Imagine a psychologist teaching a class on effective parenting. As she teaches, you can tell the material has some great foundations, but all throughout the presentation you feel like something is missing. As the class ends, individuals are encouraged to ask questions.
A man at the front raises his hand and asks, “do you find it hard to implement these strategies with your kids? Could you give us some tips on how to respond when our kids don’t exactly follow our instructions?”
The professional psychologist blushes and says, “I don’t actually have any kids.”
That, you realize, was the missing ingredient. The information you just received was all theoretical, but not tested in real life situations.
Sometimes I read tips online, and I think there is no way that anyone actually follows that advice.
- Change your passwords every 30 days. Yup, I just read that and there is no way I’m going to follow that advice.
- Never let your credit card out of your sight. Hmm. That makes it hard to pay at a lot of restaurants.
How To Make A Personal Budget
A lot of people struggle to keep a budget and wonder how they can overcome some of the common budgeting pitfalls. But, they want practical advice that actually works, not theoretical assumptions.
So, I want to share how we keep our budget – as a point of reference. I don’t believe that there is a one-size-fits-all budget. But, in order to help you, I’ll be a little transparent and let you know what works for our family. If there is a tip you like, then take it. If nothing fits your personality, then that is fine too.
- We set up a simple budget using Moneydance budgeting software. For a long time we used Excel spreadsheets. My wife isn’t as crazy about using the computer, but since I like the idea, she goes along
. However, my budget worksheet was a little complicated so we went to a software that allowed us to see everything clearly in one click. - All through the week, my wife and I keep receipts for everything we buy. If we buy something and don’t get a receipt, we write it down on the back of one of the other receipts. Memories are not good budgeting tools.
- Once a week, Sunday nights or Monday nights, we take 15-20 minutes to enter all the receipts. One person reads the receipt information, and the other records the information on the computer.
- After entering the receipts, we both look over the category totals to see if we are on track and if anything needs to be adjusted.
By working on the budget together, we can complete the task more quickly. In addition, we are both very clear as to the current state of the budget. We have both seen the numbers. Since we meet weekly, the job doesn’t seem overwhelming. Any time we don’t get receipts done one week, we start to dread sitting down to sort through everything. Weekly small chunks of time work best for us.
The best part? It usually doesn’t take us more than 15 minutes a week to maintain our budget.
Full disclosure: For the last year, we’ve not done as well with our budget. Typically, we’ve been slipping to bi-weekly budget meetings. Sometimes our three kids wear us out, and we just can’t get the motivation to get to the budget in the evening. Hey, I understand, budgeting can be hard at times . So why don’t we just quit? Because both my wife and I believe that budgeting is the most important tool to help us reach our financial goals.
For that reason, we always incorporate a way to be lazy. We put $10 into our budget called ‘unaccounted’. Anything under a dollar we don’t do anything with and assume the $10 will cover it. Your lazy number might need to be more depending on your spending habits, but if you get too concerned about the details, then you’ll never be able to keep a budget for more than a week.
Want to learn more about budgeting?
I’ve just released an eBook called The Secret to a Successful Budget: Practical Advice for Creating a Budget That Lasts.
In that book, I introduce five effective strategies for keeping a budget along with answers to the most common budgeting questions and challenges. Actually, I talk about a lot more things than that, but for the sake of brevity, I’ll stop here.
Note From Bob:
Craig has taken a often misunderstood (and sometimes frightening) subject and has provided an extremely helpful and valuable resource for anyone wanting to create a budget. Having written about budgeting myself for years, I have not seen a more thorough resource dedicated specifically to setting up and maintaining a budget than Craig’s eBook. So, if you have failed to keep a budget in the past, this might just be what you need to help you create a successful budget. Learn more here.
Photo by: Svadilfari
Do you have any budgeting tips or tricks to share?
{ 6 comments… read them below or add one }
Seems a bit excessive if you ask me but if it works for you then keep on doing it. Budgeting is still the most successful thing when it comes to saving money.
@Tracy
Your right, the key to any budget is “if it works for you”. Too many people try to say there is one right way to budget. A budget needs to be based on ones personality.
The description may be excessive, but it only takes us about 15 minutes a week or around 2 minutes a day. Those 2 minutes a day is a very simple way to save hundreds or thousands of dollars a year.
Budgeting is always something I find frightnening and hard to do but it sounds like it is not too hard if you stay focused and on task. Thanks for the post!
I think it is natural to need to monitor less often as time passes since the plan has moved from implementation to maintenance. I prefer monthly and keep a modified envelope system for the miscellaneous expenses. Easy to do a visual check of where I’m at each time I spend.
We keep written ledger pages in a three ring binder. The front page shows the overall yearly budget. After that, there’s a tabbed page dedicated to each category. At the top, each page shows what is put in there from each paycheck, the category name, and the total yearly goal. The person who incurs any charge is responsible to write it down and deduct it from the balance. I “do” the books every payday, adding the deposit, writing tithe/giving checks, and noting potential problems. My husband writes checks for most other bills. I keep track of automatic deductions. We have a major discussion in November when/if he gets a COLA or raise. That’s the time we finalize our budget for the following year. If during the year some amount seems to go totally out of whack (car dies, major medical expense), we discuss it again and rework the budget together. At year end we staple the pages together and stash them with our tax forms.
One thing we’ve been advised to do, and we haven’t done consistantly is to track actual expenses in each category year to year, to see if there are any trends. Theoretically, this way we could anticipate future needs.
although i realize many here do not and will not use credit cards (CCs), i use my online account for my CC (1 Amex and 1 Visa) to keep track of expenditures. they are updated within 24-48 hrs of each transaction and i can also detect VERY recent purchases (<24 hrs) by looking at the credit limit which changes in real time (minutes after swiping the card for a purchase). i mentally deduct that total from my current checking account balance knowing i will be paying off the balance at the end of the month. this way, i do not have keep receipts for budgeting purposes (i do keep them for return/warranty purposes). it also allows me to see any fradulent activity (although i have had no such experience in the last 3-4 years). having online access to CC accounts has dramatically improved our ability to cut down on frivilous purchases and stay underbudget.