How Do I Budget?
I teach Dave Ramsey’s Financial Peace University class multiple times a year and I’ve walked with many people as they begin to set up their budgets. One of the questions that I get asked a lot is, “How do I set up a budget?” There are a lot of forms out there, so I’m not going to address the initial set-up.
I do want to talk about some of the questions that I get asked regularly about the budget process and offer some tips.
Yeah, but what budget forms do you use?
To be really honest, our budget is much more detailed than these forms because we like to see where the money is going, and some of these categories are not broken down as we would like them to be.
We use a spreadsheet that Sweet Husband set up. It changes occasionally as we find that we need a bit more detail. For example, we have broken down our Entertainment category into Restaurants, our individual allowances, and a vacation fund. We like the smaller categories, so this is what we’ve found has worked for us.
Should I use paper or electronic forms?
I think you should use the forms that are most comfortable for you. If you’re tech-inclined, then use electronic forms. There are a ton of apps out there. This is an uncomfortable process, so go with whatever makes this easier. You do want to make sure that every decision-maker in this process is able to see a copy of the budget quickly.
How do you get realistic numbers in your budget?
For the first 8 weeks,keep every single receipt and add each one to the correct budget category. This is a way for you to see where the money is going. Adding up these expenses and looking at the amounts at the end of each month will get you some realistic numbers. For the third month, take the average of the first two months and you’ll have a good starting place.
How long will it take until my budget it right?
It will take you several months to get accurate numbers, so don’t stress out too much over these initial numbers. Each month will enable you to get a better total of your expenditures. And, as you start to notice your spending, the spending will likely change.
Send me your questions and I’ll be happy to answer them in a future blog.