self-awareness and finances

For the month of May, I have tracked every transaction I have made in an Excel spreadsheet. Even something simple, like a cheap iced tea that was paid for in cash is tracked. It stinks.

I hate having to write down everything that I spend. I hate saying yes when I’m asked if I want to keep my receipt. I also really hate overspending in certain categories.

I have tracked my spending before, for a period of 6 months. It was painful then and I hated it, but I also appreciated how eye-opening it was to see exactly where my money was going. I had been doing okay before, but I really wanted to ramp up my savings and seeing how much money I spent and where it went showed me the areas I could easily cut back on to add to my savings (I’m looking at you, fast food!).  This method worked! I hated every minute of it, but it worked. Once I re-aligned my spending with my budget for a few months, I quit tracking so hard and eventually stopped. Bad idea!

Although I have done okay in the last few months, I know that I am not as careful with my spending as I need to be when I am not tracking it. I decided that May was going to be my month to “reset” and get back on track. I decided to do this in the middle of purchasing a house and moving. I know that my spending is going to be out of whack this month because of all the unusual expenses that went out the door (utility transfer fee, internet installation fee, miscellaneous house expenses) but I still wanted to know where I stood. I can’t lie, it’s a little scary to look at right now, with one more day in the month to go. I’m slightly hesitant to see my grand totals when I add them up tomorrow. I know that knowledge is power, and that I should use this information to affect my future decisions.

Here are a few reasons why I think forcing yourself to be aware of your spending is important:

  1. Self-awareness helps you understand your financial state of the union. Simply put, if you don’t know how much you are spending and where you are spending it, being able to have an accurate view of your true financial state is impossible.  Once you are aware of how much you are spending and in what categories versus to your income, you have a much clearer picture of your financial situation and have empowered yourself to make future money decisions.
  2. Selfawareness makes you become more accountable. Like I said before, the task of accounting for every dime that I spend stinks. I intensely dislike having to note my total and what I bought every time I spend money. It does make me realize where my spending weaknesses happen. It suddenly makes you think twice about an impulse purchase if you know that you are already close to or over your budget in a category. If you are forced to manually note a transaction, you start to realize your routine spending – which later will make it easy when you decide what areas you want to be more mindful of in your budget.
  3. Selfawareness forces you to be more realistic when you are financially planning. If you spend a month tracking your spending and are spending normally, you will typically have a good idea of the areas where your spending was non-negotiable (utilities, lodging, transportation, food) and where it was simply because you had a few extra dollars burning a hole in your pocket (the iced tea that I bought that I didn’t really need, but wanted badly!). Knowing this will make your budget estimations much more accurate. For instance, when I tracked my spending for a 6 month stretch, I realized that I spent too much money on fast food, but I wasn’t fully utilizing my grocery budget. That knowledge coupled with wanting to eat less processed food led me to lower my eating out budget and fully use my grocery budget. I was able to align my budget with my actual spending and make a healthier change. Win-win!

Tracking your spending is just one way to make yourself more self-aware of your finances. What other methods or hacks do you use to make yourself more mindful of your spending?


money saving kitchen pantry staples


As I mentioned a few posts ago, I just purchased my first home. In the 1.5 months before my move, I decided to eat down my pantry – although I was moving about 10 minutes away, I really, really, REALLY hate moving and didn’t want to have to pack/move a lot of food. I was able to go almost the whole time without buying “real” groceries – just a few fill-in items here and there in the fresh foods categories.  This saved me a good deal of money that I needed to save for the moving process (more on why that was a good idea in a future post!), but it has also saved me a few times in the past when I have been very short on cash.

I am a firm believer that everyone should have some pantry staples around for the lean times or in case of emergency. When the tornado outbreak of April 27, 2011 came around, I was one of hundreds of thousands who were suddenly caught with their pants down – we weren’t prepared for an emergency, and our pantries were DEFINITELY not ready. After that happened, I made sure to keep foods around that I could prepare easily without electricity for if that happened again (I live in a tornado-prone area).  I have also had times where I am living paycheck-to-paycheck and had to rely on the foods I had stocked up on when I had a little cash – maybe that paycheck the grocery budget had to go to an unexpected car repair. This is also a great time to learn to cook, if you don’t already know how. Being able to take the contents of your pantry and create a meal out of it can be a financial lifesaver.

