Over at Wise Bread they have an interview with Mary Webber, a Frugal Family Thrift Counselor. Yes, that’s apparently a real job.
Anyway, they asked her for some advice for people who have never ever made a budget. How do you get started?
Buy a school composition book, the kind with the black-and-white cover and lined pages inside. Then whenever a bill comes in, put it inside the book. Use one page for each month and list each bill, its due date and the amount – XYZ Company, the 17th, $23.89. When you pay each bill, check it off in the far right column with the date paid. This is totally NOT complicated, NOT time-consuming. It’s amazing to me how many people just toss their bills in a drawer, pay them haphazardly and have no idea at any given time what they have and what they owe. Plus, the add-on fees for missing the due date on payments can get very expensive. This is absolutely the simplest way to ease into the budgeting, the next step being to actually plan ahead for bills you now can anticipate being due on certain dates each month, and eventually at different times of the year.
We like this tip because it’s simple and it’s something physical you can do right now, today, to start getting your finances more organized. It’s also something you can do if you’re starting out on your own and are just getting used to paying bills. College students getting their first apartments, for example, should do something like this.
I Free Advice from a Frugal Family Thrift Counselor [Wise Bread]
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My personal problem with budgeting is that I don’t receive any paper statements anymore. When I was first on my own it was so easy to keep track of money because everything was on paper, but now everything is emailed and done automatically, I can’t keep track. I know this is easy enough to fix by getting paper statements again, but I hate having them waste the paper. I’m trying the site mint.com to track my funds instead now and they have some fun tools on there. Seems to be going well……for now.
Not bad, I basically do this with Excel. I’m no Excel wiz or anything, but I have a typical month on the left in 2 columns (Payee and typical bill) and I copy and paste that to the right each month for the ‘actual’ month. Then as I pay bills I delete them on the right. I also have slowly added columns for dates due (which I update), then added fields at the bottom for expected income and then I can see how much wiggle room I have in my budget.
It ain’t perfect, but it’s a notch up from this and has dramatically simplified bill paying, and really, really helps me keep track.
@crabbyman6: Try my method. If you have them listed in an electronic document with due dates (that you basically add 30 to each time you pay them) and delete the temporary listings as you pay them, you can see clearly what’s left to pay that month and what’s been paid, and best of all, it doesn’t matter if you get an email, don’t get an email, if a bill gets lost, etc.
I’d also sincerely recommend paying on the payee’s site directly and not with some billpay thing. For one, you can always see exactly what’s due. Second, they always update their records faster than billpay would, and lastly, having worked for a mortgage company, I have witnessed firsthand the vagaries of billpay. It breaks down. Often. Sometimes billpay is just an elaborate check mailing system, and consumers rarely know that.
@crabbyman6: @aphex242: this is a good tip, but you should also print a copy of the ‘print this copy for your records’ page that you see on the website after you make your payment. unless you’re backing up your computer like youre supposed to – a crash could find you without all of your financial records. i keep a few folders on my computer that mirror the real folders in my file cabinet with print outs of each payment – these should include the date, amount paid and the account number/confirmation number.
in terms of reminding yourself when to pay online – use ical or your computer’s calendar program. i have one category of reminders in ical for when bills are due, and another for when i’ve actually paid them – now if i could only get those dates to always match up!
I use MS money to track EVERYTHING. I’m actually quite anal about it and download new transactions every morning. Doing it every day makes it so much easier and it only take 2-3 minutes as I check my email each morning, if you wait a week it gets difficult to catagorize things. I now exactly what I have in my account at all times and if I ever get double billed I know as soon as it posts. (only happened once in the 6-7 years I have been doing this)
This also helps with my budgeting, as the month comes to an end I can see were I should cut back in order to stay in budget. You would also be suprised by how much the little purchases cost (like buying a bottled water twice a day at work costing me $40 a month, I now bring a water bottle for free)
@aphex242: Actually I have an issue with paying everything on the payee’s sites… that leaves me with the record of my payments scattered all about, gives the payees access to at a minimum a credit card (but for some your only option is a checking account) and doesn’t show me any future activity in a centralized location unless I maintain that myself.
I have free bill pay through my primary checking account, they have a guarantee that they’ll cover late fees if it’s not delivered by the “deliver by” date you specify, and I schedule a repeating payment at or slightly below my average monthly amount for all the repetitive stuff so even if I become a space cadet and forget, at least part of the payment will automatically get made. (For example, for the credit card I use for all my incidental expenses during the month, I have a $100 repeating payment scheduled and I just adjust that to whatever the balance is every month. If I forget, at least I’ve made well over the minimum payment and incur no late fee.
