Evaluating your Budget
Managing your budget does not have to be difficult or time consuming. By taking some fundamental steps, you can gain better control of your spending and develop a more detailed view of what you spend.
The fundamental thing to remember is that managing and evaluating your budget doesn’t happen automatically. You must first decide what information is important to you. Then create or choose a tool that will allow you to see how your money is being spent. Set aside a little time each day or each week to record that information. Finally, take the time to review your expenses [monthly? quarterly?]; you may be able to make adjustments that will save you and your family money for other things.
There are several budgeting tools from which to choose. Tools like Quicken and Money are available, but they are commercial products and must be purchased. However good you think they may be, they can only be used for financial management. If you are just getting started, or do not wish to pay for a dedicated tool, what else can you use?
Consider a spreadsheet program such as Excel. Most computer users, especially if they use Windows as the operating system, have a package like Microsoft Office on their machines which often includes Excel. Excel is designed specifically for numbers, it supports multiple pages within one file, and it allows you to design a standard weekly or monthly form that you can use to easily fill in your recurring expenses. Or if you’re just getting started, or you just don’t want anything very complicated, you can use paper and put your record into a folder for later review.
Next, identify the bills you pay every month, which may include rent/mortgage, electricity, water, gas, garbage removal, cable/satellite TV, Internet access, automatic payments to a savings account or a child’s 529 college fund, charitable donations to your church or other organization, etc. Using the tool you selected, create a template or form that you can copy from week to week or month to month that is easy for you to read and easy to enter your payments. Depending on the amount of detail you wish to have, you may want to leave room at the bottom of the template for your day to day expenses like gas or other fuel for your vehicle, groceries, lunches and dinners eaten out, doctor or other medical visit co-payments, etc.
As you start to review some of the details of your spending, you will likely find that you spend far more than you realized on something like eating out. You may be able to save a significant amount of money by simply eating at home an extra night or two, being a little more selective about the restaurants you choose, or bringing your lunch to work a few days every week.
To put this all another way, you must decide that you will exhibit the discipline to record your expenses while making it as easy as you can on yourself. If you can keep it simple and easy, you will be more likely to do it. Once you begin recording your expenses, brief reviews should make it obvious where you can, in many cases, easily save money which will give you the freedom and resources to do more of the things you want to do.