Here is my list of pantry staples. The asterisk (*) denotes a must –have item in my opinion. The others are items that I like to keep around, because they typically don’t perish quickly or can be frozen for a later time. Those “extra” items also make it easier to incorporate more variety into your diet – after all, you can eat canned beans everyday and be fed, but you will be tired of them quickly!

Baking Items:

–          Oatmeal*

–          All-purpose flour*

–          Sugar*

–          Brown sugar

–          Cocoa powder

–          Baking powder*

–          Baking soda* (also helpful for cleaning!!)

–          Cornstarch

–          Vegetable oil*

Pantry/Shelf –Stable Items:

–          Tomato paste

–          Crushed canned tomatoes*

–          Rice (I like to keep white, brown and jasmine rice around, but white rice is the most cost-effective in my area)*

–          Black beans (either canned or dry, dry being cheaper but requiring more time/effort)*

–          Lentils (dry)

–          Pasta*

–          Canned soup (not too many, but when you come home from working 14 hours and are just hungry and broke and want something that requires no effort – total lifesaver).

–          Canned tuna*

–          Mustard

–          Ketchup

–          Hot Sauce (everything is better with hot sauce, in my opinion)*

–          Mayo (not a huge fan, but it is good for tuna salad or some recipes)

–          Soy sauce

–          Olive oil*

–          Peanut butter*

–          Canned veggies (I usually keep green beans, corn and peas around)*

–          Bouillon cubes (for stock –I usually keep chicken around, because that’s what I use the most, but you can get veggie, beef, or fish stock. You can also make your own, of course, but I typically don’t have enough scraps to make my own!)*

–          Canned green chilies (I like to add it to Mexican dishes)

–          Cereal

–          Honey

–          Jam

–          Pickles

–          Flavored Vinegar (I prefer balsamic or red wine)

–          Coffee

–          Tea

–          Tortillas (I do a lot of Mexican!)

–          Bread of some sort – loaf, English muffin, bagel, etc. Something carb packed so you can make a sandwich type of meal.

–          Seasoning herbs & spices (I love variety when it comes to this, so I have a lot. I would recommend to start with, though: salt, pepper, oregano, garlic powder, basil, thyme, rosemary, paprika, chili powder, cayenne powder, cinnamon, nutmeg, ginger, clove. If you have this many spices, you should be well on your way to flavoring anything your heart desires. Of course, you will want to omit anything that you just absolutely hate.)

Refrigerated/Frozen Items:

–          Garlic (I say this is refrigerated because I like to buy the minced garlic jars in olive oil for frugality’s sake. I do love fresh garlic, though!)*

–          Butter*

–          Milk (I prefer soy milk because I like the taste better and it lasts longer, but it’s up to you)

–          Yogurt

–          Cream cheese

–          Sour cream

–          CHEESE! (Usually, shredded sharp cheddar makes everything better)*

–          Frozen shrimp

–          Eggs

–          Frozen veggies/fruits (I prefer broccoli, green beans, and asparagus)*

Meat Items:

–          Ground beef

–          Chicken breasts

–          Pork loin or something I can use to make BBQ

–          Polska Kielbasa (great to stretch with peppers or with rice or in a gumbo/stew!)

*Note that none of these are essential. If you are really living lean, meat will be a luxury, not a necessity. Vegetarian meals can be a frugal pantry lifesaver!


–          Bananas

–          Oranges (citrus fruits keep for a long time, which is why I like to have them around – plus, at some times during the year, you can get it in bulk cheaply and it won’t go bad before you can eat it)

–          Bell pepper

–          Onion

–          Potatoes (you can get a good deal on russets, and use these to stretch out meals)

–          Lemon/lime (great for seasoning meats and some starches/soups/salad dressings)

–          Lettuce

I know that this list reflects my personal eating habits, and it may not be the healthiest choices, but when times are really lean, these staples have gotten me by. I typically like to use fresh fruits and vegetables when I can, not canned or frozen. I also like to buy meat on sale and then freeze it to use later. I typically have very little refrigerated meat, it’s usually frozen. I also try to keep junk food to a minimum, because I am the worst about ‘grazing’! What type of items do you like to keep on hand in the pantry?

