How to Create A Budget That Doesn’t Suck

Budgets can be boring.  If I had to guess I would say it might be the number one preventative reason why some steer clear of the subject of personal finance.  If you don’t have a personal budget, the idea of creating can be incredibly unattractive. I know this.  I’ve only had a budget for a little over a year now.

The thing is that budgets are incredibly useful and they don’t have to suck.  They can be awesome.  You can be proud of a budget.

Before I created our budget I used to loathe the idea of creating one.  I always thought of it as a type of slavery.    I thought of a budget as something I would have to obey.

But I found a way to create a budget that is not a ruler who demands obedience.  Rather it is more like an inventory — a honest portrayal of what I really spend.  I look at my budget quite often and I really like to look at it.  It gives me peace of mind.  It is accurate and it guides our financial lifestyle with a gentle hand.

Here’s how I made this so-called budget:

1. In a unorganized list, write down everything you regularly (every week, month, year) spend money on and record how much you think you spend on it per month.
2. Sleep
3. Revisit the list, add things that you forgot. Repeat 1-3 for a couple of days.  Exhaust the list.  Did you include oil changes?  Did you include dentist copays?  Did you include vacation?  Gifts?  Shoes?
4. At first I was depressed.  Proud, but depressed.  I knew I had a lot more on there than I wanted to admit.  But congratulate yourself.  It only goes up from here.
5. Categorize the list to your liking.  Make some basic categories that make sense to you.
6. Spend about a week refining your estimates.  Convert them to real numbers.  Look at old receipts, old account history.  Figure out exactly how much you spend on food per month (both eating in and eating out separately).  Count lunch — at home and at work.  Count breakfast.
7. Look at your list.  Is it correct?  Is that what you really spend?  Do you trust the accuracy of this list?  Keep refining until you can answer yes.

Now you have your budget.  Add to it, subtract from it, refine it.  Scrutinize it.  Let it whip you into shape.  Total it.  Cry into it.  Embrace it.

I believe everyone should have this type of budget/list.  I look at mine a couple of times per month at least.  It’s one of the best lists I’ve ever made.

Happy budgeting!