Setting Up a Budget

Do you have a budget? Many people think of a budget as almost a form of punishment that keeps them from spending money on things they want. If used correctly, a budget is a powerful tool that can help you get the things you want in life.  So why not start one today?


I like to use a combination of a set bill/discretionary bucket approach. This way, I do not have to track every penny I spend, but I track categories, especially for my discretionary saving and spending. I use a an Excel spreadsheet that I created based on my needs.

So how do you do this?  First, make a note of your monthly pay. I put this at the top of a column for each month. Then I create two columns, one for my anticipated spending, and one for my actual spending for each month.

It looks something like this (using made-up numbers):


  Anticipated Spent notes
mortgage 2300 2300  
nat gas 165    
phone 22    
electric 90    
car insurance 150 150  
gasoline 250    
food 500 230  
miscellaneous 400    
unexpected bill 24 24 license renewal
savings 800 800  
cable 111    
cell phone 79    
gifts 25    
  4916 3504  

I used the Excel autosum feature at the bottom of each column. When I add an amount, it adds the column automatically, so I can see how I am tracking against my budget for the month.

What is nice about this method, is I have two buckets of spending that are not set: the food bucket and the miscellaneous bucket. If I shop wisely at the grocery store and have money left, say $40 in that bucket, then I can go out to dinner during the month, guilt-free. The miscellaneous bucket is my “walking around money”. I can do whatever I want to with that-buy a snack, go to a movie, whatever, again guilt-free.   I always budget in a small amount for an unexpected bill- in the example here, a driver’s license renewal in March. The other important item is the car insurance. I pay this quarterly, but put money aside every month, so that when the bill is due, I have the money instead of a budget-buster. I also try and anticipate any items like gifts I may need to purchase ahead of time. With this budget, as long as I do not overspend, I will have saved $800 during March, because I put that money aside in my budget, first (see pay yourself first on this site). I move that $800 to an online savings account on one of the paydays.

Try it yourself- just fill in whatever bills you pay every month. Within a couple of months, you will have a clear idea of how you are spending your money be on your way to meeting YOUR goals.

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