Already, in response to the first challenge, it is apparent that budgeting approaches vary quite a bit.
Now that we’re in our second challenge, I’m going to tell you our budgeting approach.
Whether you track your budget on paper, in Excel, or online, you can use the following steps as a comparison. Here are the steps we take:
- Decide where to track expenses. See this post for info on some financial software. Microsoft Money was beneficial for us in the past, but we are switching to Mint and/or Yodlee since they are free and (slightly) simpler.
- Import accounts and expenses. Import all bank, credit cards, and investment accounts.
- Setup expense categories. When we used Microsoft Money, setting sensible categories became our most important step to understanding our finances. For one, it helps us to understand expense types by identifying them as frequent, infrequent, or fixed bills. Unfortunately, Mint does not let you create your own categories or exclude any of their default ones. This is a common complaint about Mint, and I hope they will change it soon.
- Categorize expenses. It might take awhile initially, but once you categorize everything in the past, it won’t take long to categorize things as you go.
- Review expenses routinely. That’s it - from here, we’ll continue to categorize new transactions weekly and then review the spending report routinely at the end of the month. As I have mentioned, we don’t like to set arbitrary numbers as budget goals. Instead, we view our last month’s spending habits as a benchmark. Our favorite type of report is a month-to-month comparison of spending trends to see how we’re doing.
Mint was extremely easy to set up and start using right away. Anyone can do it!
I’d say Mint is great for anyone looking to track his or her expenses and find out where the money is going.
I hadn’t really been doing much of a your challenge, but you convinced me to just start watching where all my money is going. I decided to try out the Mint and just watch over the next few months to see what I spend too much on. I tried Mint tonight, but I am having trouble with it. It wouldn’t find my bank account. It said I had my username or password wrong, but I didn’t. I will keep trying. Thanks for the information.
Leah
Hmm, that’s frustrating. I guess Mint doesn’t offer support for all bank accounts. Don’t give up! Maybe there are other programs out there that would be better for ya.
I am loving MINT. I agree that I don’t like that you cannot make your own category, but I love the other features. I am sure that over time it will only improve. It linked up to most of my accounts just fine, however a few of my credit cards it would not link up to because it doesn’t suppport them or because I couldn’t remember which of the 10 questions in three different spots I set up to use as a security measure. But I am hoping that this will give us a better idea of what we are spending. I have a budget for all “fixed” espenses like mortgage and car and even “estimates” on utilities. But even though I “budget” and amount for groceries I truely have no idea how much we spend…..so we will see.
Wow! What a well formed idea on budgeting! It should be read by people who are planning for launching a Valentine’s Day party before they set out to shop.
[...] I’m using Mint right now. [...]
… I digg this! I belive that everyone
should learn how to complete a budget.
Howelse are you’re going to accurately
account for how and where you spend your
money.Also,if you’re married,it’s a great
way to make sure that you both are on the
same page(especially if you share the same
bank account).
- garry b
[...] we’re creating a flexible budget by tracking our expenses with Mint (a great tip from Kacie at Sense to Save). New expenses spring up every month and some months our income may be higher than others, so our [...]