Budgeting

Today I restarted by learning goal by completing the 2nd module in the financial planning course. Today’s topic was about spending and budgeting. I’ve been working on our budget for nearly 6 months now. I know where every dollar is going and have been able to reduce our expenses by making careful decisions about how we use our funds. I can’t stress enough how much value there is by simply knowing where the money goes. If you don’t take the time to understand your spending habits you can’t expect to spend less.

I found a budget template on Nerd Wallet. I think its a good place to start. I’d recommend at first just inputting what you think you spend on various categories. I bet you’ll find there is a difference between what you think you spend and what you actually spend. After you get done with that you need to monitor your spending for several months. Yes, its true that just by monitoring your spending you’ll be less inclined to spend. That’s ok. That’s why you need more than one month of data. I categorize every transaction using Quicken’s Simplifi platform. I used to be a Mint user but the platform is going dark this year. Simplifi doesn’t have a budget feature so I have to maintain that separately in excel. By categorizing your spending into your budget buckets you can easily compare your plan to your actual spending and where you’re out of line you can either cut back the expense or change the budget.

Once you have a clear picture of your spending you can make any changes that are necessary to meet whatever goals you have. If you don’t have financial goals, now would be a good time to think about what those might be.