Budget Time

It is getting to be that time of month. About a week before the month is over I put my financial outlook together and start budgeting for next month. A basic process of what is do is:

1.) Update all transactions in Microsoft Money to date and look at a snapshot in a summary of my accounts.

2.) I plan out a detailed projection of expenses (for the next 7 or so days) and put them in as transactions. The date I use is the last day of the month and as the actual expense comes, I delete that "projected" transaction. The reason I do this projection is because it is my goal to always keep $1,000 in my main checking account. I do not want to keep more and do not want to keep less in there. Anything left above $1,000 goes to a different account (savings, money market, investment, etc.) but I usually will end up right at $1,000 anyway because that is what I plan for.

3.) Now I am ready to put a plan for next month down on paper. The first thing I do is put the amount of income coming in. This goes at the top of the page and I want to "spend" all that money on paper. And when I mean spend I do not mean buy stuff, I mean give all your money a name. A certain amount goes to food, a certain amount goes to investments, giving, college fund, etc.

4.) After you put the income on the top of the page you start putting down necessary expenses. (i.e. Food, Shelter, Car, Utilities, Clothing in this order)

5.) I then think of upcoming expenses that could possibly be a budget buster in the coming months. I think of my car, Christmas, girlfriend's birthday, etc. And I choose a target amount for it then divide it by the number of months between now and then. This is now included in my budget and I make a separate account for it for money to be transferred to.

5.) Now lastly I roll over my previous months budget for all other accounts. I make my tweaks and then move on.

This whole process might be time consuming your first couple months but after a while you will be able to knock this out in less than 15 minutes. The important thing is to get the ball rolling. If you have yet to make a budget, I encourage you to start with next month (October).