Image courtesy of sritangphoto /

a few thing I learned from Sam Walton

Sam-WaltonPhoto Credit

Love it or hate it, most people in today’s society are familiar with the name Wal-Mart. I personally am not a fan of the company itself (especially since I work for one of their direct competitors), but I do admire Wal-Mart’s founder, Sam Walton and some of his business tactics. Recently I did a little research to learn more about him. Here are 5 things that I learned about Sam Walton and how he managed his finances and became one of the most influential men in the world:

1. He was versatile. In Sam’s younger life, he held many different jobs: paper boy, waiter, magazine subscription salesmen. He did this as a way to support his family and make it possible to put himself through college. Being versatile helped Sam later on, when he was developing the Wal-Mart brand. When he faced challenges for being successful (the owner of the franchise did not want Sam to keep owning it, because Sam was making the owner’s son look bad), he overcame them (instead of complaining or bending to the will of the owner, he bought him out for “a fair price” and used the stores’ contents to start his own five-and-dime). Because he was able to roll with the punches and keep going, he was able to expand his business.

2. He wasn’t afraid to take calculated risks. In order to start his own five-and-dime, he had to borrow money from his wife’s parents. This could have put a lot of strain on the social relations of the family, but he was certain enough that his business would make money so that he could pay his father-in-law back easily. Although Walton made many other risks in business, this early decision was crucial – not only was business on the line, but family relations as well. Sam trusted himself and the business enough that he made it happen.

3. He encouraged others to succeed. Sam offered incentives to his management teams and encouraged them to be active participants in the company. This encouraged his managerial staff to push themselves to become better and more effective managers and take ownership and pride in their work. By encouraging others to be successful, oftentimes we can gain some of the benefits (even if it is not financial. Knowing that you helped someone reach their full potential can make you feel successful, too).

4. He lived simply and within his means. Famous are the stories of Sam driving from store to store in his old, beat-up pickup truck or bending down to pick up pennies off the ground. Even though he was a very wealthy man and could have disregarded these practices, he didn’t. He tried to live a relatively simple life compared to his income and not exceed his means. He wasn’t out to impress anyone with material possessions, he was out to do good business.

5. He was innovative. These days, no one thinks twice about a superstore that has everything you could want in it – furniture, household goods, groceries, clothing, entertainment, etc. However, when Sam opened his first superstore, it was novel. He also wanted to see his shelves full at all times – that way, someone was more likely to impulse buy it. He also went against the typical culture of retail at the time – he wanted his store located in small towns. He strategically placed his stores within a days’ drive to the regional warehouses so that stock could readily be available. He wasn’t afraid to go against the curve and try something new, and it usually worked.

Personal opinion alert: I think that some of the principles that Sam Walton instituted within the Wal-Mart brand are gone now – how many times have you been to a Wal-Mart and they didn’t have what you wanted in stock? However, the ideas that made Wal-Mart the company that it is today are still good ideas. Sam Walton was a smart business man. There are many good traits that can be taken away from Sam’s legacy, but these 5 were probably my favorite.

house adventures

Hi everyone!

On Friday, I made a huge step – I closed on my first house! I think she’s a beauty, but she needs a little TLC to really shine. Right now, I am up to my earlobes in boxes and paint, but I’m loving it! Although I have already moved all of my stuff over, I have yet to officially move in, because of a couple minor plumbing issues. Thankfully, I have a friend who is a contractor, and he made time in his schedule to get it taken care of. Our goal is get everything done by the weekend so that I can be truly moved in! In the meantime, I am doing a lot of painting and unpacking. If I’m absent for a while, don’t fret! I haven’t forgotten about this little blog and in fact have several new ideas to share with you all! I’m very excited to be a homeowner, but I am also a little overwhelmed with responsibility at the moment. Keep your eyes peeled for a post in the future about what I have learned in the homebuying process!

kitchen utensil staples

There is one area that almost inevitably gets reduced when someone is trying to be mindful of their money: the food budget. This is one area that many people are likely to overspend on – after all, food is pleasurable for most people. One of the best ways to get more bang for your buck is to start cooking for yourself. Many people are intimidated if they have never cooked for themselves before, but it is really not too difficult to cook healthy, tasty, and thrifty meals. There are millions of recipes on the internet, and there is enough variety available that you will undoubtably find something that you like to eat that is within your skill level to make.

