When it comes to our financial lives, nothing is easier or more difficult than planning. And our plans generally (or should I say, hopefully) take the form of a written, thought-out budget.
We must meticulously plan out every aspect of the budget; we have to think of every expense and every source of income that we will potentially incur.
But more important than the planning for the budget, of course, is the changing and required variability of the budget. The budget– and you, by extension– has to adapt accordingly to any change that is going to happen.
The budget might not change this month if a large, unexpected expense is to happen. But for the next month, that expense needs to be taken into consideration. And for every month thereafter until you’ve recovered. You have to reduce your other expenses (or possibly increase your sources of income) until everything is back to normal for your finances.
I get all the planning stuff. But how do I do the budget?!
Alright, so you’re going to have to be your own personal accountant. And myself, personally, I recommend Wave to track your expenses and income for free. It does the bookkeeping for you so after you’ve hooked up your bank accounts and credit or debit cards so you don’t have to do anything other than check the reports at the end of the month.
It categorizes your expenses so that you can easily see where your money is going and where you can afford to stop your money from going.
More importantly, after you see realistically where your money is going for a month and what it is being spent on– and also where your money is coming from and realistically how much you make in a month– you can create a budget in an Excel spreadsheet based on those numbers.
This is how businesses track their income and expenses. This is how businesses know when to increase their income and how to decrease their expenses. If it works for them, it will work for you.
But what do you think? How do you and your family track your income and expenses?
This page is not meant to constitute financial advice. For specific information concerning your financial situation, please contact your local financial advisor.