I use Mint.com :B. If you like to pay bills and bank online, use Mint.
@aphex242: Re: the rough tracking on Excel… there’s absolutely nothing wrong with the fact that this isn’t perfect. A budget is just an estimate, after all, it’s expected that you’ll be slightly over or under budget in some periods. Balancing your checkbook should be perfect, tracking your budget at all is vastly better than just winging it.
I think it may be an issue lots of people have with budgets that they think it has to be complex and rigid, rather than something practical like your Excel spreadsheet or the composition book mentioned in the article.
@crabbyman6: I have a spreadsheet as well–one section for each paycheck. I figured out when my different bills were due and subtract them from whatever paycheck I would have to pay them with. Then each payday, I just open the spreadsheet and see what I have to pay, and do it all electronically the same day. In my mind, my bills are due as soon as I have funds to pay them, so I do. I also treat savings like a bill, so all that is left in my checking account is the cash I need for my weekly allowance.
I am always amazed at how simple this stuff is, but also how tricky it can be (as it was for me) to get started. There are lots of people with mortgages and families that don’t have budgets.
@GearheadGeek: You’re absolutely right, BillPay can be really, really convenient. But if they screw up, and double-pay (like I’ve seen countless times), and you can’t absorb being out that money for 72 hours or so, you might reconsider. I suspect you can, but be aware that these kinds of things happen with alarming frequency.
The converse, of course, that you nailed, is the looser security of having info all over and not being able to see those future debits. I guess it’s a balancing act for everyone, they gotta choose what’s right for them
I’ve started doing a spending report in excel. I enter all charges from the first of the month to the last day. I color-code by category and run totals for each category. I then identify impulse/unnecessary spending into its own category.
Takes about 30 min – 45 min to go through everything, but gives me a fairly accurate picture of if I’m spending more than I’m bringing in. Comparing to prior months lets me see if I’m improving or falling.
There are quicker ways, this one works for me.
This is good advice. I use Quicken religiously, so I wouldn’t use a notebook for bills, but I do keep a paper notebook for my “finance journal.” I keep it with me any time I have to call anybody — write down notes on what phone number I dialed, who I talked to, what the resolution was, etc. That way I always have my notes in one place, and never have to search for phone numbers, or forget what they promised last time I talked to them, etc.
I recommend a Happy Bunny or Edward Gorey blank book — that way at least you have some sarcastic bastard with you in spirit while you’re listening to “Girl from Ipanema.” Never underestimate the value of neglected murderesses to inspire your doodling when you really want to choke someone at Comcast.
My strategy is to add the bill due date in my Google calendar, under the label “Bills.” Then I add a one week reminder e-mail notification and that has been the most effective method for me so far, because I am constantly in my e-mail account.
@aphex242: I always end up putzing with Excel to make it prettier and wasting tons of time, so I use a freeware program called AceMoney (upgrade to enter multiple accounts, etc., costs) that lets you enter your bills and income and track it by various categories, etc. (I put it all in one “account” called “budget” — I’m not interested in which money that I have is where, but in the overall income and outflow.)
I just tracked expenses and income for three months or so, very diligently, and then I started having it spit out reports for me by category — enough data to start making forward-looking budgets and spotting trends.
(I also include a $20 “random” charge every month — for things like parking meters, vending machines, small forgotten transactions, etc. I’m sure I don’t spend nearly that in “random” ways most months, but I’d rather the error in estimation be too high than too low.)
Personally I use an excel spreadsheet (or the equiv of) on google documents.
Sure, its hosted on their servers and holds my financial information… but its only the balance sheet–theres no account information or anything.
Its just for me to keep track of my numbers. if someone wants to find out how much money I’m banking above and beyond what I pay out in bills… have fun! The ability to access this spreadsheet from home/work/a relatives house/etc and have it always current with minimal hassle makes it worth it.
The best thing? it does all the calculations on the fly and when my girlfriend becomes my wife and we finally move to a joint budget I can add her access to my spreadsheet and we can both update and manage the information easily.
I highly recommend it! Just be sure not to put any real sensitive information (not ego sensitive.. security sensitive) such as bank accounts, passwords, logins, etc. and you’re all set.
Does anyone know if there is a Mint.com-like program that works for Canadian banks/credit cards? I got all pumped to set up a Mint.com account, but it won’t work for any of my accounts/credit cards…
In regards to one-vs-many online banking areas, its harder to make multiple work. As others have said, most online banking sites from the larger banks have some sort of guarantee, etc.