More on that later. Before you can start cooking, you have to have a few basic tools in your kitchen, or else you simply won’t make much progress. Different people use different tools and methods when preparing tools, but a lot of the basics are standard no matter who you are. After learning how to cook (both through my mom/grandmother/great-grandmother and by trial-and-error, as well as working in restaurants), I find that these are the tools that I turn to the most, that I find most useful, and that I feel complete my kitchen. Sure, there are plenty of meals that I can make that don’t entail the use of all of these utensils, but in order to make most any recipe, I find these tools the most important:

1. Can Opener. You have to be able to get your cans open! Canned things are typically going to give you more bang for your buck, so I suggest you pick up a can opener if you don’t already have one! This is easily available. Mine came from the local dollar tree for a dollar!
2. Measuring cups (liquid & dry)/spoons. These are completely necessary. Some recipes you can eyeball, but if you want your food to taste like the recipe, you need to be able to measure the appropriate amounts of ingridients for that recipe. Take it from my experience – a heaping tablespoon of cayenne pepper has a much different effect on chili than a heaping teaspoon! These can also be found most anywhere. You can get a complete set of cups and spoons for under $5. A liquid measuring cup can also be found for under $5 if you look around.
3. Ladle. Homemade soups are a great way to have a frugal meal that has multiple servings and freezes well. A ladle is not absolutely essential to getting the soup out of the pot, but it makes it a lot easier. You can find these anywhere for cheap, between $2-3.
4. Chef’s knife. Your chef’s knife is going to be seeing a lot of action, so this is a piece that you want to invest some money in. Still, a good sturdy knife can be found for under $25. You want to make sure that the metal is of a good weight (not flimsy) and that the piece looks like it can hold up to regular sharpenings. Many knives come with a lifetime guarantee – keep your eyes peeled for one of those!
5. Paring knife. These are cheap. They are really useful for peeling or chopping smaller vegetables. It’s also nice to have paring knives around if you need to cut something, but your chef’s knife has already been used for raw meat – a paring knife will save you the time of having to wash the chef knife. You can find a really nice paring knife for under $5, but you can get a pack of decent paring knives at Wal-Mart or a dollar store for $2-3.
6. Kitchen shears. These don’t have to be fancy, unless you are intending to cut through bones on a regular basis. They can be a pair of regular scissors – they just need to be dedicated to the kitchen. For food safety purposes, you don’t want the scissors that you used to open the packaging of a steak to be the same scissors you use later for cutting wrapping paper. You can find this for under $5 (cheaper if you do not want a high quality).
7. Whisk. A whisk is something that I don’t use all the time, but when I need it, it’s very convienent to have. Oftentimes, a fork will do the job that a whisk does quite well, but occaisionally a whisk is the better choice – like when you have thick batter or a sauce bubbling on a hot stove eye. You can pick up a good whisk for under $10 (note: I prefer a whisk with metal spokes. I’ve used others before and they are not as sturdy. I also like a medium sized whisk – a very large or very small whisk will only have certain times where it is useful).
8. Spatula. Get a good, high-melting point plastic spatula. You will use it all the time. Under $10.
9. Mixing bowls. A good set of mixing bowls is really important for combining any sorts of ingridients. I recommend a set, because oftentimes you will need a few bowls to complete a recipe. Oftentimes, you can find nicer bowls and double them as serving dishes. $20-25 new, but many times you can find them for much less on Craigslist or at yard sales.
10. Storage containers for leftovers. Same as above. You want to maxmize your returns when cooking for yourself, so you need to be able to store your food and make it easy for you to reheat and eat later. A good set will run you for $20-25 dollars, but you can find them for much cheaper by looking for them at yard sales or repurposing other containers (I have used Cool Whip bowls for years to store my soups/sauces!).
11. Cutting board(s). A decent cutting board will run about $10. You don’t have to buy the best quality, but don’t buy the cheapest either (they can get cuts/grooves in them easily and bacteria can breed). I like to have two around – one for raw meats and one for fruits/veggies. You can get away with just one, but it is much better to have two for food safety purposes.
12. Strainer. Essential for noodles or rinsing veggies, you can find a cheap one of these for $4-5. A fine mesh is good for small things (think quinoa, beans, etc) but a larger hole is better for pastas and large veggies. Be warned, if you get a cheap mesh strainer, it will rust!
13. Sauce pan. Known around my house as a “boiler”, this is a pot that will allow you to boil things and make soups and sauces. Ideally, you would have one smallish-to-medium pot for every day use, and one larger one (a “stock” pot) for when you make larger quantities, but you can get away with just a medium one in the short term, or if you rarely do bulk cooking. Expect to spend $30-45 for a decent pot. You don’t want one that is too thin on the bottom, because then you may end up with sauces that scorch on the bottom. One that is too thick will take a long time to heat up and may not conduct heat evenly. A good place to look for these items are places like Ross, Marshall’s and TJ Maxx – they have good name brands, but you don’t have to purchase the whole set.
14. Frying pan/skillet (one big and one small). Same as above. You want something that has a thick, even bottom to the pan. I prefer non-stick or Teflon, because it makes clean-up easier, but that is a personal preference. It’s nice to have one large pan for making bigger meals and a small pan for cooking eggs, or just one meal for yourself. Ross, Marshall’s and TJ Maxx all have good quality items at a reasonable price. You will probably spend about $30 for the larger pan and about $20 for the smaller.
15. Cookie sheet. Get a good quality cookie sheet. Not only can you bake cookies on this bad boy, but you can use it to broil meats and veggies – and in a pinch, it can work as a pizza pan! $10
16. 9×13 or 8×8 pan (Pyrex, metal, silicone). Excellent for baking brownies, casseroles and lasagnas, the pan is wonderful. If you mostly cook for yourself, an 8×8 pan will work best. If you routinely cook for a larger crowd or like to have a lot of leftovers, the 9×13 is your better bet. I prefer Pyrex, but any thick metal pan works just as well. I have never tried silicone, but I know that some people like them as an alternative to metal pans. $15-20.
17. Oven mitt/potholders. Dollar store! Also available from any friend who likes to knit 😉 You can find this for under $5. I suggest getting at least two for heavy dishes.
18. Tongs. Not completely necessary, a long fork will do in a pinch. However, it works well when you are trying to turn something over in a hot pan!! $5.
19. Vegetable peeler. Good for peeling vegetables (obviously) but also a good idea for thinly slicing veggies. $5.
20. Crockpot! More on this amazing appliance later. For now, let me just say that it is a busy singletons’ dream appliance, and I highly recommend anyone to get one. You can pick these up for $20-35 new, but oftentimes you can find them at garage sales cheaper.

