How I Budget

If you’re here, you’re probably wondering exactly how I budget. My way has worked for me, and if it will work for you, I am all too glad to show you what I’ve done!

I always knew that traditional budgeting was not for me. What is traditional budgeting? I would say it is giving yourself a spending limit for varying categories of things you need (or just want) to purchase – such as giving yourself $40 for household items, or $150 for food in a month. If I were to do this, I know I would spend money up until this limit. There’s nothing wrong with that.

However, I prefer to keep track of every dollar that I spend instead. Why?

Every month is different from the next. One month you may be hosting a dinner party, the next you may need to buy a dress for your friend’s wedding, the next you may forgo a concert to sit outside in the sun and read a book. Emergencies happen, unexpected bills come in the mail, or you may spend extra nights at home. Life is life, and we need to be flexible.

When I track every dollar, as opposed to limiting myself, I have to justify every dollar I spend. Marking my budget with a miscellaneous expense becomes negatively reinforcing. I end up avoiding spending recklessly partly because I don’t want to go home and track that expense in my spreadsheet.

Which leads me to my next point. I log everything in an excel sheet that I made (see below). This is an example, and does not represent what I pay in bills, what I make for my income or what I have saved in the bank (for privacy reasons in case anyone I know in person finds this blog).

This is an example. It does not accurately depict my income, balances or bills for privacy reasons.

It’s simple, really. Each column is a month, and I just add as I go. Whenever I’m at my work or home computer, I open it up and it only takes a moment to throw in whatever purchases I’ve made since I was last home/at work.

This won’t work for everyone. Many people find this too involved. I love the level of control I get over it, as well as the detail. I can easily pick apart how much money I spent in each little aspect of my life that I’m interested in. Tracking my spending like this became highly addicting, and perhaps it’s something you could try.

Visit my “Downloadables” page if you would like to download this template, or browse through other types of templates.