Budget Planning Step 1 – Start A Budget

by Markus Bodner in  Personal Finances Guide  

You’ve decided to plan your budget. Great! First you have to learn where your money goes. The best way is by tracking your expenses. Don’t worry this is easy.

You might wonder why this is the first step and not laying out a plan. To plan your budget you need to know your income and how you spend your money. Tracking is the best way to get the required information. Keeping a log of all your expenses will stay with you through it all. So starting right now is the best time.

There are several ways to record your personal expenses. The cheapest way is a pen and piece of paper. Write your income on top. Then every time you make a purchase write down the date, what you bought and the amount you paid. Keep a running ‘remaining budget’ by subtracting that amount from the line above. You should end up with something like this.

Example Expenses Tracking table
Date Description Amount Running Budget
Starting Budget 1200.00
2017-11-11 Groceries 43.22 1156.78
2017-11-13 Rent 653.59 503.19

Of course tracking by hand is time consuming. A more advanced way would be to use an excel table. There are a lot of them out there. With that said, I really recommend using a dedicated personal budgeting app like my own Claire Budget.

The reason for using an app instead of pen & paper or excel tables is convenience. Maintaining the excel table is as—if not more—time consuming as paper. Apps provide you with everything already set up and all you have to do is enter your expenses. Claire Budget also gives you a very clear look on how your budget is doing at any time. This is very helpful.

Next time we look at planning your budget to take into account all your necessities. For now though start tracking to get a feeling of your money.

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