those of you who "pre-spend" your money on paper (ie, every dollar is assigned a category to predict and set parameters for spending), can you share your methods of doing it?

I want to get on an actual budget instead of my method now of just watching my spending and paying bills. I want to be able to bank money but I don't think I will get there with how I am operating now. Outside of just writing down my bills and looking at my net pay, are there other good tricks? I am taking Ramsey's financial peace university at the end of the year, but would like to lead in with some momentum.


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Are you handy with Excel (or similar spreadsheet program)?

Numbers (part of the iWork suite) has a nice and simple budgeting layout built-in with all of the complicated items outlined and all you need to do is fill-in the blanks. It will even give you a per month savings total and a graph to illustrate the saving over the year. It would not surprise me if other basic spreadsheet programs don't have something similar.

Before you get to the point of filling that out, I would recommend that you make a list of all of your expenses over the course of a normal month (or, if you have it, great). Divide the list into categories (automotive, housing, food, entertainment, etc.) and break those into specifics (e.g. - automotive into gas, insurance, maintenance, washing). This will allow you to see how much you spend on what ... and from this, you can create a realistic budget by trimming the excess expenses without causing yourself pain (e.g. you may realize that you spend 30% of your income on food & drink or 15% on going to the cinema that you can easily reduce).

I know that this is all basic, but that is where everyone has to start. Also, despite having had to make business budgets in the past, I still use very basic double-entry accounting for my personal/family budget.

In my experience (both personal and professional), the hardest part is not creating a budget but sticking to it!
I suck with excel, and everything I have seen on excel for budgets is overwhelming to modify to make work for me.
Personally, I hate Excel! Microsoft seems to like making things three or four steps more complicated than it should be.

The Numbers option is easy to use for long-term planning and can be quickly adjusted ... plus, it fits on a single sheet of paper. If you would like, I could send the worksheet to you as an excel version to see if it would work for you.
One option would be to get a ledger, a book for keeping books. If you are good with a calculator, you could probably get a good budget going.

And remeber, "pay yourself first".
If your financial position is at least comfortable enough that you KNOW you can afford your monthly expenses, set up automatic payments.

All of my expenses go to my credit card (Earning me a cash-back reward), then I set my bank up to pay off the card each month before any interest can accrue.

Doing this ensures that your cash flow is going where it's supposed to...

It can also be helpful to compartmentalize (Color your money). Set up seperate accounts for Routine expenses, Play/Luxury, and Emergency
I don't have a single automatic deduction, because I am too afraid of having a transaction returned NSF. I do pay every single bill online though my bank's website, and only two of them take longer than 2 days to be received.

One thing I don't know how to build into a budget is "blow money", the funds you spend on random stuff that doesn't matter like a pack of gum, or ice cream for the family. Maybe it just becomes a line item.
For discretionary spending, you'll have to estimate an amount you feel comfortable with. You can begin by SWAGging the figure, but you'll want to refine after you've tracked that spending over the course of an average month.

I usually over-estimate a little bit in order to pad my budget. At the end of the month, you have a couple options. You can roll any unspent portion forward and maintain a growing mad-money account, you can find some way to spend it, or you can carry the excess back to help with another area of your budget**.

** Discretionary funds are the only funds that should be redistributed casually. Please don't ever dip into your regular expenses or emergency fund for alternate purposes unless you have taken the time to reassess your entire budget.
This is where thinking about your expenses is helpful, for example, with the things you named:

Gum = Discretionary
Ice Cream with the family = Food and/or Entertainment

Ideally, all expenses should be categorized ...

One trick that I learned from business accounting, add a small contingency fund (~5%) into your budget for those discretionary items.
I suck at budgeting, but I learned a trick over 30 years ago that has helped me a lot recently. I write down Every. Single. Expense. Every day. I use a spreadsheet (too bad we didn't have Lotus back then), and just use general categories (Food, Entertainment, Transportation, Utilities, Housing, etc). I even include a column for Income, so I know when and how much money I have coming in. The first benefit I noticed was a drop in expenditures. There's something about recording them that has a certain psychological effect. I would recommend doing this for AT LEAST six months, but a year would be better. Then you can track your expenditures and and set up a true budget.

Up until recently, I was doing well enough financially that I really didn't "need" to use this (although I wish I had). Since losing my job in February, it's been indispensible. I set up a separate spreadsheet for each calendar year, so that I can track my expenses on an annual basis. The expenses form the basis for a budget.
I keep a google document called "Check Register" which is how I balance my books. I can go back until the beginning of the year to see how I spend my money online and how I spend with my debit card, but mentially aware of how I spent cash (I spend 100 a week cash, for everything from gas, to discetionary stuff, to a haircut or whatever random item happens that week).

Anyone have a favorite online example of a budget excel document they used to modify for their budget?
Do you track any of your money in anything other than the google doc you mentioned, anything that will show you an easy breakdown by category. You may want to check out something like, they're a free personal finance site. My wife and I use Quicken, but the software costs money so you may not want to start out with it.

Basically when we do our budget we grab a pad of paper and write stuff down, putting montly income at the top. Then we go on to expenses that are always the same (rent, insurance, tithe, investing). Then move on to things that very only a little (electric, cell phones), and then thigns that could have a wide variation but we take an average over the past year (auto for example, who knows what gas will do or what repairs we'll have, but we take an average and go with it). This gives us what's left. From there we have a bunch of categories and put dollar amounts next to them until we're out of money. Blow/entertainment money we just take in cash and put in our pockets and if we use it in the month it's gone, if we don't we keep it in our pockets and just add to it.

The tough thing then becomes what categories will you have and how much will you put there. Since you're doing the Dave Ramsey stuff I'm assuming you're trying to pay down debt. So then it ends up with a conversation of what's the least amount of blow/entertainment money I can survive on without going crazy, how much do we want to save for Christmas (remember what Dave says, Christmas is Dec. 25th every year, it's not an emergency and there's no reason to put it on credit cards), what are we willing to give up to be able to throw extra on debt.

You can set up the budget how you want, the question you raised about ice cream with the family could go a few ways. It's either food, or it's entertainment, or it's family time, or you can have a separate restaurant/eating out budget category. It's tricky but freeing all at the same time.
I actually registered for mint, but did not have the time to mess around with it, or the prior knowledge that it was worthwhile to do so. What is your experience using them?


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