Effective and Smart Budgeting With No Hassle In 15 minutes!

   

When talking about budget and actually doing it, some  people seems to bother more about which software that they need to buy, which method do they need to follow (as in accounting method ), etc.  On the other side of the coin: some people only do the budgeting on their head, as remember everything on their memory. And the rest of us simply don’t bother about any budgeting at all…..

Budgeting in 15 minutes

Maybe some of us have confused budgeting with accounting where you need to track and write all your transaction. Which to me, it’s a bit overkill for a house hold to do accounting. (Of course if it’s a business, you don’t have a choice except doing the accounting properly)

So, my opinion is: every household in the world should have a budget.  I recommend to do monthly budget for a year. And also I suggest align it with your tax financial year. I mean if the financial year starts at July, you do your budget from July to June next year. If your financial year start on January, do you budget from January to December time frame,  and so on.

How to Do a  Budget in 15 minutes (each year)

First of all, your budget need to be in written form. You CANNOT just do it on your head. But you don’t need any software, just a piece of paper (well, if you’re fluent with a spreadsheet you can load your Excel or Open Office’s Calc now).  You might need a calculator. Let’s get started:

1. Divide your papers in 12 column to represent every month, add 1 column as your row name
2. Start with INCOME. Estimate your main income per month and put it on every months. Do the same with your partner’s one.
3. Still in INCOME, put all your other income, including your partner’s or children: every single benefit, government support, social security, tax return that usually you receive during the year. Put it into the months that usually you received it.
4. Sum all those income in (2) and (3) above
5. Now let’s do the REGULAR EXPENSE. Do for ALL THE REGULAR BILLS the monthly cost or quarterly cost on the month that you actually pay the bill. For example: if you pay the electricity quarterly on Feb, May, Aug and Nov then only write the amount only on that month.
   Includes: Electricity, Water, Gas, Phone, Mobile, Child Care, Petrol, Bus Ticket, Home Insurance, Car Insurance, Health Insurance, Credit Card Fee, Monthly Bank Fee, Mortgage Repayment, Car Loan Repayment, etc. Includes everything that you see the bill in regular basis.
6. Sum all those regular bill in (5) above
7. Subtract no (6) above from no (4) above and label it “DISPOSABLE INCOME“.  This is the income that you can use for food and other purposes.
8. Pay yourself first ! From this ‘DISPOSABLE INCOME’ decide how much you want to put aside as saving. You have to scan through all 12 months looking for the smallest one. This amount need to be consistent each month to make it easier for your self.
9. Subtract (8) from (7)
10. Do your Groceries & Food expense per month. You have to eat every day so, you have to budget enough for adequate food. If your number already to small, then you have to knock down some of the regular bill (Disconnect service, find cheaper alternative, downgrade, etc)
11. Plan all other purchase after subtracting (10)… holiday, new computer, new car deposit, new TV, etc
12. That’s it you made your self a yearly budget and you have been promoted to elite group above average that have a written budget on the house hold.

Software

The problem with using software mainly is that it will take some time for you to learn the software for you to be able to use it fluently. It does take some effort only to learn the software. The problem is if you found a difficulties about the usage of the software then you will loss your momentum to do the budget itself which by the above method will be just done within 15 minutes.

But if you insist you want a software. Quicken Deluxe 2009 is my recommendation for your personal budgeting/accounting need. It’s has simple and straightforward interface, but to make the most of it you need to track all your transaction (accounting), perhaps even on daily basis. You can visit our corner store for broader pick.

Conclusion

Doing a budget does not need to be very sophisticated. Even this 1-page budget that I describe above it’s enough to give you guidance. You may even show it to your mortgage broker or bank to prove to them that you have a budget for your house hold. Now the most difficult task is to execute the budget. At least now you have written guide, you know exactly that you will be into a problem if you don’t follow your budget as you can see those bill will come the next month (see your budget paper).

Do your budgeting , 15 minutes and you’re done ! See you with a budget soon !

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• Kiyosaki: “Savers are Losers” – A Sad Truth with a Catch
• Everybody Can Be Rich Financially, Do You Know How?
• Wanna be Rich? Change Attitude First !
• Taking a mortgage ? Do Not Change Your Lifestyle Dramatically

Denis Kristanda  

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