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When I'm not blogging, I love walking to town with my husband for a date day, talking to my three young adult children about their lives, and planning pretty much anything I can- parties, projects, travel, budgets- you name it I will plan it! Click here to learn more about me!

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January 15, 2021

Wondering How to Make a Budget?

Are you just an average non-accounting person trying to get a handle on your finances? Or saving up for a dream vacation or a big purchase but don’t know where to start??

Step One = Write it down!

But here’s the thing about budgets – they do not need to be overwhelming.

make a budget

Heck they don’t even need to be on accounting software (ahem- grid paper anyone?). Honestly – you don’t need to stick to it once you make it (although you should make every effort to do so otherwise what was the point 😂).

How you should look at a budget is as your own private compass for your money. It can be flexible, it can change as things change, and most importantly – it is not meant to make you miserable!!

I have mentioned before that I am good at math – well algebra really. In case you are new here and wondering why in the heck is this lifestyle blogger talking about anything financial – my college degree is in economics and every job I have had since I was 18 years old has been in accounting 🤪. I love formulas and things working out as they should from the formula. Budgets really are just a very simple formula.

Side note- I was mentioning this topic to my husband and his reply was – make it funny – don’t be all boring and dry and only talk about Quicken facts. Soooo – if that is how the rest of this post comes across- I am sorry. Not exactly sure how to liven up the topic of budgets and how to make one 😂.

I started making budgets for my husband and I when he was in grad school and I was pregnant with our first baby.

We were in our mid-20’s and I was just not loving my accounting job at the United Way. I was struggling to even think about hiring a nanny to watch my new baby as I went to this job I didn’t love. But besides student loans, I was our only income source in grad school…

I was 9 months pregnant when my husband was offered a job teaching anatomy to first year students for $8000 a year!

My prayers had been answered! I sat down and was like – okay we can do this. We can live on this for the next two years of grad school and I can stay home with our new baby. WE GOT THIS!

And our first budget was born…

I used plain old pencil and paper and started figuring out how we would spend our $8000 a year…

To be fair – we lived in student housing and our rent was covered under our student loans. And student health insurance was included with our tuition.

make a budget

So all I had to do was figure out how to pay for our car payment and insurance, food, baby products, clothing, and any travel to visit family that we did with $666/month (how am I just now realizing THAT figure was our monthly income???!!! Seems like we should not have made it with that omen 🤷‍♀️).

But we did.

As soon as we got that job offer – I looked at our checking account register and started categorizing every single thing we had spent money on for the last three months.

I had a list for eating out, groceries, entertainment, clothing, travel, and gas. And then I tallied it up and had to make hard decisions on what was really important to us and what wasn’t. And I made the decision to stay home with our first baby and subsequent two others for 18 years.

My biggest recommendation is to use Quicken Deluxe for all your financial needs

If you want to know how to make a budget WITHOUT computer software – skip this section and go below

Once we had a personal computer in our house (which was in 1996 fyi) – budgeting and keeping track of our finances got infinitely easier! In 1998, I bought the Quicken desktop software and was hooked. I am officially a Quicken-aholic 😂.

I know I have a natural knack for accounting but I am pretty sure this software is very easy to use (let me know if you feel differently in the comments below!).

I tried to set my young adult kids up with www.Mint.com and even a couple other online budget sites and seriously – nothing compares to Quicken. I AM NOT GETTING PAID TO SAY THIS BTW!!! 😂 I have been using their products for over twenty years and just find them that easy.

However here is a Forbes article listing some budget apps for you to check out if you don’t want to try Quicken!

Oh and a joke to make this post funny in case my husband is reading this post and is getting bored…

Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair. – Sam Ewing

make a budget

How To Use Quicken

You will enter usernames and passwords from all of your bank accounts into the Quicken software. And then it will easily upload all your checking/savings/credit card transactions into the software for categorizing. Quicken has been around for centuries and is extremely reliable if you are worried about online protection.

When just starting out – my suggestion would be to start with uploading 90 days of transactions from your banks (Quicken should ask you how far back you would like to upload from your banks).

It will be up to you to customize your categories if you want to add more details than Quicken already has in their system. More on that below!

You will need to make your own budget in Quicken and cleaning up the transaction categorizing will take a bit of time.

Here is the thing – starting with anything will take a bit of work. Heck it has taken me five months to get my blog looking the way I want it to! And financial software is no different.

You need to be consistent and diligent with the categorizing of each transaction that gets downloaded into Quicken. Otherwise you just bought financial software for no good reason.

Any questions I have EVER had with Quicken have been answered simply by googling it.

But here are a few of my own tips with using this software:

Categories I have given MORE details to and what the subcategories are:

  • insurance
    • medical, life, and disability
  • auto
    • loan payments, gas, AAA dues, repairs, and registration (the last is a tax write off so it is good to have this separated out so that you can find that information easily for your taxes!)
  • household – for my own information I have many subcategories in this list! Just a few that I like knowing how much I have spent specifically on are:
    • home decor, home repairs, housecleaning
    • don’t laugh but I use Amazon SO MUCH nowadays – about two years ago I just decided to give it it’s own category… so I can tell you on any given day how much I have spent on Amazon (please don’t ask -it’s bad…)
  • kids’ spending – my kids all have my credit card with their names on it for emergencies and school expenses. To their chagrin – I am on Quickbooks daily and see when they use this credit card and if I don’t know what a charge is – I quickly text and say ummmm what’s up??
    • This category is divided EVEN further by kid!! No getting away with anything in this house…
  • savings
    • 529 savings, regular savings, investment account savings, and retirement savings
  • travel
    • airfare, hotels, ground transportation, meals, and misc
  • Gift giving
    • Christmas, birthdays, and Easter

Using these new categories – make a new budget and enter your expected income and expenses in all of these categories

Making a budget in Quicken is easier than it sounds. You don’t need exact numbers. Just best guess will work…

However since you have already uploaded the last 90 days of transactions from your banks and subsequently categorized them, you can use this information for your new budget.

