Budgeting Basics 101: The Simple Must Do List

 

We all can make money mistakes, and over the years I made more then a few of mine but by learning the budgeting basics I was able to learn to really take control of my spending, and money habits. There are simple must do’s when it comes to budgeting. This is what I did, what I did, what I learned and what I am continuing to learn along the way.

Track It

You need know what is coming in each and every pay, and what is going out. Keep every single receipt for at least 3 months, I was in a hurry to get started so I cut this to a month. Some days it was hard, who wants to write that tea down, or collect a receipt for something cost less then a toonie, but I did it. So gather then record each one. I was just getting in Excel so I did up a spreadsheet just like a friends dad had. I also bought a notebook from Dollarama so I could track those small silly purchases.

Categorize it

Once you have them all you will find several patterns. You will find there are fixed and variable stacks of receipts. Separate them into piles that make sense.

For me when I was starting this in worked down to this:

Fixed Income -CTC, GST, and child support fell into this one for me

Variable Income- work and blogging income fell into this one for me.

Fixed Expenses:

Rent, Cellephone, Cable, Transportation were mine.

Variable:

Clothing, Medical, Food, Grooming, Allowance, Entertainment, and Charity were mine.

Notice Savings was not even in the picture.

Analyze It

Take a look, a good hard look at where the money went.Look through the piles. Check out each receipt.  What are your habits? Where could your make changes. This is most likely to be found in your variable expenses. Do you eat out 5 days a week? If yes by brown bagging it just half the time, think saving. Look at each stack, where there ways you could of saved yourself some money? Think about it. Look for at least 2 ways you could save. I am not asking you to make big changes at the beginning. I found when I took on too much at once I set myself up to fail. I don’t want you to do the same.

Budget it

Now you know what you have been spending set out how much you want to spend in each catergory. For me I set a line in the sand for certain categories that I will not go over no matter what. Ie  I have a strict budget for entertainment and once it is gone, we are looking for free things to do. When it comes to things like medical though I know now that some months there will be no expenses and others well I need to be prepared for.Do make sure you add savings to your budget on my initial budgets there was no spot for it.

Test It

Use your new budget tracking as you go. If you do not spend what you have budgeted, great you save it.

Look At It Again

After you have used your budget for a couple of months look at it again, are there new ways you could be saving? Are there categories that need adjusting? Did you get a raise, change jobs, those are things that would require a relook at the budget.  You should repeat this every few months.

I am trying to do this, and to be honest some months I am not the best tracker, but I am trying and I will get there. What keeps you on track if you keep a budget? What are your simple must do’s?