Thursday, March 8, 2012

Women's Money Week: Budgeting

 Today, let's talk about budgeting.

Specifically, let's talk about what budgeting is not.
  • A straightjacket
  • A reason to beat yourself up about your spending
  • Boring
  • Useless
In my mind, the components of a budget are actually
  • A plan for where your money will go
  • A reliable method of tracking where your money went
  • A review to see how that all worked out
I will confess right now that Peanut and I don't have a written budget anymore.We've been tracking our spending and I've been doing monthly reports here on this blog for so long that we don't find that we need to make an official, written-down plan of where our money is going every month. SO. If you're new to budgeting and you hate the thought of having to do one forever...you don't.


In my opinion, a budget requires tracking and can't exist without some method of tracking what you've spent. If you don't track your spending (either by writing it down and then looking over it as a whole every month, or using the envelope system so that when your envelope is empty, you know you've spent that category's budget), how can you tell whether you're staying on target?

That's why Peanut and I have moved away from the "on purpose, on paper" written budget model. We know how much we tend to spend in certain areas and we've removed a lot of the temptations that would cause us to mess up our plans: we stay away from advertising/don't go window shopping, we save up for large purchases and plan ahead for them, we transfer money from our checking to our savings account on a regular basis so it's not just hanging out there, and we write down every single dollar we spend and go over it at least once a month together. Doing this allows us to see where our habits are changing and make small corrections if we feel like we don't like what we see.

If you're thinking of starting a budget, don't forget to include the tracking element. In fact, I'd say that if you track your spending diligently, you may never need to move to creating a planned, written budget (Peanut never did).

Do you track your spending, use a budget, or a combination? Let me know in the comments!

5 comments:

  1. I use a budget. I don't keep a close eye on my spending but it all works out.

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  2. That is an interesting idea, i.e. being sensible and then seeing if where the,money went at the end of it all is reasonable. I think though that it does help to have an outline budget, if just to tell you how much you can spend each month and how much you need to put away for longer term expenses and/or savings each month.

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  3. I track all my spending, but I'm still working on creating a budget I can work with. But as they say, practice makes perfect!

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  4. I've tracked my spending for quite a while now but I've never had the need for a written budget. My spending wasn't out of control in any one area. I got an app for my smartphone to track my spending and it was mandatory to create a budget so I have one now and I do enjoy it.

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  5. It is a challenge to them to budget expenses.

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Thanks for commenting!