Two Good Options to Get Your Budget Under Control

Chris Reddick |
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We all want to take charge of our spending. There are many circumstances where you get tempted to spend more than what you bring in each paycheck. This puts you in a difficult situation if you cannot control your spending and find areas to cut your budget, as you could go into further debt. Financially, this can restrict what you can accomplish, from buying a home, too paying for college for your children.

What are some of my preferred methods to take charge of your family budget and the pros and cons of each? These are my preferred methods, and I’m sure there are others.

Spreadsheets

One is the good old fashion Excel spreadsheet. You would create categories of spending ranging from fixed expenses such as your mortgage, utilities, and so forth. Stuff that has to be paid each month and is predictable and has to be paid each month.

The second group of expenses is "more flexible," such as food, going out to eat, entertainment, which can change from month to month. A spreadsheet is an excellent method to keep track of your spending to be aware of going off track and correct that path.

The pros of spreadsheets are that it is an easy and cheap way of keeping track of your spending. The cons are that there is a lot of work setting up the spreadsheet for your budget and being consistent with each month. It gets easier over time as you get into a pattern. You can always write a budget on a notepad if you don’t like using spreadsheets. But in my experience, if you are really serious about getting your budget under control, you must invest the time. Budgeting is mostly behavioral, meaning that you need to change your behavior to think about how what you spend impacts what you can do financially.

Budget Software

Another method of tracking your spending is to use software such as YouNeedABudget.com or YNAB. This software enables you to take your monthly paycheck and assign money to each category of the expenditure. If you overspend, the software warns you, and you need to find savings to offset spending. This is an excellent tool for those that want to control spending and pay down debt.

The pros are that you can pinpoint problems of overspending and correct these as they arise. You can set budget goals as well, such as saving for a big purchase. The cons are that the software is not easy to use and takes a lot of dedication from the user. There is a learning curve. But if you are committed to getting your spending under control, this can certainly help you. YNAB provides many educational videos, and after you view them, you should become a pro.

Another con is that the software is not free. There is other software on the market, but many do not do an excellent job tracking each dollar as YNAB does. I personally believe that you get what you pay for. Some software is "free," but they serve up an abundance of advertising and don't focus on spending control as YNAB does. So for those serious about getting your spending under control and are dedicated to doing this, YNAB is an excellent choice to track every dollar spent.

My Bottom Line

As a financial planner, I found these two methods excellent to get control of your budget. The good old fashion spreadsheet is good, but if you want to pinpoint spending and look for savings, YNAB might be a good option. Unfortunately, budgeting is a difficult and excruciating process. There are no shortcuts. It is always easier to spend than finds ways of reducing spending. Be sure to talk to a financial planner and work on your budget today.

 

*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on to avoid federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities. Asset allocation and diversification do not ensure a profit or protect against loss in declining markets.

 

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