What is important here is that we now are back on tarck. We know how much we spent last month, and can better prepare ourselves. Tracking ones expenses can be difficult; especially when you start doing it. What you need is a few easy tricks and some dedication. You’ll find hereunder a few I found useful:

• Keep all your receipts
• Take a piece of paper and write the figure down when you forget or lost the receipt
• Update your tracking file every 2 days – it only take 5 minutes
• Keep your excel file with you all the time – a USB key is the idea companion
• Print your budget and stick it somewhere visible (fridge, mirror, TV…)
• Do it with your spouse / fiancée / GF / BF – doing it together will help you stay on track

Got any other? Please share

Budget template?

Finding the right budget template is important. At the end of the day, you need to feel comfortable using your sheet or program in order to update it regularly and use it to its full potential. Doc Stoc can help you find your template. They have many of different templates ready for you to download. You should try many, and select the one you feel most comfortable with; Furthermore, you should adapt it to your needs.

Budget = treasure map ?

A budget will help you think ahead. It is here to help you achieve the goals you defined and refined. This is why I see it as a treasure map. It set all the little dots you have to link in order to get to the final line, all the check-points you have to go through to reach the cross mark, all the obstacles to overcome before reaching your reward.

Spending Plan

But before celebrating, you have to draft your budget. To get you started, you simply have to take a piece of paper, and ask yourself 3 questions:

• Expenses – How much do you need to spend to maintain your lifestyle? To answer this question you should list down all the expenses you will make over the coming month(s). All the ones you are tracking on a daily basis should be here, plus a few more representing large expenses you foresee (house repair, vacation etc.)
• Income – How much will you bring home next month? I’m sure your know the answer to this one. Straightforward answer.
• Debt – How much is your minimum repayment? You should list down all your debts, along with their minimum payment. By minimum payment I mean the one you can not escape.

Once you’ve done that, you can arrange it in a spreadsheet. Following your current assumptions, do you have something left at the end of the month once you deduct your expenses and your minimum debt repayment from your income? If you do, congrats! You are saving money. If you don’t, play with the figures (reasonably of course) so that you get a positive bottom line. Imagine how much you would save, and how your life would be without cable TV.

Work in progress & Tracking

You should consider the budget / spending plan you just drafted like a work-in-progress. It will certainly evolve over the next few weeks and months. It will evolve thanks to your reviewing it with your tracking sheet. Your tracking will help you come up with more accurate figures. You will also add some expenses which you first forgot to write down. You should review your budget on a regular basis, and draft new ones for the coming months / years even more regularly. Try to see it as a game.

The Starbuck Phenomenon

Let’s imagine you take a coffee every morning on your way to work. Every morning you spend a few dollar to get your dose of caffeine. It may not seem much when you think about it on a daily scale, but if you start changing the scale to a week, a month, or even a year the dollars adds up very quickly. This phenomenon is not unique. It actually comprise most of the small stuff we all buy over a day.

Keep track of all cent

Knowing that small spending can add up pretty quickly, you need to start keeping track of all your expenses on a daily basis. Use a piece of paper, a pocket size memo book or your blackberry phone, but keep track of every single cent you spend. The data collected will then be used to review your progresses and set your budget.

You will find hereafter a sampling of my excel sheet:

I you don’t see the excel sheet, please follow this link

What is a budget

A budget is a summary of probable expenses and income for a given period. It gives you a foresight on what expenses you can expect and what you have to plan for. A well planned budget will create a surplus of money which will help you reimburse debt, save, and invest. A badly planned budget will leave you with a deficit of money, leading you to credit card debt (18% interest rate!!!) and bankruptcy.

Budget = Planning

You should see budgeting as the same as planning. I’m sure you do not leave to a party without knowing where it is (I hope not). A personal budget is the same; you need to know where you are going before you can reach there. It is extremely important to know where you are spending money, and how much you can spend.

The real question to ask yourself is the following one. Do you really know where your money goes specifically? Unfortunately, most people don’t.

Interesting link to check from very different sources:
Why Budget – Tulip Tree Press
How Budgeting Can Improve Your Life – Get Rich Slowly
Budget, creating a blueprint for smart spending – Citibank