They have never really worked for me so I can only speak from my experience with them. Just like diets you eventually go off of them because they don’t work and have never helped me to save money. What I prefer to do is track my spending and be conscious of what I spend and why I need to spend it. I write down what I spend on a daily basis and you should too. That is if you really care about where the money goes and want to save money. Budgets get way too specific and restrict your spending to a certain amount every month and after awhile you’ll hate it.
I can hear all the groaning from the budget conscious crowd now. The thing is I’ve always found when trying to stick to a budget it becomes frustrating and then the guilt sets in when you can’t reach those self imposed targets you’ve set for yourself. Eventually you throw in the towel and spend what you want on whatever you want. This is what usually happens, but of course if you’re in the minority and are disciplined, then sticking to a budget will be worthwhile.
It has happened to us countless times during our financial lives. I never follow a budget and haven’t for over 30 years. I just don’t care to be told how much I can spend on entertainment or eating out. I know what I like to spend money on and this system will tell me if I can or can’t.
Do diets work? Of course they don’t. If they did there would only be one at the most two of them around and we’d all be on it all the time. You go off that diet and you go off that budget. That’s what happens. They don’t work so what’s a better way to get our financial house in order and save money?
Track your spending
I found over the course of time that the best way to know what I spend money on is to take a three month average of my expenses by writing down everything in a cheap ledger book. Do this daily and add it up at the end of the month.
- separate entry for each item
- make categories at the end of the month based on recurring spending
- date, month and how much is all that is needed
- total it up at the end of month
Fixed payments vs Variable payments
- at the end of the month add up all expenses that never change
- this is your taxes, mortgage, car payments, insurance etc..
- other bills like cable, internet, phone, gas, credit cards and food can change monthly
- it’s always a struggle on what you pay vs what you should pay
- you can’t do anything about fixed payments right now accept write them down
Automate everything that’s fixed
- so you don’t pay needless late fees
- on a calendar write down what day your fixed payments come out
- go to your ledger and make those entries
- keep in mind this is just a running total you are compiling
How much income is there?
- write down how much you got paid and when
- any interest you earned
- any and all monies that went into your account keep in a separate ledger
Keep living your life the same way
- this is not about deprivation
- don’t stop spending because you’re writing things down
- this will paint an accurate picture of what your life costs
Invest the rest
- subtract your expenses from your income
- make sure you average out your expenses over a three month period
- this takes some work but it will be accurate
- what’s left over is what your life costs
- if there is no money ever leftover then you’re broke
- if you’re broke you need to long and hard at your variable expenses
- change what you can change
- invest the remainder
If you follow this method of tracking your spending there is no need to go on a budget. Why do I say this? Because when I ask any one of my four kids what their life costs, they all look at me like I have 3 heads. You have to know this number. What is the total amount of all your bills coming in every month? You have to know this (3 month average). What is the total income I bring in every month. Now just subtract the difference and that is what’s left over for you to enjoy your life.
Not enough? you only have 2 choices:
- Make more money, maybe get a second job. Bottom line find a way to bring in more income.
- Cut variable expenses. This you can control. Find out and determine what you can live without and get rid of it to save money. You know what they are, make the sacrifice.
Budgets don’t work
I can’t make them work maybe you can. Budgeting has never worked for me for saving money. Just stick to what works for you, this is just what we have done at our house.
Those are some real live crude worksheets we have used from the past. As you can see it’s nothing fancy and you don’t need to bother with fancy software but something like Quicken would work well too. We have found that as soon as you come home from the store, grabbing the scribbler and making an entry is quick and immediate. If you let the receipts pile up too much you will forget and probably lose track. This simple system has worked for us, I know it can for you too. I read a lot of books on personal finance and everything I’ve learned about implementing this system you can also read about for a fraction of the cost of expensive advice. Learn how to do this yourself and get personally involved in tracking your spending.
Do you stick to a budget? What methods do you use to save money and track what your life costs? I would love to hear your thoughts on this. Please leave me a comment below.
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