks so much for your comments, everyone! It’s so interesting to hear what you do to track your spending. I think it is an individual thing - whatever works for you is best. Sometimes it’s good to try something new though. I hadn’t used a budget like this before, just monitored my account balances and cc statements and such. I really like my new system.
Wendy - great categories. Thanks for sharing these.
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Saver Queen September 30th, 2009 at 20:12
PS Michelle B - I can probably make a template for you sometime, but if not it’s SUPER easy to do!
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I have been using a budget for about 2 months now and it is really helpful. I also thought I would hate but, similar to what people here have said, I find it kind of calming. Even this month when I was WAY over I could see that I paid tuition and put more into my travel fund than I should have. Even going over teaches me about better strategies for next month. I wish I did this years ago!
I use pearbudget.com and I really like it. I knew I would lose track of stuff on paper but this way I just enter receipts when I get a minute at work and its all done. -
I definitely keep a budget! With 4 kids and only one income coming in, it’s a must! I don’t feel ‘deprived’ either… if we want something, we save for it, we don’t put it on credit. I think honestly i’d go a little bit insane without a budget! lol!!!
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I keep a budget, but I track expenses somewhat retroactively. I also use Google Docs, simply for the same reasons as above in that it is accessible from anywhere there is a web connection.
I have an idea of how much money I have for discretionary spending each month and stay within it. I don’t use envelopes or jars simply because I love my debit card. I can track what I spend just by logging into my online banking account (PC Financial, which is FREE, by the way!).
I feel the same as you, that it is totally liberating to live by a budget. You know you have enough money to cover your expenses and cash flow is never an issue. It is amazing how much more money I seem to have now!
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I’ve kept track of my spending for years, and you’re right–it’s very freeing to know exactly where you stand with your money. I highly recommend the book Your Money or Your Life by Joe Dominguez. We jot down any cash spending each day in a little notebook in the kitchen drawer, and on Sunday morning I enter everything in Quicken. I like surprises–but not with my money! ;o)
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