Spending Tracker – Budget Creator

Why are you creating a budget?

 

This is a very important questions to start with as having the discipline to stick to your budget can be extremely difficult at times and you must remain mentally strong.  When you start with the Why, it will give you purpose on your mission to stick to your budget and achieve the goals that you are trying to reach.  A recent Gallop Poll found that only about 1 out of every 3 people have and maintain a budget so if you currently don’t have one, you aren’t alone – great job on taking the steps towards maintaining a budget and creating a path to financial freedom.

Reasons for a budget:

Reaching your Goals:  Short term goals can be achieved in some cases without a budget but Mid and Long term goals are nearly impossible to achieve if you don’t have a budget.  With no real plan, it’s hard to save for them on a random basis that is unplanned.

Emergency Fund / Piece of Mind:  Living paycheck to paycheck can take a very large mental toll on you.  With no savings built up, one major emergency can have a major lasting effect on your life and put you deeper into debt.  Knowing that you have an emergency fund can have a very positive impact on your overall well being.

Eliminate Useless Spending: When you don’t have a budget and aren’t paying attention to your money, it is very easy to not even realize how much you are spending on things that are not needed.  Your bank account never grows and day by day money is leaking away from your small purchase after small purchase.

Creating a Path to Financial Freedom:  Living on a budget will set you on a path for financial freedom and set you up for a comfortable retirement.  The great thing about a budget is once you create it and stay disciplined, you will know that a plan is in place and you won’t need to spend sleepless nights thinking about the uncertainty of the future.

Whatever your reason is, don’t skip this step!  Discuss with your partner / family and declare why you are going to take more control over your money and your life.  Remembering why you are deciding to change will help your will power when making spending decisions moving forward.

 

What does the ideal budget look like?

There are numerous different types of budgets that people utilize to effectively manager their money and stay on track for their goals.  Below are some general Categories that a normal household spends on each month as well as the suggested % of your income should go towards these categories in order to maintain a healthy balanced budget.

 

Debt: 5%

Entertainment: 10%

Groceries / Food:  10%

Housing: 25%

Insurance: 10%

Medical: 5%

Personal Spending: 5%

Saving: 10%

Transportation: 10%

Utilities:  5%

Miscellaneous: 5%

 

Tracking your spending

You cannot create a successful budget until you truly discover what your current state is.  The best way to gather this information is to download your debit and credit card statements and get them in a spreadsheet.  This can be an alarming but great exercise for you to get a true feel of how much money and on what categories you spend on.

Sign up here for a free copy of our Spending Tracker which will give you a solid visual of where your money is going.  Before you figure out the smartest changes that need to be made you must first identify where it’s going.

Below is an example of someone who has a salary of $60,000 and a take home of $45,000 after taxes, insurance and everything else that comes out of your paycheck.  This individual would have $3,750 each month going into the budget as income.

Transactions:

Expense Amount Category
Rent $865.00 Housing
Coffee $3.15 Personal Spending
Fast Food $8.95 Personal Spending
Car Insurance $119.00 Insurance
Dinner Out $65.00 Entertainment
Gas $35.00 Transportation
Medical Bill $45.00 Medical
Cell Phone $75.00 Utilities
Student Loan $235.00 Debt Payment
Clothes Purchase $85.00 Personal Spending
Coffee $3.15 Personal Spending
Groceries $125.00 Grocery
Fast Food $8.62 Personal Spending
Deposit to Savings $100.00 Savings
Gas Bill $86.00 Utilities
Electric Bill $102.00 Utilities
Concert Tickets $85.00 Entertainment
Cable Bill $135.00 Entertainment
Coffee $3.85 Personal Spending
Groceries $125.00 Grocery
Fast Food $8.65 Personal Spending
Dinner out $85.00 Entertainment
Car Payment $245.00 Transportation
Gas $35.00 Transportation
Credit Card Payment $145.00 Debt Payment
coffee $3.85 Personal Spending
Walmart $60.00 Personal Spending
Fast Food $9.00 Personal Spending
Savings $125.00 Savings
Groceries $125.00 Grocery
Gas $35.00 Transportation
Home Insurance $195.00 Insurance
Fast Food $9.00 Personal Spending
coffee $3.85 Personal Spending
Dinner and Movie $100.00 Entertainment
Groceries $125.00 Grocery
gas $35.00 Transportation
Fast Food $9.00 Personal Spending
Night out with friends $75.00 Entertainment
coffee $3.85 Personal Spending
Target $80.00 Personal Spending
Credit Card Payment $115.00 Debt Payment
Fast Food $9.00 Personal Spending
Dinner out $60.00 Entertainment
Gym Membership $45.00 Entertainment

 

Now that we have the individual expenses we can group them together to see where our money is going and work on balancing our money.  In this example, we have a serious problem!!  If life continues like this month, we are digging a hole and going into debt by $300.

Spending Pivot Table

Getting Into the Positive

It is vital that we create a budget where we are bringing in more than we are spending.  If you have an unbalanced budget and are spending more each month than you make, it will lead to a life of debt with no financial freedom.  The longer we allow this to go on, the deep a hole we dig for ourselves and it can become very difficult to reverse the cycle.

How do we do this?

  1. Dig into the individual transactions for all of the categories that are highlighted in Orange which means you are spending too much money in that category. Are there things we can cut back on?  In the above example, the categories that we would attack are Debt Payments, Entertainment, Grocery and Personal Spending.

 

  1. Earning More: Do you have a job that offers overtime?  Could you get a second job?  Do you have skills that you could get paid for?

If your budget is not balanced and you are spending more than earn each month, don’t panic, your first goal should be to get your balanced to at least breakeven.  Once you start forming habits with your goals in mind you will then be better equiped to create a budget with a surplus.

 

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