You will use a report called ‘Profit and Loss’ to help you see how much you have spent per month for each of your categories and can then enter a monthly average in your new budget using those figures.

Make and LOOK at custom reports

For a Quicken newbie this might be kinda tricky – but the report you will want to go to the most is called Budgets vs Actuals. This report right here is exactly why some of you have asked me to write a blog post on budgeting. It is your main reason for getting Quicken in the first place and is how you are going to stay on track with that budget you created earlier!

If you are having trouble finding it – it is considered a standard report but you can google where in Quicken is my budget vs actuals report. As I said above – the help information on the Quicken website is truly amazing. I have never not found what I have searched in their help desk.

Jump below to what to do now that you have this budget information to look at!

Here are the steps to making a budget WITHOUT software:

Before I started using Quicken and later moved to Quickbooks, I made a spreadsheet using these steps:

Categorize your spending

  • Look at your previous 3-6 months spending (whether via your bank statements or online) and recognize your main categories of spending. List those categories on the top of a piece of paper (here is where grid paper would be super handy!). Do not be too detailed with these categories. Here are the main categories you should have and use my subcategories listed above as well:
    • Income
    • Mortgage or rent
    • Utilities
    • Groceries
    • Dining out
    • Cell phone
    • Loan payments
  • Use a separate page for each month of this spending analysis (which should be at least 3 months worth of spending). As you go through each transaction – whether from your bank statements or online – put each under one of the categories you listed
  • Tally up each column by month
  • Add the monthly totals together per category and average it based on how many months of details you are using

Using these averaged figures make a separate yearly budget spreadsheet

Excel would be helpful for this spreadsheet. It will allow for changes and fixes and moving things around as need be. But pen and paper always works too!

Here is a simple Office template for you to download as well!

This is what your goal for it to look like would be (minus the subcategories listed above):

make a budget

Budget vs Actual Report

This is the key to WHY you made a budget to begin with… Every month, you need to keep track of your actual spending in each of those categories and then go back to your budget and do an analysis.

make a budget

Is your expense number bigger than your income? If the answer is yes – you need to make changes in your spending. Are there a few months in particular that you seem to struggle with (that would likely be December for me 🤷‍♀️).

You may have it where some months have a positive net income (income less expenses) and some have a negative net income. However if your net income for the year is still positive – than good for you!!!! Your budget is working!

If you need to make spending changes – hopefully when you were making that list for the last three months of spending, you noticed places where if need be – you could make those changes. Every budget article ever written always says – once you have analyzed and written down your spending you will always be shocked to see how those dollars added up in at least one category. People usually blame a Starbucks addiction (or in my case – a McDonald’s Diet Coke addiction…).

Do you need to start eating out less? Do you need to stop “treating yourself” to those new shoes every month? Or are you buying name brand items when you should be buying generic brands until you figure out how to get your income higher? Are you spending too much on decor items (this is usually where I look every month and say well clearly I can do better 😂)? Or maybe you are spending money on an adult child and until you tallied it all up you had no idea you were spending that much on them?

Clearly just increasing your income would solve all problems but in today’s economy that is a heck of a lot easier said than done.

Are you saving up for a big purchase or a dream vacation? Financial goal setting is key!

make a budget

This little budget vs actuals lesson is how you are going to do it!!! But first – please make sure you have an emergency fund set up! Financial goal setting is one of the best planning practices you can work on. Lowering your savings amounts should be the LAST thing you do to meet your budget.

Did you catch my post about planning? My travel and home project bucket lists? Those are all possible because I set financial goals and PLAN!! About fifteen years ago, once our student loans were paid off and we were finally settled into our forever house, I made an Excel spreadsheet laying out my savings goals for us. I used an online calculator to figure out how much we will likely need for retirement and college savings and went from there. So far – we seem to be keeping to those goals ☺️.

I am the first one to tell you life is short- go on the trip! BUT unless you are told you have limited time left on this earth, you will almost always be better off thinking ahead and being financially prepared for whatever comes your way first 😉. So be responsible on your planning for that trip or project or whatever fun goal you have set for yourself!

My husband and I like to talk about our life balance alot. We don’t oversave. We don’t have our retirement fund completely funded already. But we have found balance in our saving and LIVING LIFE. If we learned ANYTHING these last couple of years – it’s that absolutely nothing is guaranteed to anyone especially not tomorrow.

So work on that budget, and work on those financial goals, but FIND BALANCE. If you crave escaping on a vacation – use your budget to find your balance. Your comfort level. Eat PB&J for a little while if you have to in order to live your dream… trust me – it’s worth it!

Heck- if I can survive with a family of 3 on an $8k/yr income in the late 90’s – you can meet your goals too! BTW- I have zero regrets with that decision to stay home with my kids- and I have the handy tool of budgeting to thank for that 😊.

Happy goal setting, budgeting, and most of all DREAMING my friends!! Let me know if you have any questions or if I forgot to answer any questions! You all know I enjoyed writing this post even if it wasn’t funny 😉.

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