Tracking Spending or Budgets and Why They're Awful
Few topics make a client's eyes glaze over faster than talking about budgets. They're not particularly fun, even for a spreadsheet and accounting software geek like myself. I'm not a fan of budgets.
Budgets are only good as far as they help you control & track your spending. I usually find that the time they take to monitor on an ongoing basis aren't worth the results. That said, knowing where your money has gone and having some way to control your spending is really important.
So what to do? Here are three options that I like:
I know how much needs to go into the fixed account because all those expenses are fixed and have automatic payments set up, so I just make a monthly deposit from my savings to that account and I know those are all looked after.
In the other account, I make a deposit that's for everything else that's not consistent, then I know that's my hard cap for flexible spending for the month. While it's useful to know how much goes to groceries versus going to see movies versus eating out, I find that it's most important to have a bank balance to keep an eye on and how I spend that money month to money isn't too important. That's a dead easy way to have the basics of a budget without carrying cash or adding up receipts.
If you're a spreadsheet user, you can download a CSV file and track categories that way. Using a program like Quicken, you can download the transactions and enter them in an at home accounting program. Lastly (and most simply) you can use Mint.com. Mint connects to all your bank accounts and automatically enters transactions into categories. It's not 100% accurate, but you can always change a record and it tends to learn going forward. It spits out charts & reports letting you know where your money has gone. You can have it alert you when an account balance gets low.
To bring it full circle, you can even use Mint to ... set up a budget.
There you go. Budgets might be a drag, but there are a couple options to control spending without having to get in too deep.
Drop me a line if you'd like to talk over your options on the budgeting front.