So spreadsheets aren’t your cup of tea… That’s okay! Not every method works for everyone.
The good news is that you don’t have to have a fancy computer, or fancy software to make a budget and track your spending. Some things you can do real old school.
Sure, you’ll still need to do a basic spreadsheet to calculate your spending. If you haven’t read Creating a Budget Part I, go back and read it and then return here as you’ll need that information for this method.
Go ahead and compile a list of your needs, wants and work/business expenses (see Creating a Budget Part I to see the breakdown on these). Now determine what you spend each month on these categories. Now put them into order of importance. First rank your needs, then rank your work/business (you can skip this if it doesn’t apply to you) and finally rank your wants.
Each month, after you pay the bills for your needs, including your credit cards. The remaining money gets divided into your envelopes. Now look at your spending spreadsheet and divide out the remaining money into cash and put it into your envelopes.
If the money doesn’t match that means you’re spending more than what you are bringing in and you’ll need to revise your budget to match. That may mean getting rid of or reducing spending on some of your wants.
If you separate the money out into the envelopes and still have money left over, you may want to consider an emergency fund for those months where you need to overspend because something out of your control happens – you have to spend more on gas because the prices went dramatically up, your car needs new brakes, your microwave broke, etc.
This method can be great for those just starting out and wanting to get their finances in order as it keeps you from overspending. Some months you’ll have extra money left in an envelope(s). These will be for things you don’t spend money on each month.
As tempting as it may be, don’t remove the money from this envelope as you will need it later down the line. This allows you to spend more the next month if you want, or you can save the money for a rainy day, or pay down some debts to get out from under your creditors once and for all.
So no matter which method you decide to do, just stick to it. The longer you use the budget, the easier it becomes to continue using it. Remember to update it as you go, as things can change or you forgot to add something that you need. Your budget can help you get your spending in order and hopefully put more money back in your pocket. Happy budgeting!
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