I do all of my bill pays through my bank. When I get a bill in (or am notified via email for paperless) I either pay it outright or schedule the payment to “be delivered” a few days before its due. If you make it a habit, you win for having a good idea about your monthly bills and using it for those brain farts that make you forget.
It helps when they do have those seemingly-slow-and-inefficient payees as well when they have the fall-back of sending a check in the mail. My power provider is cheeper than the others because they charge you $5 for each transaction through their in-house online bill payments. Yeah, sucks to that.
there are many fine budget and check register excel templates out there. Also; using google calender has helped me remember the due dates tremendously. Just enter in when each bill is due and tell it to keep recurring monthly and you’ll know very quickly when a bill is due.
I don’t like the billpay feature. I’m scared it’s going to mess up and I don’t have enough wiggle room every month. I have all my financial aid sitting in an ING, I pay myself on the first out of that to cover the month, then I pay my bills. For some, I still mail a check (when it’s not free to pay them on their website). I never use USAA’s billpay feature…even though they’re a great bank, I don’t trust it. I prefer doing it myself.
I keep my “budget” – amounts and due dates in an Excel sheet. When I pay, I change the color and write down any necessary info, like confirmation numbers. I print out the receipt and stick it in my file cabinet.
@Eyebrows McGee: Thanks for the tip on AceMoney, I’ll check that out.
@Copper: I do use USAA’s bill pay and have experienced 1 problem in about 7 years. The bank quickly made the necessary call and fixed the situation . . . .rent check not delivered on time.
@crabbyman6: Is this Mint.com secure . . . it being free and all.
This is an excellent idea, one that I have been using for years. I know some people like Excel and other programs, but I like this for the simplicity and the fact that I don’t have to turn on my computer to view it. As the bills come in I note them, transferring any automatic payment amounts from the previous month. I keep it open on my desk and it reminds me of when things are due. Then when I mail it I get the satisfaction of crossing it off. That’s all I need!
For the less well off, or even the less organized, I wouldn’t recommend a computer solution to this issue.
Try stapling a manila envelope to a calendar in the kitchen or living room. It’s far less likely to be ignored because it’s in plain sight, plus payment due dates can be written on the calendar.
I get emails whenever my statement is due, but I also get texts and also track it on my own. Receipts are emptied out of my purse every few days, I document each purchase, date and price, and place the receipt in a clear page protector (the static helps it stay in). If I make a return, I’ll document that as well. I used to get paper statements, but even now when I pay online, I still get paper statements because I want something concrete in case there is an error with my statement online.
@KJones: That’s sorta what I do.
On a whiteboard/calendar in my kitchen I have what’s due (and how much) broken out into “weeks”. I know at a glance that on the 1st through 7th I have 1/2 a mortgage payment and a credit card payment (potentially) due. 8th-14th is Water/Electric, another credit card (potentially), and Cellphone. When the bills actually arrive, I confirm the date due and amount is still correct or erase and adjust it.
One other step to make bills more predictable is to sign up for the balanced (or budgeted) billing program offered by your utility companies. They average out your usage for the year and break it into equal monthly payments that are recalculated annually. It’s also provides a indicator on how good or bad any conservation efforts you are taking are going when the bill goes up or down for the year when they recalculate.
I hate all the paper crap filling up my home with a passion. Now that almost 90% of my banking is done online, I tend to print PDFs of any “Print this for your record” confirmations. These are time stamped on the filename (easier to track), saved in the PC and backed up with my regular DVD and Hard Drive backups. If I have to move house for any reason I usually put the most important files in an encrypted ZIP on GMail as they take up less space than you would think (3 years of statements and receipts – 6MB compressed).
@That-Dude: They say they use Yodlee, which is a bank account information aggregator that banks use anyway. They just ask for your online account’s username and password, there’s no way through the site to get your account number or move money. They have a security section on their website that explains it better than I can. I’m still not 100% sure I trust them, but thought it was worth a try anyway.
I will be renting for the first time soon, this may be a good idea for me to make sure my money is straight each month.
this is pretty much what i do, but i use one of these:
[www.amazon.com]
carry it in my pocket wherever i go. i also use it to hold my receipts until i get a chance to categorize them. added bonus of making all the girls jealous when i whip out my “black book”.
Why use a notebook in the year 2008?
I use google calendar in this manner, and it even notifies you when your bills are due.
I got the idea from this blog..
[thinkcheaply.blogspot.com]
I want to know how one gets a job as a “Frugal Family Thrift Counselor.”