Budgeting, Part II

Yesterday, I answered some reader mail about budgeting, which discussed why budgets aren’t effective for some people, but can be effective for people who like to track their spending so they can figure out where all their money is going and where they’re overspending (i.e. when Lindsay Katai discovered too much of her disposable income was being spent on snacks).

The Billfold Community offered up a bunch of suggestions on how they keep track of their spending. Here are a few of them. 

• Excel spreadsheets. People love their spreadsheets! Personally, I have no patience for spreadsheets, but there are people out there who can’t live without them, and you may be one of these people. Go through your statements online, and categorize each transaction into their respective fields: Groceries, Dining Out, Rent, Transportation, Shopping, Entertainment, etc. If you’d like to see how some people format their spreadsheets, check out Billfold pal Presh Talwalkar’s expense tracker and budget spreadsheet for 2012.

• Online spending tracking tools like Mint, Learnvest, and Bundle, which can show you how much you’re spending in certain categories after you’ve synced all of your accounts with their online software. People like these programs, but in my own experience, you have to check to make sure that the programs are not only pulling all of your transactions, but also categorizing them correctly. There are other times when the programs for one reason or another refuse to sync with your bank. Now, not everyone will experience this, but if you do and have to put in the effort to fix things, you might as well track the expenses yourself in a spreadsheet.

• An online money forecasting tool like pocketsmith, which not only tracks your spending, but forecasts how much money you’ll have in the future, based on how much money you’re spending and saving. One caveat is that you have to pay to open up additional features to get the full experience.

• Keeping a rolling budget. For example, giving yourself a $200 monthly budget for eating out. If you spend just $150 of that money in your first month, you can roll over the leftover money and have $250 in your eating out budget for the following month. If you spend $225, you have to deduct from the following month, which means you’ll have $175 in your budget for eating out during the next month.

• Spending holidays. Or days where you don’t spend any money to help balance out the days when you do spend money. I do these sometimes, and call them “no spending weekends,” and find them effective.

[Update] • You Need A Budget. I forgot to include this one! Thanks for the reminder, you guys. This money management software has an easy to use interface, and is especially helpful for the person who is living paycheck to paycheck to get their finances in order, and make each dollar work for them. The caveat is that the software is $60, but you can try it for free for a month to see if you like it.


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