Okay, I received an email about my budgeting system. Now, I know that several personal finance bloggers post their actual budgets, but I am not going to do that. I am going to post a very simple, 2 column budget, assuming a 1000 dollar take home. I will use 50 dollars in each category. This IS NOT an actual budget. I am just using these numbers as “place holders” for where you would put your “real” numbers. I just wanted to show how easy a simple, dimple budget can be.

Here are the steps for a simple, easy to use budget.

1. First, Start with 2 columns. You can use a spreadsheet program like Excel or just a piece of paper. In Column A put: “Take Home”. In Column B put: take home pay: Example “1000″. See example here:

Really Simple Budget
   
Take Home 1000

2. Now, In Column A list the 5 ways or place you use your money. I call these major categories Savings, Cash, Bills, Debt, and Checks. (This is all money that has a purpose for that pay period. Long-term savings and retirement are not included.) Savings is a major category for saving up money that will be used once a year or for unexpected needs. Cash is for day to day purchases, like groceries and gas. The Bills Category is where you place funds for your MONTHLY bills. The Debt Category is where you allocate funds for debt re-payment. (Note, you CAN put your debts under the Bills Category, but I like to separate them.) Checks is a special category I created for those constant once a month payments that I have that I do not receive and actual “bill” for. Your page should now looks something like this:

Really Simple Budget
   
Take Home 1000
   
Savings  
   
   
   
   
   
   
   
Cash  
   
   
   
   
   
Bills  
   
   
   
   
   
Debt  
   
   
   
   
   
Checks  
   
   
   
Total 0

3. Now, break-down each category into sub-categories. These are your actual “budget” items. Your page will then look like this:

Really Simple Budget
   
Take Home 1000
   
Savings  
General 50
Clothing 50
Medical 50
Life Insurance 50
Car Insurance 50
Local Taxes 50
   
Cash  
Baby Sitter 50
Gas 50
Grocery 50
Misc. 50
   
Bills  
Electric 50
Phone 50
Long Distance 50
Cell Phone 50
   
Debt  
Auto 50
Credit Card 50
Home 50
Student Loan 50
   
Checks  
Day Care 50
Gym 50
   
Total 0

As you can see, the numbers listed here are simply to make the math work. Please note, you should spend EVERY dollar that comes into your house, ON PAPER, before the month actually begins.

A few special notes:

I keep my “savings” category in an interest bearing savings account, and withdraw funds as needed. I keep my cash in my wallet. I keep my checks, bills, and debt payment in my basic checking account. I use online bill pay as much as possible.

Now, this is why this Simple Budget really works. You can use it for weekly, bi-weekly, or monthly pay-checks. You simply put your starting amount, and then allocate a portion of it to each account. For instance, I get paid weekly, the wife gets paid monthly. We allocate my check to several accounts weekly, and hers monthly. The allocations are not always equal, but, the total allocation for each check always leaves us with a “zero” total. We spend EVERY dime, before it comes into the house. Any money “left-over” gets to go towards debt, or towards extra savings.

Ready to move beyond pencil and paper. I suggest you try long-time site sponsor: If you are ready to move from pencil and paper, may I suggest long-time site sponsor, You Need A Budget. I use Jesse’s product to manage my day-to-day spending.