How to Stick to a Budget – 5 Tips to Help You Track Your Income and Expenses

Aaron AvatarOne of our fine readers is interested in learning more about sticking to a budget and finding ways to easily track their purchases. This is a great topic – and one we haven't really discussed here on Three Thrifty Guys too much.

Let me first say that not everyone uses a budget. Some are so good with their money – they really don't need one. They know what is coming in and going out and managing money is something that has always come naturally for them. I know of few people like this and I'm sure you do too. 

For the majority of us (and I'm including myself here) – a budget is a great tool to have at your disposal and a necessity. I began tracking my income/expenses in 2003 when I had enough of living paycheck to paycheck and wanted to get out of debt. It was pretty simple: just a one page Word document listing general categories of everything going out – and everything coming in.

I've kept a budget every year since and it's fun to go back and see how my financial situation changed over the years. Call me a nerd, but I like tracking our dollars.

The budget my wife and use today is a lot more complex than I used in 2003. It's an Excel spreadsheet that details every purchase made and every dollar taken in. I could tell you exactly what we spent on postage stamps this past year as well as what we've put into savings.

Knowing where your money is going is a liberating thing. And if you are struggling with money – it will help you gain more control over your financial picture. At least that's what it did for me.

Here are 5 things to get a budget started and keep it going:

  1. Find a good budget
    There are a ton of them out there – already created with formula's and categories, ready for you to fill 'em up! I prefer a spreadsheet for mine. You might want to explore some other online solutions – but I have found that a spreadsheet helps me to organize things easily with good visibility of what's going on with our income/expenses. I actually use Google Docs to store the spreadsheet. This way I can share it with my wife and have access to it wherever I am (Here's a link to the budget we use).
  2. Track everything that comes in and goes out for one month
    The real key to getting a good picture of your financial situation is to track every transaction that hits your bank account for an entire month. It's really the first step in laying a solid foundation for your budget. Once you know exactly what your spend and receive you'll be able to tell your dollars where you really want them to go.
  3. Make a separate tab on the spreadsheet with total expenditures for the past month
    This will be your budget. Of course, your spending and income may change from month to month – but putting it down on the paper (in this case, spreadsheet) with what it is you plan to spend every month for each area of your finances will empower you and get you back into the driver's seat.
  4. If you're not single – get your family, spouse to “buy into” the budget
    Getting a budget together will only get you so far. I found out early that if I wasn't emotionally committed to the purpose of having a budget to steer my finances, then I wouldn't be sticking to it very long. Once I saw what having a budget did to my life and how I gained control and was more at peace, I bought into the budget. It's important to get those in your immediate family to do the same. It will make things doubly harder when you have to fight them on what to spend / where to spend it. Show them what it's doing, what it WILL do – paint them a picture of financial peace in your future.
  5. Give yourself grace
    I think one of the reasons why we fail so early and often with resolutions is that we don't give ourselves enough grace when starting something new. I will be honest. I don't always fall in line with our budget every month. But as long as things aren't totally out of whack – I cut myself some slack. I often view the budget as a road-map. But we all know there are often different ways to get to a destination (side-roads, the highway…).

It's never easy starting something new. If you've tried and failed before with a budget – give it another try. In the long-term, you'll be glad you have it and it will ultimately give you greater peace of mind (not to mention freedom!)

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  1. Keeping expenses under control is very important. And to do that it is mandatory to maintain a monthly budget. I am doing this for a few years already and I say that it pays off. I started first with an excel sheet, later I realize there are free online tools which helps you to do that.

  2. It is not easy to start a budget but so important to realize where your money is going and what you could really do without. Having it on paper makes it more obvious.

    • @Pauline – Isn’t it? It’s really nice to be able to go back and see where its went and make changes.

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