TOTAL: $ 250 for NEW!

You could totally bust that budget if you tried. Shopping at thrift stores, garage sales, Craigslist, etc. can be a great value. Also, you can put the message out to your social network – chances are, you have some friends and relatives who would love to get rid of some kitchen utensils!

Cooking your own meals can save you a ton of money, but in order to cook, you have to have a few tools at your disposal!

“save where you can to spend where you want”

One of my personal finance heroes is Donna Freedman. I came across her writing at the beginning of my personal finance journey, when she was still in college and stretching every penny to make it through (I suspect that I had searched for something like ‘poor college kids’ to lead me to her). I’ve lurked and followed her career somewhat, and she has become quite successful. Not only does she have her own PF blog, “Surviving and Thriving”, but she also is a staff writer for Get Rich Slowly, and additionally contributes to Smart Spending on MSN Money as well as freelance contributions to other blogs and online publications.

One of the reasons I love Donna’s sage advice is that she is always realistic. Sometimes, she takes frugality a little farther than I would, but she is also balanced and reasonable in her viewpoint. One of my favorite mottos of personal finance comes from Donna (or at least I discovered it through her!), which is: “Save where you can to spend where you want.” She even made this the motto of the now-retired Frugal Nation segment of MSN money. This philosophy has really hit home with me and is probably one of the founding principles of my own personal view on my finances.

