Is Your Personal Budget Working?

by Joe on March 31, 2010

I was so obsessed with our budget a year ago (an excel spreadsheets with formulas on it) that i would check it several times a day. My obsession has declined and i check it now at least twice a week, but i still love the idea of budgets.  If you are on track to get out of debt, a budget is a MUST HAVE tool. Some of the many benefits that my wife and i are enjoying out of budgeting are:

  • We are able to identify how we are spending money now.
  • We are able to see variations on our monthly expenses and nail it to the specific.
  • We are able to track and evaluate our current spending and set goals for reducing the expense item (if it‘s not a need).

 How to make a budget system work

Use a written budget
There is a ‘something’ that happens when you write down stuff. I personally think that it‘s a commitment call- because you are signing to do what the document says.  Avoid the ‘mental budgets’. Write it down and find that ‘something’. If you are married your spouse may not be mind reader- and the more the need to spell it out.

Use a computer application
There are so many free budget spreadsheets that you can download online and tweak them as you wish to fit your need. We are in 2010 and technology should be your friend.

Watch out for money moles.
These are items that secretly eat your cash and are not itemized on your budget.  Items such as starbucks coffee, lunch with friends, and such miscellaneous expenses can accumulate to a huge chunk of cash. Keep a close eye on them.

Put tithe on your budget
Human beings are not naturally inclined to give; especially when you are drowning in debt, it’s even hard to think about it. But when it’s on the budget with other items like rent, food and clothes- then you start having a different perspective. This is the first thing we did after we got married and embarked on the journey to becoming debt free.

Spend less than you earn
A no brainer concept -but statistics shows that about 43% of American families spend more than they earn each year. Refuse to be counted here.

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{ 5 comments… read them below or add one }

Arthur @ Financialbondage.org April 2, 2010 at 10:58 am

At first it was not working great but over time it’s much better. I look at it monthly and make changes when needed. For those new to budgeting, it takes 6-12 months to get the hang of it. If you make mistakes that’s okay, keep at it. Do not give up

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Patrenia April 2, 2010 at 10:25 pm

*raising hand* Guilty as charged, LOL!!! In the early stages of starting a budget, I would look at it “constantly”. Maybe I thought the numbers would change. You’ve given solid advice here in reference to budgeting and tithing.

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Joe April 5, 2010 at 6:40 am

@arthur, thanks for your comment. and yes infact we made several mistakes and took a while to to put our spendings in syncy with our budget. And this is to be expected.

@patrenia! did the same thing.. but i know normally look for areas that we can cut spending.

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Awareness Home Funding April 6, 2010 at 1:50 pm

Thank you for adding the point about living beneath your means. While this is not always easy for many right now with increasing costs and decreasing income, it should be the overall goal. If more took that general approach, more funds would be set aside to counter those ‘bumps’ that are almost a guarantee in life.

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Joe April 6, 2010 at 9:12 pm

@AHB- That is something that we constantly check on our budget; to make sure that we are not spending more than we bring home.

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