Everyone always says to make a budget. So why do so many people not do it? …’Cause it’s hard! At least for me it is. A while back I bought Quicken and Microsft Money in the hopes of being a super-organized personal finance software guru. Now? I only fire it up once a month. And mostly because of this blog. (Another reason I can’t sell it.) Here’s my current budgeting process:
1) Buy stuff as much as humanly possible with credit cards.
2) At the end of the month, download all my statements electronically into MS Money.
3) Go transaction by transaction and label each one by category (Utilities, Rent, etc.). The good thing that through time MS Money is getting a bit smarter. For example, every time it sees “Safeway” it puts it automatically under “Groceries”. So in total it takes about thirty minutes at the end of the month.
4) Run a ‘Spending Report’, where the software organizes everything into nice little buckets. I can see exactly how much in a given time period I spent on Gas, Clothing, and so on. I compare these with the Target Areas and amounts I have chosen to focus on. See my July Budgeting Results.
5) Then I can decide whether I need to adjust my budget and/or my spending patterns.
Pros of this method:
- It’s easy and take minimal time.
- Because of this, I’ll actually do it!
- I’m only get to see monthly check-ups on my progress.
- I can’t do real-time analysis like “It’s only the 10th, and I’ve spend 60% of my Dining Out budget, I should stop eating out so much.”
For some reason I can’t seem to spend the 10-15 minutes every day and manually enter my transactions like some people do. I always put it off for a couple days, then the receipts stack up, and then it’s all over. I’m going to try instead to make a mid-month check-in. At least this way I’ll fire up MS Money twice a month…