Ways to Create a Budget and Track Your Spending

Corey —  October 9, 2009 — 2 Comments

       There are many ways to create a budget and track your spending. The only “right” way is the way that works for you. This is a short list of some ways you can track your spending and create a budget.

Paper & Pencil or a Spreadsheet (Microsoft Excel, OpenOffice Calc, or Google Docs Spreadsheet)

Pencils and Moleskines 04 by Paul Worthington on Flickr       Creating your own method of tracking and categorizing your spending and then creating a budget can give you a much better understanding of your situation. It takes a bit of time and is not the easiest way by far, but it is free and keeps all of your information private. You simply create categories for all of your expenses, track them manually, and then create or update your budget as your situation changes. If you don’t have the discipline to track all of your expenses and continue to update the spreadsheet, then I don’t recommend you try this method.

Quicken

       Quicken has been the standard personal money management software for quite some time, but many competitors are emerging and offering better products. Quicken can import data from your financial institutions, track your spending and help you create a budget, and offers various reports so you can get a better picture of your financial situation. Quicken Online is currently free (but that could change), so if you’re comfortable storing all of your login information online in one spot you might want to check it out. If you want an alternative that keeps all your information on your computer, you can try Quicken Deluxe for $59.99. (You might be able to find a better deal elsewhere online, so shop around!) My own personal experience with Quicken Deluxe wasn’t especially great. It takes a while to set it up and you’ll have to get familiar with how the program works. However, if you need a way to automatically track your spending it may be worth the initial effort.

Mint

Mint       Mint is a free, online money management program that can pull together all of your bank, credit union, and credit card data to help you track your spending and budget for your expenses. To get all that information in one place, you’ll have to give them your user names and passwords. While Mint uses the same kind of data encryption as your bank, there is still risk in putting all of your financial information in one place online. If that data were ever compromised, you’d have to change the information on all your accounts to protect yourself. I’m OK with using Mint because I researched their security measures and feel comfortable with it, but you might not. I recommend you look into it for yourself and make your own decision. Also, Mint’s computer algorithms look at your spending patterns to offer you specific deals through their sponsors so you may or may not be comfortable with that as well.

Mvelopes

Mvelopes       Mvelopes is another online money management program that has received good reviews around the web. You get a free 30 day trial, but after that it will cost you anywhere from $7.90/month to $13.20/month depending on the membership period you select. Like Mint, Mvelopes gathers data from your bank, credit union, and credit card accounts to help you track your spending and create a budget. Again, I personally wouldn’t feel comfortable with having all of my account logins stored in one place regardless of the encryption and security used. But if you’re comfortable with it, Mvelopes might be another easy way to start tracking your spending and keeping a budget.

My Method

Google Docs       Personally, I just use a Google Docs Spreadsheet to create a budget so I can have an idea of what my spending should look like. Every so often, I check over different categories to make sure I’m not overspending. However, I don’t really track my spending closely because I have my spending well under control, my savings is automatic, my bills are on auto-pay, and I have a sizable emergency fund. Unless all of those apply to you, I recommend you track your spending. The Spreadsheet method also isn’t for those who don’t have the discipline to dig in and do most of the dirty work themselves (as opposed to a computer program doing the grunt work for you). Here’s a template of the Google Spreadsheet I use. You can save a copy for yourself if you have a Google account and use their “Save” feature under the “File” menu. You should be able to save a copy to your computer, too. You’ll have to edit it for your own situation, as I can’t list every possible expense category a person might have.

There’s More Than One Way to Skin a Budget

       There are many other ways you can track your spending and create a budget. I didn’t even mention You Need a Budget or PearBudget. You can also do variations on any of these methods. For example, for the paper & pencil method you could use envelopes to split up your money and make sure you don’t overspend. What are some other methods you use to track your spending or maintain a budget? Leave your tips in the comments!

Corey

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Corey is currently pursuing a Master of Arts degree in religion. While he enjoys learning and writing about Christianity, another one of his new passions is writing about personal finances in order to help others make wise decisions with their money.

2 responses to Ways to Create a Budget and Track Your Spending

  1. Mint.com has some great tools and works wonderfully IF! your bank doesn’t use any sort of varying input to log in, such as a captchka (spelling?) or security question. It may log in sometime, but not reliably. I have a checking, savings, credit card, and auto loan through my credit union. Mint was able to access this information the first couple times, but it has gotten progressively harder to the point where it wont connect at all. Well if I can’t access these accounts, its no good to me. Quicken wont connect either so I’m left having to do it the manual way or pay an outragous monthly fee.

  2. I agree, Robert. But like you pointed out, that’s a problem with Quicken as well. How much is your credit union’s fee for direct access?

    With the new banking regulations that are in place, it seems like banks aren’t going to be quick to give customers what they want without a price. Of course, the smart ones will always be focused on customer service so maybe they’ll force the others to give unfettered access. I can’t imagine it really costs the bank that much to offer such a service.

    Tracking things manually can be a pain, but I still think it’s worth the time because it makes you consciously think about your spending. For me, that’s provided better results than just trying to stick to a budget. I have to think about whether it’s really worth the money for the things I’ve bought and whether I want to keep paying for them.

    Thanks for your comment, Robert!

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