Making a budget

[Csara]

What is the correct way to make a budget?

Do you list all your expenses for the year, then just add them up?

:confused:

[suzieq728]

I think thats about right, but you have to add money for miss expenses too.
I can not live on a budget, I tried. Although I should..

[meliz]

NOT that I am one to ask... I think yearly would definitely work. But if I were to keep a budget I'd also figure it out in monthly increments too... things cost more in winter (here at least with heating costs, more expensive veggies etc), so I'd have to account for that. Of course, this is all entirely hypothetical! :D I still have to get the not-spending-money-at-whim thing under control. Which I guess is the point of a budget... sigh. Wish it grew on trees...

[suzieq728]

I have made so many budgets, only to throw them out. I have the same problem Meliz, spend-at-a-whim! Yeah thats my problem too :rolleyes:

[Margarita]

It depends on what your goal is. Do you want to limit your spending? Or just have a ballpark total of your expenses for the year? Are you trying to figure out how much you can put into savings? Is there something specific you feel you're spending too much on and you want to control it?

After you figure out what you want your budget to accomplish, then you can create one to fit your needs.

For me, I'm quite the anal kind of gal, being the daughter of a CPA (my dad) and a chronic saver (my mom). While I was growing up, lots of people thought we were rich because we went on a vacation every summer, sometimes pretty nice ones, like to the east coast for 2 weeks or Hawaii. Even my in-laws thought (probably still do) my parents were loaded. Little do they know that it's all due to the amazing saving capabilities of my mom. But I digress...

I inherited the saving genes. I want to save as much as possible and can't stand it when my savings account is nearly empty (like after we bought our house - ouch!). So, long story short (yeah, right), I keep track of all of our expenses in detail. ALL of them. I even just started using my parents' new software to keep my budget. Everything is broken down by category, mortgage, car payment, groceries, meals out, entertainment, medical, etc. I have a "target" amount set for each category, based on what we generally spend. At the end of every year, I look through the budget to see how we did and adjust target amounts as necessary.

So, I don't really force us to keep to a budget (except entertainment expenses), but rather keep track so I know where our money is going. One thing I did accomplish was getting B to stop getting cash all the time. I was constantly complaining that the budget didn't balance because he wasn't giving me his cash expenses. Finally, it got through, and he quit going to the ATM.

I don't care for doing the budget, but I like knowing where my money goes, so it's worth the PITA to do it. It's really gratifying when we end up with money left over to put into our savings account at the end of the month. :)

[Csara]

We just want a ballpark figure of how much our expenses are per year. I think I figured it out last night....I just added everything up. :huh:

Thanks!

[Tearianna]

Margarita, you are a gal after my own heart! :D I keep a budget almost as extensive as you! I have a 5-page spreadsheet in Excel that tracks our budget on a monthly and yearly basis. I always round everything up, just to leave us a bit of a buffer. We also set up a separate bank account just for ATM usage. That way I can put a certain amount of money into the ATM account every month, and I know we won't take out more than we're allowed (we use ATM money for lunches at work, etc). We also have one other bank account in my parent's hometown. I have a little bit of money deposited in there every paycheck, and we never even miss it or think about touching it. That is slowly building up, to make for a nice emergency fund. My hubby says I should have been a CPA!

Oh, and we recently bought a house too ... I almost cried when our savings account went down to almost nothing! But if we hadn't had that savings, we would have never been able to afford the house, the move, etc.

You'll have to tell me what budget software you're using. Right now I'm only using an excel spreadsheet ...

[Margarita]

C, I guess I gave you a lot more than you bargained for, then, huh? LOL Did you remember incidental expenses that you may not pay every month, like car insurance, dentist, etc?

Jennifer, it's nice to know my mom and I aren't the only ones! :D Our savings is building up nicely again, too. I love seeing it in the 5-digit range! Hopefully, when we move this time we won't have to touch it because our house has appreciated in value, and we have quite a bit of equity due to an early inheritance from my parents. I especially hope that's how it works out since we might need that money for infertility treatment expenses.

