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

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About Philip Taylor, CPA

Philip Taylor, aka "PT", is a CPA, blogger, podcaster, husband, and father of three. PT is also the founder and CEO of the personal finance industry conference and trade show, FinCon. He created this website back in 2007 to share his advice on money, hold himself accountable (while paying off over $75k in debt), and to meet others passionate about moving toward financial independence. He uses Personal Capital to track his wealth. All the content on this blog is original and created or edited by PT.


  1. Gabriel Killian says

    Very useful info. Thanks, very well written article.

  2. I budget by limiting how much money I carry with me. That way I can’t spend more than I have on me at any given time.

  3. I use an app on my iphone to keep on top of expenses on a day to day basis and for our cheap wedding we found setting a firm budget early on and sticking to it made a big difference.

  4. We have never budgeted. We just try to make sure that we a lot spend less than we make and then save and invest the rest. I would be interested in seeing exactly where our money goes each month and areas we could adjust. I’ll keep checking in to see what you suggest as a good budget program.

  5. Shaun McGowan says

    Making a budget work for you can be a challenge. if you stay organized and budget wisely, you ought to be able to stay within your budget and be able to save for the future.

  6. I mentioned your post in my blog this morning as part of a post on the best things I’ve read all week! Cheers!

  7. I use my own custom built excel. I automate as much as possible -investing, saving, rent, bills etc and allocate the rest of my planned spending by %.

    I don’t keep to the budget 100% of the time but as I plan to save a comfortable % each month I have a little wiggle-room.

    The thing I’ve found most helpful is to avoid as many regular monthly expenses as possible: I have a pay-as-you-go-phone, I don’t go to the gym ( I cycle to work and everywhere else) and have cut back magazine subscriptions.

  8. All utilities are on the budget plan and automatically deducted from one of two credit union checking accounts. I keep an index card in each checkbook with list of bills and amount of each bill to be paid from that account. When pension checks or soc. sec. check is deposited I enter it in the proper checkbook and automatically deduct said amounts from checkbook immediately no matter what time of month it is due. Also deducted from checkbooks is automatic savings transfers to cover any expenses not deducted on a monthly basis ie. Insurance, doctor and meds etc.

    I have 3 credit cards one for gas only, one for prescription and doctor visits only and the third is used for on-line purchases. All are paid in full at end of month. The balance of money in checking account can be used however I choose. If there is any left at end of month. I will add it to my secondary savings at one of the credit unions. There is $500 in each credit union primary savings to cover any emergencies.

    This system has been working just fine for me. Since all bills are covered and e-funds are put aside I don’t worry about spending too much on eating out or anything else as long as I don’t spend more than what is in checking account.

  9. Jo/Gaelicwench says

    I am a big fan of YNAB3. It’s very simple to navigate and does a lot without all the unnecessary bells and whistles, as I’ve discovered in other standalone and web-based budget software. I was fortunate to not have to pay the full price because I already was using the Pro version. I really like the concept of building a Buffer so that living paycheck to paycheck becomes non-existent.

    It’s like an envelope budgeting system without using one.

  10. I just finished my first budget last week. Right now, it’s on paper. All our actual payments are made online and I use ING for saving for irregular expenses. Maybe once I get the hang of it I’ll move to a software program. But as of now I’m comfortable checking off the monthly paper budget with a pen. It’s a big step for us that we actually even have a BUDGET!

  11. @Laura – You know, I did a NeoBudget review back in 2008. I may have to revisit that one again though. Thanks for sharing your system. 🙂

  12. For the past year or so I’ve used a small table-top calendar (showing the current month) to mark down the dates a utility or mortgage payment is going out via online bill-pay.
    As soon as a bill comes in, I schedule it for immediate payment and mark it on the calendar. I can see at a glance (and so can the hubby) where the money is going and when. I have a set amount of money that goes into our savings account every two weeks, and we don’t usually vary very much from our grocery or gasoline expenses week to week.
    For me, this is a very basic system that is handy, simple and easy for my husband to have access to, as he doesn’t always have time to go on the computer.
    Online bill pay is a free service provided by my bank and it saves me a great deal of money on postage. And the calendar was free, too :o)

  13. Laura Stiller says

    I’m going to LOVE this serious. I think I’ve tried almost every budgeting program there is – but we LOVE Neobudget. Are you going to review that one? I use an excel spreadsheet to plan how much we’re going to put in each ‘envelope’ and then I use NeoBudget to import our transactions and track our expenses – it’s ridiculously simple!

  14. I use an Excel spreadsheet. I budget the recurring monthly expenses accordingly that always stay the same (mortgage, student loans, etc.) For those that flucuate with different amounts (utilities, for example) I attempt to level out the spending across a year, so I have a big balance in the ‘gas bill’ category going into the winter, but then when the bills are high, that balances moves down. Having a standard amount across each month helps keeps things a lot more manageable!