It embodies my attitude spending and saving almost completely: I have no problems skimping on things that don’t matter that much to me in order to spend money on things that are really important to me. I’ve discussed some of my budget ideas for saving for travel, and most of them are based on being frugal in some areas of my life in order to save money to spend on travel. I love to travel, it is a real passion of mine, and I am willing to make that sacrifice on things that aren’t incredibly important to me. Here are a few reasons that I love this idea so much:

1. It makes it easier to save. Knowing that the money I am saving is going towards things that I really enjoy makes it so much easier to save. It takes away some of the drudgery and sometimes makes it fun. It gives me motivation to WANT to save.

2. It makes it easier to make sacrifices to save money. If I save $10 by cooking my dinner at home instead of going out to eat, then that is $10 that I can put towards a meal in a foreign country, a bus ticket between cities, or maybe admission to an awesome site, like a museum or park. When I think about it that way, it makes me more excited for the future and the potential that $10 has than upset because I am eating at home again.

3. It makes you feel less deprived. Instead of feeling like you are completely deprived of anything extra, it will make you feel like you are accomplishing a goal. You are putting forethought into where your money goes. Plenty of people earn the same amount or more than you do, and they have no idea where there money is going and always feel broke. If you are making conscious choices to be frugal in some area of your life, it frees up funds to go towards something that you really want (a new computer, that next vacation, becoming debt-free, etc.). This kind of satisfaction goes a long way to making saving money less painful.

Who are some of your favorite personal finance writers? What kinds of mottos have stuck with you regarding money?

budgets… not a four-letter word

If you do a quick search for “how to create a budget” on Google, you get 912,000,000 hits. I definitely did not sift through all that information, and I doubt that you will, either. There are many different models that you can take when creating a budget, and many people like to have different formulas to come up with the perfect answer to their financial problems.

The real answer is that there is no one-size-fits-all solution for budgets except for this: you need to make one. How you decide to allocate your money depends on a few factors like the size of your household, the amount of income coming in, and what sort of financial situation you are in (do you have debt? Are you trying to save for a goal? Are you trying to trim the unnecessary things?). Whether rich or poor, single or a family, in debt or debt-free, a budget is essential in order for you to know where your money is going.

Many people think of a budget as a four-letter word. The very word sounds restrictive! However, a budget doesn’t have to be a negative thing. It is simply a way for you to know what your expenses are and what your income is. If the two don’t agree, it’s time to look at your life and see what you can adjust.

There are many free budgeting tools out there. I personally still use a pen and paper to write my budget out, but I also have a account and use Microsoft Excel as other ways to see my finances laid out.  All of these are viable ways to create a budget. There are also several apps that you can download (I hear Moneybook is a good tool!), but no matter how you do it, the basics are the same. Here is how I formulate my budget, and I hope that it helps you, too.

1-      Gather all of your financial statements together. This means that you will need to get recent bank statements, credit card statements, bill statements such as utilities, insurance, cell phone, etc. (any bill you pay online you will need to print out, or at least have easy access to so that you can review it), rent/mortgage statements, loan statements and any other piece of paper or electronic notification that means that you owe someone else money. You will also want your most recent paystubs from your employer as well as records of any additional income streams that you may have (babysitting, freelance work, a part-time gig, etc).

2-      Review your financial information with a fine-tooth comb. Look over all of your bill statements. Are you being charged for something that you shouldn’t? If so, you need to contact that company and dispute it. When it comes to bank statements and credit card statements, take the last two to three months and add up your spending in a few categories. I usually like to pick things like fast food, dining out, clothes, entertainment, groceries and bars/clubs, since these are usually my trouble categories. Looking at what you spend in these areas gives you an idea of what you are spending each month – and you should be able to look at it and know if you are being outrageous or not in each category.

