Do You Live on a Budget? Tracking Your Finances
Do you live on a budget? I mean literally track your finances and know where you spend your money every month? Do you know how much you spend on dining out? new clothes? food? Do you know how much money you bring in each month? save? invest? A lot of people say they live on a budget but I often wonder how many of these people actually track their finances and know where their money is going.
The best way to save money is to know how you are spending it
If you don’t already know the specifics of your spending and saving then now is a great time to start. Saying you live on a budget is one thing, it’s another thing to actually track your spending and analyze it on at least a monthly basis. Once you get your numbers into a program, whichever you choose to use, you will begin to see whether your spending is higher than your income. Or if you have any extra money that you could be investing or saving in an emergency fund?
What can I use?
Below are some software programs and websites that can help you keep track of your finances. Most of them provide the same basics of accessing your accounts, budget creation, analyzing, alerts and goal tracking.
Examples: Microsoft Money, Quicken, Quickbooks
Pros: Safe and secure on your personal computer
Cons: There is ususally a cost associated with buying the software.
Pros: Online, which means as long as you have access to the internet you have access to your finances. These sites are free to use.
Cons: Online. (yes, a pro and a con) These sites claim to be safe but of course, anything online has some sort of risk so use these sites with educated caution.
Another way to track your spending is to create something unique and personalized in a spreadsheet such as in Google Docs or Microsoft Excel. In addition to using a software program, I also have a spreadsheet to keep track of my budget. This is my personal favorite because when I look up numbers and type it in myself it sinks in more than if I were looking at a bunch of numbers, graphs and bar charts on a screen. By importing some of the data myself I also feel more accountable for keeping on top of my spending and I can easliy compare my month to month spending. It is also very easy to personalize and adjust to see what the overall impact would be if a fixed income or cost changes. The downside to this method is it takes a little more time every month to analyze and you need some basic knowledge of the spreadsheet program.
Overall, the most important thing is to have something. Anything. Whatever gets you to analyze your spending habits is a good thing. But remember, just making a budget is not going to help, you also need to look at your numbers, analyze them and make sure you know exactly what is going on.
UPDATE: Download an example Spreadsheet (Microsoft Excel 2007)Posted by admin in Budgeting