Budget 101

Although budgeting isn't fun, it really is step #1 to saving money. You need to know where your money is going before you think of ways to to stifle the flow. We'll get through this as step number one, but don't worry, the fun stuff will be right behind!




Set Your Goals
If you haven't set your goals yet, it's time. I'm a visual person and I wanted a big fat reminder of why we're living on a tight budget. Solution: I slapped up a big three foot by four foot piece of brown Kraft paper on our wall. Our one year, five year and ten year goals are nicely spelled (and drawn) out on our wall as a giant reminder.

What are your goals? Whether you are planning for retirement, trying to adjust to a smaller income, planning a big vacation, paying off debt, or even just trying to make it by month to month, identifying your goals will help you focus and stay on budget.




Creating a Budget
One great service to help you create your budget is Mint.com. It is a free service that helps you see where your money is going, create a budget and set your goals. What's great about this service is that it pulls information straight from your bank account, so it saves you a lot of time! It even has a mobile app so you can manage your money on the go! Worried about your privacy? Mint.com is an Intuit company (the makers of TurboTax and Quicken), so you can trust that your information is in good hands.

Unfortunately, my credit union doesn't work with Mint.com (although most banks do), so we do our budgeting the old-fashioned way. My budget workbook can be downloaded at links below. Please let me know if there are any bugs in the workbook.

Budget Workbook (Open Office Format, Excel Format)

1. Determine your monthly income. Click on the Avg. Monthly Income tab in the workbook. This gives you a number of areas in which you may have income. Enter your numbers and your average monthly income will total for you.
2. Determine your expenses. This includes many categories! If you have the ability, look back at the past year and take an average of what you have been spending. Taking an average over the year will help you be prepared for spending spikes during the year such as Christmas gifts, going on vacation, a winter heating bill, annual tax bills and vehicle maintenance. Enter these numbers in the Monthly Expenses tab. The totals will fill in for you.
3. Evaluate your current budget and make adjustments as necessary. It is recommended that you follow common financial planning percentages when planning your budget. This will help keep you from overspending in any one area. In the budget workbook, click on the Budget Calculator tab. This tab automatically pulls all of your numbers and will tell you if you are within the recommended percentages, or if you are overspending.

Keeping Your Budget

Creating a budget is one thing, but keeping that budget is a whole other ballgame! Here are a few tips to help you stay in line.

• Cut up those credit cards! They feed the ability to overspend.
• Use the 'envelope system'. At the beginning of the month, stock up labeled envelopes with the amount that you can spend in that category - in cash! Once the money is gone from that envelope, you literally will have no more to spend!
• Use the buddy system. If your friends know that you're trying to stick to a budget, they may be willing to find cheaper forms of entertainment. They may even be willing just to ask you how it's going and help you work through issues you are having. It's funny how even the closest of friends clam up when it comes to money, but if you share, they can help!
• Lose the shame! There is NO reason to feel ashamed about living on a budget. You are working towards a goal and sticking to it! Be honest with the people around you. "Sorry, that's not in the budget this month. I'm trying to (pay off my college debt)."

Keeping your budget may be difficult, but when you are able to achieve your goals you'll be happy you stuck to it!


I wish you luck on getting your budget together. It can be challenging, but it's worth it! Do you have any budgeting tips?