Archive for the ‘12 Weeks to Fiscal Fitness’ Category
This week I’m going to talk about using cash in your budget. I was once a skeptic of using cash and didn’t want to leave the convenience of using credit cards. Now, I’m a huge proponent. Maybe that’s because we saved $6,000 the first year we started using cash. But there are other reasons as well that are detailed in this podcast.
Cash is so powerful because it will not only help you control your spending and stay within your budget, it will also help you decrease the amount of time you spent reconciling your budget at the end of the month. In fact, it’s probably the single biggest factor in decreasing the headache of reconciling your budget.
I’m going to be posting this content in a text format as well throughout the week so look for that if you’d like to read rather than listen.
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This video shows how to create your first working budget with excel. If you want to use pen and paper I would recommend printing out a blank copy of my Working Budget Excel spreadsheet. You can get a free copy by subscribing to my newsletter on the right. You could also create your own spreadsheet if you know how to use Excel or another spreadsheet program.
The advantage of doing a budget exclusively in Excel is that it’s pretty straight forward and you only have to deal with a single software tool. The downside is that you have to calculate and enter all your expenses manually which not only takes a long time, but can result in mistakes. But if this approach works best for you, check out the screencast below.
Tags: 12 Weeks, Budgeting, excel, zero based budgeting
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To start off, if you haven’t viewed Emily’s screencast on using Quicken with your zero-based budget, you’ll want to do that first.
You can receive a copy of the Working Budget excel file shown in the screencasts below by subscribing to my newsletter on the right.
Step 1 - Set up your accounts
If you choose to use Quicken to keep track of your money, I’m going to assume you already use Quicken and know how to set up your accounts. If you don’t already use Quicken, I would recommend using You Need A Budget software. You can read my You Need A Budget Review or watch my screencast You Need A Budget Overview.
Step 1 is to simply set up your accounts in Quicken so do that first.
Step 2 - Allocate existing account balances
Allocate any existing account balances. There are three general ways to make your allocations.
- Funds are reserved for a specific purpose. If you already have a specific use in mind for the funds in your accounts, allocate them accordingly. For example, you may have some money reserved for a large purchase or vacation.
- Use funds for this month’s budget. If you’re starting your budget mid-month or are tight financially, you may need to use some or all of the money in your account for this month’s budget. If that’s the case start allocating the money according to the priorities you established in your Master Budget.
- Use the funds for next month’s budget. If funds are neither reserved for a specific purpose nor are needed for this month’s budget, put them in a “buffer” category and start building up a month’s worth of expenses so you don’t have to live from paycheck to paycheck. It will also will act as an insurance policy to ensure you don’t overdraw on your account
You’ll want to allocate funds in your Working Budget and within Quicken. Watch the screencasts below for more details.
Step 3 - Budget your income
As you receive your paychecks, enter them and allocate the total amount into your budget categories according to the priorities you established using your Master Budget. Allocate your income in both your Working Budget excel document and in Quicken. See the screencasts below.
Step 4 - Print your budget.
If you have a buffer of one full month’s worth of expenses and can budget the whole month at once, print the Working Budget once all the funds are allocated. If you are allocating paycheck to paycheck, print out your Working Budget each time a new paycheck is received and allocated. Put the print outs into your financial binder.
Step 5 - Entering expenses.
You don’t need to enter expenses into your Working Budget until the end of the month when you’re ready to reconcile your budget. You can, if needed, enter transactions throughout the month into Quicken. You should do this if you are very tight and need to keep tabs on your accounts to ensure you don’t overdraw.
In a couple of weeks I’ll detail how to reconcile your budget at the end of the month. Until then you don’t need to worry too much about entering transactions unless you are very tight financially and risk overdrawing your account.
That’s it you are now up and running on your first working budget using Quicken and Excel. If you want a copy of the Working Budget spreadsheet, just subscribe to the newsletter and you’ll be automatically emailed a link to it.
Tags: 12 Weeks, Budgeting, excel, quicken, zero based budgeting
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For years my wife and I had to make due with trying to make Quicken work using a zero-based budget. While Quicken simply isn’t made for zero-based budgeting, we did find a cool hack that lets us keep track of our money in a way very similar to a zero-based budget. It’s kind of like zero-based accounting.
Using this method combined with a zero-based budget spreadsheet, we were able to get the control we needed. In the screencast below, my wife Emily takes you through an overview of this hack and how it works.
For those ready to create their working budget, you need to watch this video first before you read about how to create your first working budget using Quicken and Excel
Tags: Budgeting, quicken, zero based budgeting
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The tool I recommend for creating and managing a budget is using You Need A Budget (YNAB) budgeting software. You can see my YNAB review for the various reasons I recommend YNAB.
In the videos below I outline how to create your first budget with YNAB and explain the basics of how YNAB works. I’ve divided the videos into 9 parts and they are meant to be viewed sequentially. Follow along and before you know it you’ll be up and running.
If you don’t have YNAB and want to give it a try, you can download a free, fully-function trial version here.
Part 1 - Overview
To start out, here’s a quick overview of why I think YNAB is so great.
Part 2 - Setting up your accounts
The first step to getting started with YNAB is to set up your financial accounts.
Part 3 - Managing categories
The next video shows you how to manage categories in YNAB. You can add, delete, edit, and reorganize your categories for your personal needs.
Part 4 - Allocating initial balances and how the buffer works
After you first set up your accounts you’ll want to allocate the existing balances in those accounts. You may have those funds reserved for something already or you may want to use them for this month’s budget. You could also use them to start creating your buffer of one month’s worth of expenses.
Part 5 - Budgeting your income
Up to this point you’ve set up your accounts and allocated any existing balances. Now you receive your first paycheck. This video shows what to do.
Part 6 - Printing your budget for your financial binder
Every time you receive a paycheck and allocate funds, you should print out your budget, mark any notes on the printed copy, and store it in your financial binder. If you’re a month ahead and can allocate your full month all at once, you’ll only need to print one budget. However, if you’re still living paycheck to paycheck, you’ll want to print out a copy whenever you receive a paycheck.
Part 7 - Entering additional paychecks
This video explains different options for entering paychecks. The three scenarios are:
- You need to use the paycheck for this month’s budget
- This month’s budget is already funded and you want to usethe paycheck for next month
- You need some of the money this month and some of it next month (split transaction)
Part 8 - How YNAB handles expenses
At this point your budget should be complete (at least up to your last paycheck). In the next video I show you how YNAB handles expenses and how they’ll appear in your budget. I won’t be going through the entire process of reconciling your budget yet. We’ll cover that in a few weeks when it’s actually time to reconcile.
Part 9 - How to re-allocate funds between categories
What happens if you want to transfer funds between categories that were funded in previous months? This short video shows you how to move funds from a previously-funded category to another category.
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