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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11 Comments / Post A Comment

I like call my spending holidays “Austerity Plans.”

AnnieNilsson (#406)

@dj pomegranate Likewise. Makes me feel like I’m a country.

Out of the online tracking tools, what might be the best for young graduates? I’m assuming each site has a bunch of options.

brinsonian (#646)

@Nina B.@twitter I like Mint.com. Well, I “like” Mint (in the begrudging sense, not in the Facebook sense). When it works well, it’s awesome–but when it’s buggy, it’s very frustrating. There isn’t a lot of customer support (no surprise, as it is a free service) and fixes are slow to come.

When it’s good, the things you get are: transactions automatically categorized (though I double-check all of them and manually adjust them often to split, say, a “grocery” charge into the “grocery, toiletries, and booze” categories it should be), snapshot graphics (net worth, expenses and income by sources, investments, etc.), and easily-trackable goals. I’m a big fan of targeted savings accounts (saving $x week/month/whatever in separate online savings accounts to save up for big purchases) and Mint plays nicely with those.

Bottom line is, any decent online tracking tool should give you the option to export all your transactions as a CSV (comma-separated value, essentially a super-basic Excel sheet). So if one service ends up not working for you, you can literally take your money somewhere else.

@Nina B.@twitter I, too, like Mint.com. Fair warning, though: It isn’t great for creating a budget for a future month. Say it’s April and you know that, in June, you’re moving, so you want to make separate budget for June. Mint doesn’t really let you do that (not to my satisfaction, anyway).

It is great, however, for letting me see a snapshot of all my accounts – credit card, savings, checking, and student loans – so I always have a reasonable idea of what my financial situation is. Also, the aforementioned ability to split transactions is so genius.

@Saralyn@twitter Another vote for Mint. I just started using it the other day, and it is really nice that you can see how you’re doing budget-wise from your phone.

I have mentioned this in the comments before, but I’ll say it again because I <3 it: You Need A Budget (YNAB.) Seriously you guys, it has made my life so much easier and better and more money-efficient! You do have to track manually sort of, but it also allows you to import the CSV file from your online banking. It also allows you to create a budget for future months–in fact, that is the whole point of the system–planning for next month using this month’s income. You can also choose your own categories, which I find very useful.

lizziefresh (#651)

@dj pomegranate I heart YNAB so much. Using it is the first time that I’ve attempted to get a handle on my finances that has actually stuck (4 months and counting! woo!). There is something about the interface and how it has you start thinking about money that really clicked for me. And somehow it’s making me really excited to not only not incure more debt, but pay down the debt I have? Not sure why?

I think if you are disciplined or spreadsheet minded, you could build something similar to this tool for free, but that is not where my strength is. Also I needed something I could maintain on my phone since I am terrible at sitting down and entering receipts etc after the fact. So check plus for that!

I was so inspired after reading The Billfold’s archives the other day that I wrote a blog post on how I manage my budget! This might be helpful for some folks? http://jessicamcleod.blogspot.com.au/2012/04/budgeting.html

Jaime (#507)

Ugh, Mint. Every time I’d pay to use the subway (on Boston’s MBTA), they’d classify it as “fast food.” So annoying! I don’t even like those fucking sandwiches!

Now I use an Excel spreadsheet. But the amount of money I have to spend each month is ingrained in my head so much that I don’t really look at it except when I need to see if I can handle significant life changes/expenses.

The twp things that really, REALLY made a difference in how much I was able to save and budget:
1. Making a list before going to the grocery store, and using a calculator before purchasing food to make sure I stay within my ridiculously small – but surprisingly manageable – budget of $60 a month (that’s $120 between two people, which helps things).
2. Packing my own lunch and making my own coffee. It changed my life. That’s easily $200 or more saved a month. I couldn’t believe it either. Also, once you get in the habit, it’s really easy (I’ve also always made my own breakfast and cook dinner most nights).

branza (#660)

@Jaime What do you eat that only costs $60/month? I think my budget is more like $30/week!

I am not trying to be flip. I am genuinely curious. Please tell me more about your food budget.

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