Categories keep expenses organized. When you look back at ATM receipts, you can tell when you withdrew the money but not what it was for. The same goes for entries on a statement. Paper and online statements don’t put deposits and withdrawals into categories. The added information lets you know where to subtract the money from in your budget.
Start with a few simple ones. Don’t make things complicated right away. Most people are already less than enthusiastic about putting together a personal budget so the more painless the better.
List all of the income and expenses from the last full month. Go one by one and decide what would best describe that item in a budget. Here’s the basic list I use:
- Income
- Savings
- Anti-Emergency (see Create your own Anti-Emergency Fund)
- Fun and Self-Development
- Charitable Contributions
- Home
- Food
- Clothing
- Dependent Care (all the kids and pet expenses)
- Insurance
- Health Care and Self Care
- Personal Business (stamps, paper, ink cartridges, bank fees)
- Transportation
- Old Debt Repayment (the balances you’re paying off on your credit cards)
For example, a payment to the water company would go under “Home”. Your son’s soccer uniform payment can fall under “Dependent Care”. If you have more than one child, you can create a category under each of their names for any expenses related to their hobbies.
Subcategories can be created for each of these to leave a place to record specific bill amounts.
This is actually the fun part. There is no limit on categories. In fact, the more specific you can be the better it will be when the time comes to choose between needs and wants. Unnecessary expenses can be eliminated over time to streamline your spending.
If you use a check register (a “cash register, LOL!) to record ATM withdrawals and checks written, leave a space to enter the category name for the entry. Later, when you review spending, you can pinpoint where the money is going. Finding points of overspending is part of the reason for creating a budget in the first place.
You may want to stick to broad categories if you are tracking spending in a specific area. That one area can be more detailed and the rest of the expenses lumped in bigger categories.
Even if you don’t think that you need a budget because you don’t spend much money, it is a useful tool.
Setting up a personal budget for your home teaches valuable organizational skills. This is a help when tracking investments or growing your business. Bad spending habits here can cost you profit dollars.
Since reconciling categories can be a tedious job, set a time once a week or once every two weeks to enter these figures in a spreadsheet, a ledger book, or into a software program designed for personal finances. After a month or two, when you have started to make changes in spending, you can reconcile your entries on a monthly basis.
If you want Financial Peace, Prosperity and Joy, go to “A Financial Course In Miracles” and download our free Sampler Package with both left brain and right brain tools to help you achieve the financial peace you’ve always dreamed of.
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]]>Question: Cindy, do you have any quick and easy ways to make extra money? I’m interested in putting some into savings and paying off some debt, too. Thanks. ~ Jayne
Answer: Good question, Jayne. There are many ways to make extra cash even when you are working full time. One of the best ways to make more money in your spare time is to do something you love and to find someone who will pay you for it. Here are a few and I invite readers to add their ideas in the comments below.
- Collectors, computer savvy individuals, and the natural salesmen can all make a few bucks by setting up an eBay account and selling all the items they have stored around the house. If it’s boxed up and covered with dust then you aren’t using it. Why not send it to someone who will truly appreciate it, and you can appreciate the cash in its place.
- Almost every weekend, somewhere in the United States, some city or town is holding a fair or festival that offers booth spaces for crafters. Get your hobby to work for you by attending some the festivals and selling the items that you have been giving away as gifts. It might help to visit a few first to get a feel for the different crafting trends and the best locations for your booth space.
- Digging in the dirt is not for everyone, but almost everyone loves having a beautiful yard. If you have a green thumb, then why not offer to share that with others. It might be surprising how many people will take you up on the offer. It will probably be downright shocking how much they are willing to pay for the service. I know I’d love to have some help in this area!
- If you don’t want to labor away in other people’s yards, then why not sell the fruits of your labor from your own yard. Pot up some of the multiplications your plants have grown and sell them at the local flea market. Find a local farmers’ market to sell excess fruits, vegetables or flowers.
- Take seasonal or temporary work - as long as it doesn’t interfere with your full-time job and you still have some time to yourself. A part-time job can be the perfect way to make that extra income you need for a special goal.
Affiliate yourself with a great product like Send Out Cards which I use to generate more referrals for my work as well as offer it to others who want to use it (and I make a commission). Do you have anyone who needs a special thank you or congratulations or just a “Hi”, go to https://www.sendoutcards.com/cindymorus to send them a card on me.
If you need some extra income or just want to make some quick or easy cash, then look at what you have. Sell off anything that you don’t need or want, use your skills or talents to meet needs that others may have, or take a part-time job to reach the financial plans you have for your future.
Good luck to you, Jayne!
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