3-      List all of your financial obligations. This sounds seemingly easy, but it’s not. If you aren’t an organized person, it’s going to be even harder. You have your basic categories, like rent/mortgage payment, utilities, insurance, transportation costs, groceries, savings and entertainment. However, you also have other expenses that may not fall into these categories. Any sort of personal care, doctors’ visits, membership dues, cable bills, internet bills, veterinary bills/medicine, pet care, clothing costs, home improvement, home maintenance/repairs would all warrant their own category. Debt repayments all deserve their own lines in your budget as well. You also must consider any extracurricular activities (this is especially important if you have children, because any activity that they want to participate in will likely not be free!). Lastly, your savings categories should be broken down into more definite categories: retirement, emergency fund, house downpayment, next vacation, new car, etc. I like to organize mine by monthly debts and irregular debts, and these irregular debts I mark on the calendar so that they aren’t a surprise when the time comes and I can adjust that months’ budget accordingly (such as a yearly vet exam for my cat, or when I renew my Pandora subscription in October).

4-      Compare your current expenses to your current income. How to they compare? Ideally, your expenses will be well below your income. Let’s face it, though – if you are making a budget for the first time, the chances are that your expenses vs. income margin is slim. If your expenses outweigh your income, then you have a problem. Where can you cut back? Do you need cable? Can you reduce your grocery bill? Can eliminate some unnecessary costs each month, like a haircut or a clothing budget? This is usually where a budget can seem very negative, because it seems like you are taking away all fun things. This doesn’t mean that you will never be able to do those things again, but it means that for now, you need to cool it and find more frugal ways to have fun (more on that in a later post!).

5-      Write/type out your new goals. Some of your expenses will be fixed, meaning that they will not vary at all or will only very slightly from month-to-month. These are typically things like your mortgage/rent payment, car payments, car insurance, phone bill and loan repayments. The rest of your monthly expenses are variable, meaning that they will fluctuate from month to month or based on your lifestyle. This will include things like your utility bill, your grocery bill, fuel/public transportation costs, eating out money, entertainment, cable bills, gym memberships, etc. Aside from the utility, grocery, and transportation bills, the rest of those things are things that you can slash dramatically if you need/want to see a quick change in your budget.  I like to write it out in columns, in order of importance from highest to lowest. An example:

Rent $450/month
Utilities $150/month
Groceries $200/month
Car Insurance $50/month
Gas $80/month

When I write this out by hand, I usually have two columns – what I budgeted for and what I actually spent. Excel has some really neat templates that will do all the math for you, if you don’t mind entering a little bit of data. will do it automatically, although I find that their categorizations aren’t always the best and need to be spot-checked every once in awhile for accuracy.

6-      Track all of your spending for at least a month, but optimally two to three months.  This is a pain in the butt, especially when it comes to cash purchases, but it lets you know exactly what you are doing with your money and WHY if you are overbudget for some reason. I like to jot my transactions down in a little notebook, but you can do it via a note-taking app or a transaction recorder on a smartphone if that is more appealing. The purpose of this part of the budgeting process is to enlighten you when it comes to where you are spending your money. By being aware of what you are spending and why (because I felt like it always seems like a terrible idea when it comes time to pay your credit card bill…), you can adjust your budget into something that is more workable. You might also discover that you are spending more in one category than you thought.

7-      Compare your actual spending to your budget. How did you do? Were you able to stick with it? Was it too strict or too lenient? Where are the areas that you can trim even more from?

8-      Make adjustments as necessary. If you have never made a budget, then likely your first attempt won’t be dead-nuts perfect.  Some categories you may budget too much for, and some you may have budgeted too little. In some categories, I like to budget high to account for fluctuations in the seasons/market demand (such as utilities and fuel). This leaves me a little wiggle room – I know that my bill typically won’t be that high, but if it is, I’m prepared for it. When it comes to my grocery budget, however, I had to recently increase it since I am making an effort to eat better and am buying more food to consume at home instead of eat out.

Don’t be discouraged if you find out that your spending is not as disciplined if you want it to be. If you are a chronic spender, it might be scary to sit down and do your first budget. Don’t let that stop you! By reviewing your finances and making active decisions to change, you will be taking the first steps towards financial success.

What sort of budgeting methods do you prefer? Any must-have programs or apps to make life easier?