Successful budgeting requires that you follow these three rules:
- Decide how much you can afford to spend each month, both overall and in a variety of categories, including rent, utilities, clothing, health care, personal care, etc.
- Track your expenditures day by day, month by month, to assess whether you’re staying within the boundaries you’ve set for yourself, and
- Restrain yourself, making sure to stay within the confines you (and your income) have established.
I am no expert at the process, but in the past I’ve been far better at Rule 1 than the other two. That’s why I’m in so much debt. I’d plan how much I could spend each month on food, utilities, pet care etc. but I had only a vague idea whether I was staying within my limits. Not such a stellar plan. Rules 2 and 3 matter quite a lot, apparently.
Over the weekend I did a bit of Googling and found a tool that could help me change my ways. It’s called PearBudget, and I recommend it highly.
PearBudget provides a pre-fabbed spreadsheet that, if you’re disciplined at filling it in, will calculate your monthly and yearly expenses by category, pretty much following Rule 2 so you don’t have to.
It’s easy to use, too: Just download the spreadsheet and fill it in according to the simple steps provided on it.
PearBudget breaks expenses into three categories: Variable expenses, or things you buy every month but do not always spend the same amount on (groceries, dry cleaning and going out, for example); regular expenses, or things that you spend the same amount on monthly (rent, cable, student loan payments, and so on); and irregular expenses, which pop up every now and then but tend to cost a bit of money, so you need to set some money aside for them (think car repairs, doctor bills).
On PearBudget’s first page, you determine the subcategories for each of the three big categories and decide how much, on average, you will spend on each item each month. Once you’ve done that, you go to the sheet for the current month, and there you’ll track your daily purchases.
Best of all: You don’t have to do any math. That’s the magic of the spreadsheet. All the formulas are built in, so all you have to do is enter the relevant numbers. The rest is done for you.
Also, definitely take a look at the Analysis sheet, which compiles your expenses for the entire year. Highly useful, especially for the irregular expenses.
I filled in my PearBudget over the weekend, and it’s already provided some valuable insight about some of my budgeting errors. I spend too much on homewares, for example, but less on groceries and going out than I had thought. Being able to track such things means in the future I will tweak both my expectations and my habits to ensure I’m staying within my bounds.