Question of the Week: How do You Budget?

Do you do a formal budget?

I use a combination of things to stay on top of my spending. I my look at my checking account every other day, I occasionally plug my financial data into Quicken to see the overall picture. I also know which categories are most likely to get out of hand. So, I spend my budgeting efforts focused on those few categories.

Next week I’m going to explore some of the best budgeting tools out there. I’ll look at Quicken, You Need a Budget, Mvelopes, BudgetPulse, and possibly some others. But today I just wanted to get your opinion.

How do you budget? Do you use software? A simple excel file? Not at all?

I polled a few friends to see what they were doing. Here are their responses. Be sure to leave your response in the comments below.

“I don’t budget. Everything get automatically split up into savings, mortgage payments, bill payments, etc. and the remaining amount is available for use or it can stay in the savings account. I don’t recommend this to everyone though.” – Pinyo from Moolanomy.

“I am a huge fan of zero based budgeting. I started with an elaborate spreadsheet but now I use You Need a Budget which I feel is the best of breed. That was money well spent to help me keep track being the geek that I am.” – Paul from Fiscal Geek

“I use a spreadsheet to maintain our budget. We have essentially taken the “cash envelope system” and turned it into an “electronic spreadsheet envelope”. We also live off of last’s month’s income so we are not living paycheck to paycheck. Here’s a video of my budgeting system.” – Kevin from No Debt Plan

“I don’t really budget these days. Bills, savings, and investments are 90% automated so whatever is left is essentially what’s budgeted for day-to-day expenses. If there’s anything left over the excess usually gets pushed to savings. Budgeting proved helpful in the past when money was tight and we were in debt, but with automation and spending less than we earn a strict budget isn’t necessary now.” – Jeremy from Generation X Finance.

“We budget monthly in an excel spreadsheet. It includes our income, expenses, and line items for all irregular or annual expenses. As I pay bills, I subtract each amount and add the leftover to the following month. It’s actually a very fluid process and doesn’t take much time. Once a year, we update our budget based on our spending patterns in Microsoft Money and any upcoming changes.” – Madison from My Dollar Plan

“I’ve gone through periods where I’ve stuck to a budget and periods where I didn’t budget at all. I’ve found that I’m able to save more money when I’m budgeting than when I’m not. Currently, I’m using YNAB 3 to keep track of my budget, and it’s working really well.” – Lynnae from Being Frugal

“Our family uses a zero based budget in an excel spreadsheet to make sure that every dollar is spent to either a spending, saving or giving category before it ever hits our accounts. We try to have monthly budget meetings as well to go over problem areas, and adjust as we need to. We also use Microsoft Money as a desktop software, but we’re looking for something new as it gets phased out.” – Pete from Bible Money Matters

“I do a very loose form of budgeting. Mainly, I just keep extra money in my bank account (a couple grand) so that I don’t have to track all the small bills and expenditures. I know I have always enough for those. This saves a lot of time. I also monitor the bank account level on a spreadsheet and check it either monthly or when I want to make a large purchase or debt payment. Then I will do a quick calculation to make sure I have enough money for that big item.” – Mike from ABCs of Investing

“Ugghhh. I don’t budget in general. I track my spending patterns and habits at Mint to look for any category that gets out of control (I’m looking at you “Fast Food”!). I do budget for specific events or trips (such as my wedding coming up).” – DebtKid

“Since both my income and expenses are fairly unpredictable, I generally try to save as much money as I can in my one standard banking account. Every month I put a set amount towards my travels (50-100$ or so) and towards my retirement (about $100). I’m not a day trader but I have money set aside for stock purchases. I also have a high amount of my money in certain stocks, which I’m fairly passive with my management of. I’ve automated certain bills to my credit card but I still prefer to pay some manually. I do this to ensure that there are no discrepancies. I keep my online income in a separate Capital One 360 account high interest savings account. I’ve also created a separate sub-folder when I have random savings. Then there’s those times where it’s a friend’s birthday or something really fun pops up and everything I ever learned about budgeting gets thrown out the window.” – MD from Studenomics

“We currently do have a budgeting system for our household. Every bill that we can is ran through our Amazon Visa Card to get as many points as possible. We pay the card off each month in full to prevent in any interest accruing.All our bills are setup for direct pay to help organize our financial life. The only sort of budget that we kind of do is keep track of my business revenue and expenses in an Excel spread sheet. That is done primarily to help us to keep track of how much tax we should have withheld for our quarterly tax payment.” – Jeff from Good Financial Cents

“Creating and using our spending plan (budget) was essential in getting our finances in order… without it success would have been much more difficult, if not impossible. Creating the first budget can be tedious and difficult but each subsequent budget is easier and eventually your finances can practically run on auto pilot. We started with a paper budget for the first few months, then switched to a budget spreadsheet solution for ease of reproduction.” – Matt from Debt Free Adventure

“We budget using pencil and paper. We use last month’s income to start each month and shoot for zero-sum (spending every dollar of it at the beginning of the month). We round up on any expenses and round down any income to make things simple to grasp quickly. We use cash for discretionary spending and our debit cards (or checking) for any fixed, regular bills. We also keep a second sheet of paper for any irregular expenses (that surprise us or occurs less frequently than monthly). Anytime one pops up we record it on the master list. At the beginning of each month, we look over our master list and double-check if any “sneaky” expenses will hit this month. Two blank sheets of paper and a pencil! That’s our system.” – Baker(s) from Man vs Debt