Tuesday, July 13, 2010

Budgeting 101--Tracking expenses and staying organized

This is post #2 in Budgeting 101, here is the first post in the series.

Obviously it's a bit challenging to remember every single place you spend money in a given day and enter it into a budget. There are several ways to get around this.

1. Update your budget every day at the end of the day. I sit down with my budget every night before I go to bed and enter what I bought in the appropriate columns. If I haven't spent any money that day, I give myself a star (an asterisk*). This way, it's a habit to update the budget, and also a nice way to reflect on your day (I know that's a bit of a stretch, but I truly believe it). It takes practically no time, and if you go the google spreadsheet route and check your email before going to bed, it's right there! No excuses.

2. If you have a hard time remembering where you spent money, start collecting receipts. Then you have a record right there in front of you. Enter in the amounts, then recycle the receipts.

3. Personally, I hate receipts. I follow that rule for purchases at places like Target where I've spent money in more than one category i.e. food and misc. Then their receipts are very handy because they break down the categories for you, and you just plug in the numbers.

4. My favorite way to track expenses is to just charge everything on one credit card, which I then pay off at the end of each month. That's right, I advocate using credit cards. Controversial for sure, but I also maintain that if you use them responsibly, and track your spending as you do it, there is no reason to ever pay interest. Plus you might get some cool perks as well. With the credit card, you have the place and amount spent, and you can just look at it on your online account. It takes a couple days to post, but it's certainly easier to wait a bit than it is to try to remember every amount you spent for a week.

You should have set your columns to autototal by highlighting the column, and selecting the Sum option from the top of the page. This automatically gives you the spreadsheet formula, so you don't really have to know anything, and then it adds everything together as you go.

This helps keep your spending on track over the course of the month. If your monthly budget for food is $200, and you've already spent $150 by the 10th, then you know you need to reconsider eating out. It's a nice check and balance.

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