Okay, now that you’ve tracked every penny for a solid month and you know exactly where your money went, its time to start figuring out where your money is going. This is particularly important for the folks who have bills that sneak up on them regularly. We all have the car registration, house insurance or some other irregular bill that seems to come out of no where. These bills derail us from our budget, and make us put things on credit cards that we normally wouldn’t. However, by no means are these bills considered “emergencies” so we shouldn’t take the funds out of our stashes just yet either.

This is where forecasting comes in to play. Personally, I use a very simple spreadsheet, which I match up to my bank account about once a week because I get paid weekly. Column one is the date, column two is for credits {direct deposit}, column three is for debits {bills, gas, etc} and column four is the balance. Somehow, I managed to have a bill due each week of the month so this works out very nicely. To have everything due at the beginning of the month is a little scary . November is a tough month for me because not only is it the beginning of the Holiday season, it is also the month of my birth. Car registration along with getting snow tires put on, and the additional grocery bill because Thanksgiving is my favorite holiday! Not to mention the impending vacuum of money the Holidays can be for some people. Last year, I officially boycotted gift giving and just gave out homemade goodies and a “thank you for not making me rack up more debt”. Oh, but I’ve gone a little of course here…

Once you figure out what bills come up when, plug them into your spreadsheet. I like to forecast out a good six months. If I see any red, which means my account will go in the negative, I know I need to plan better. Perhaps go out for one less meal that month, or do some extra bookkeeping work.

This is one more way to take charge of your finances and have less surprises along the way. And it almost totally negates the temptation to spend because you saw how much money you have in your account when you went to the ATM.

Tags: budget

First off, I like the word budget. I don’t call it a “spending plan” because that’s not what it is. You account for both income and expenses in a budget. And this is my website, so I can call it whatever I want. Bwahaha!

Anyway, creating your first budget is going to require a bit of patience and organization. First you want to gather as much information as you can about your past expenses. If you pay all of your bills online, this should be relatively easy. Or if you use the carbon copy checks, have those out too. I’m a big fan of online banking, so go ahead and get all that up on your screen also.

I’m a serious number nerd, so I love spreadsheets because I know how to manipulate them to show me what I want. If you’re not so great with Excel, just use some notebook paper and a pencil. Now the easy part is putting your income up at the top of your spreadsheet or work paper. Make sure you use your NET PAY so you don’t think you have more money than you really do.

Now for the scary part, the expenses! Here’s a template you can use if you like spreadsheets.

I like this one because it has two columns, one for projected and one for actual income and expenses. Its in a nice one page format also, so you can post it on the fridge easily If you’re going the manual route, you can print this out and pencil in your numbers. Since it accounts for taxes and health insurance, you’ll want to use your gross pay up top. There are some numbers already filled in, so make sure to delete those.

Now, its going to take a few months to get used to this, but trust me, once you see where all your money is going, you will feel more in control and like you can actually do something to change it. When your money just magically disappears out of your checking account every month, don’t you feel confused and somewhat helpless? Then you get mad at yourself for not taking charge of your finances. It always ends with something negative. You might buy stupid stuff like I used to do to make myself feel better, only furthering the money woes.

Don’t give up, you now have the power to put yourself on a positive financial path. Just give it some time, and you will begin to see what you need to do to make it happen, cap’n!

Tags: budget