Summer is a great time to begin planning your budget for the next school year. This summer join me in the Summer Budget Challenge. Together we will discover our spending habits, align our spending with our values, and create a budget that we can maintain, all before the school year begins this fall. Follow frugal-community on Twitter and Facebook to hear more about what I have discovered and join the conversation.
We begin by discovering our spending habits. Over the next month, you have one task: track your income and your expenses. You may think your know where your money is going, be prepared to be surprised. Over the next few weeks track every dollar that comes in and every dollar that goes out. This includes everything from bills to paychecks to babysitting money to the dollar you used to get a diet coke from the vending machine. Every penny counts. There are a variety of ways that you can do this:
- Journal Method: Carry around a small notebook or journal and track every purchase you make whether with cash, credit or check. On another page track your income.
- Excel Method: Instead of using a journal, track all of your income and expenses in an excel spreadsheet. This works best if you set aside some time each week to put in each transaction, if you do it with any less frequency you might forget some of the smaller purchases. Microsoft provides a variety of personal budgeting templates.
- Software Method: If Excel isn’t your thing, but you still want to track your spending on the computer there are a variety of different programs out there, one of the most popular is Quicken. This software will also be helpful later when we create a budget.
- Online Method: There are a variety of sites that can help you track your income and expenses as well as create a budget. I use Mint.com because it syncs with my bank account, categorizes my transactions and tracks my budgets all in one place. Again, it is important that you set aside time each week to track your expenses on the site to make sure everything is categorized correctly and all of your cash purchases are included as well.