The software is called Creative Solutions. Trust me, you don't want it. LOL First, it's a high-end software specifically designed for accountants, i.e. costs around $1,500 at least. Second, it's been a challenge to learn how to use it, and I'm not sure I like it. I've been setting up all my parents' clients on it since the beginning of the year and am still a long way from being done. :argh:

If you want to use bookkeeping software, I'd suggest Peachtree. I used it at a previous job and liked it. I taught it to myself without any trouble, and it works well. Quickbooks is another option, but my mom hates it. I guess it has some issues that make it hard to use. But if what you're using in Excel works, I say keep it. I used to have mine in Excel, too. The only reason I switched was to help me learn the new software for my job. It was easier to start out with my personal finances since I understand me. Other people's books can be so confusing!

[Csara]

Hey Margs, I *think* I got everything, but now that you mention incidentals, I'm sure I forgot some things. Hey, I have an idea. Can we make a "master list" of common expenses (not costs, just the categories) and everyone can add or subtract what applies to them? Do you already have one? I can type mine up and post it, but I'm sure yours is better. :blush:

[Margarita]

Sure. I still have my old Excel budgets, so it won't take much effort to get it into a postable format. I'll start a thread as soon as I get it ready.

[honeybunny]

I keep an Excel spreadsheet of expenses too. But I only track the bills (mortgage, various utilities, each credit card, etc), cash withdrawals, and anything that we write a check for. I sometimes separate extraordinary expenses (refrigerator, dining table, clothes dryer, etc) from the credit card bill to show why the bill was so high one month. At the top it shows our income (mostly paychecks) and at the bottom it shows how much we saved each month. I have tracked individual expenses before broken up by category when spending was getting out of hand, but that's soooooo much work and I always got behind on it.

[Deana]

We are using MS Money and I like it, because it shows you where you spend.
Whenever I enter a transaction, it asks what catagory you want that expense to go into (it comes with about 20 catagories and then you can create your own too.)
We also set budget limits for our variable items (groceries, long distance, etc.) and it notifies you when you have exceeded your budget limit.
At any given time, we can pull up a chart that shows us how much we've spent in each catagory (for a month, or specified time frame). The thing I like, is that I have a really good comparision of how much I spent last month vs. how much I've spent this month for everything (we're trying to curb grocery spending).

You can most likely build a similar type of spreadsheet in Excel, if you are pretty savvy with formulas and macros.

[Margarita]

Originally posted by Deana
The thing I like, is that I have a really good comparision of how much I spent last month vs. how much I've spent this month for everything (we're trying to curb grocery spending).
You too? Our grocery bill is way too high, in my opinion. I don't know that B agrees, which is the problem since he's the one who does the shopping. I'm fighting needing to take it over to save money because I think he ought to be able to shop smart, but I just don't know.

Charts would be cool. All I get is financial statements with colums of numbers. I think... I'll have to check, now that I think of it.

[andrea]

:clap: i really like the idea of making a master list

marg i need some help i want to start to budget our money so i can save to go on vaction... needs lots of help here please

[Margarita]

Okay, what can I do for you? I guess I can try rambling for a bit to see if that helps. ;)

If you want to save for something specific, I suggest keeping track on the computer or a sheet of paper. Whatever you set aside for your trip goes there, and you keep a running balance.

To decide how much to save each week/month, get a general idea of your "must" expenses (bills you have to pay every month), subtract that from your net income (after taxes), leave some for extra expenses (entertainment or whatever), and see what's left over. Commit to an amount to save *every* week/month and stick to it. That's the important part! You have to pretend like you don't even have that money, and in time you'll get used to not having it and won't miss it. Make sure the amount you choose is one you're comfortable with cutting out of your regular spending. :)

I hope that helps. Feel free to ask lots of questions!