Budgeting is a Bad Word

I finally finished the online Dave Ramsey's Financial Peace University and Total Money Makeover. Although the only debt we have is our slew of mortgages, and financially, we are doing fine, I couldn't pass up the free offer on the normally $100 course. Honestly, Dave has a lot of good tools and lessons...plus, he's funny. I've even downloaded the MP3 files of the course to my Zune in case I need a refresher or "pick me up" somewhere down the road. Dave covers the gamut of financial topics from buying things, selling things, paying off debt, saving, housing and even giving...great advice. Taking the course forced me to sit down and actually do a budget among other things. A budget should not be a set-in-stone strict "all or nothing" approach. It is a GUIDELINE that will give you limits on your spending...for your own financial situation. So what if you don't want to spend money on the course but still want to see how you're doing financially?

Take the time to download this Excel spreadsheet. One of the people taking the course, a self-proclaimed Excel freak, put it up on the internet for everyone to use. The spreadsheet will do all your monthly calculations for you..and on two sheets of paper. You can easily customize it to add categories that fit your particular financial situation. I also like how it portions out your pieces of the financial pie, meaning, you should only be spending a portion of your income on each slice of your pie. As an example, you should only be spending about 35% of your net income on housing. Here is the recommended breakdown in round figures.

• Housing - 30 to 35%

• Food (Groceries and Dining Out) - 12%

• Transportation (car payments, gas and maintenance) - 12%

• Savings & Retirement - 10 to 15%
  

• Insurance - 5%

• Recreation/Entertainment - 5%

• Clothing - 5%

• Medical/Dental - 5%

• Charity - 5 to 10%

• Misc - the rest
  

Here's a little calculator where you can figure out your target percentages, according to your income, for each slice of the pie. Granted, this is a faith-based website, so it takes tithing into account, but even if you are not a Christian, you should be striving to give something back to society. It's amazing how much one can get out of giving...you feel good when you give...look at Bill Gates and Warren Buffet among others. They may or may not be Christian, but to them, it makes them feel even more powerful when they give. You can too on a smaller scale.

Here is another calculator below, where you actually put in your detailed amounts of spending. If you have no idea, take a month to write everything down in a little notebook. Assign everything a category (food, housing, recreation, etc) and then total it up at the end of the month. The hardest is keeping track of cash expenditures and what you do with money you get out of the ATM! If the total added up is below what you earn, then you are living well within your means and can start thinking of setting some aside. If not, you need to really take a look at your situation and look at more options than just sticking your finger in the dike.

• CNN Money Budget Calculator
  

With the Excel budget worksheet, I realized we were spending a tad too much on food. We do have three growing boys in the house (one being our teenage exchange student), but I refuse to accept that as an excuse....so, I will look and see how I can cut corners there. I also see that we are a bit too generous in our gift-giving every year. I think I give every relative, friend and neighbor, something on their birthday, Christmas and whatever other fun holiday falls in between. That has to stop...at least on our income right now! Time to break out the cookie recipes and some other more creative ideas, and gift those instead. I think I can be a little more frugal here!

What do YOU do to track your spending and to keep it in check? Do you follow a budget? Do you set aside money for savings, retirement and kids' college?