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This subject sounds like no fun. Whenever people use the word “Budget” it usually means to cut back, limit spending, stop having fun! Rather in this case, I suggest you figure out what you are spending. What is it that causes your checking account to be near zero each month?

Once you know what you spend money on, you can make decisions about how you really want to spend your money. What types of things are you spending more than you thought? Knowing will help you adjust and possibly have more fun by spending your money on things you enjoy more. It’s a new way to look at a budget.

There are fixed expenses: Rent, car payment, insurance, HOA fee, etc.

There are have to spend expenses: Food, electric, gas, gasoline, etc.

There are needs expenses: clothes, healthcare, etc.

There are things we “need” but can make choices on how much to spend, such as cable, phone, etc.

Finally there are the nearly 100% controllable expenses, dining out, gifts, etc.

Now organize your information:

To do this, I used a spreadsheet (see a sample one in the link at the end) and came up with categories that money would go into each month. Then I went back two months in my checkbook and charge card and filled in the numbers. This gave me a realistic baseline to decide how much we spend in each area of our life.

I suggest you go through your checkbook for a few month’s worth of entries and figure out what your categories are. Don’t get too crazy here, but cover all the major items. Then create a Miscellaneous category and lump in those items that aren’t consistent year to year. Now go to your charge cards and look at where you spend money there. Most give you the option of organizing the charges by category. Do so and then total them up. Clothes, gasoline, dining out, auto, etc.

During January, track your actual expenses and put them in column E next to the budget figure in column D. As we are just gathering information now, we’ll start refining your budget over the next few months. After a year of this, you will be amazed at how well you understand your home finances. It really only takes a few minutes a month to do this once you get used to it.

The sample spreadsheet linked below will average the actuals in your columns into the next month. So as you put in your real expenses, you’ll find the budget numbers adjust and average all the months input thus far. Thus, hopefully, making it more accurate. You’ll need to put in your categories, but I’ve put in some to get you started.

Let me know what you think.

Here is a sample spreadsheet to make this easier: https://joesabin.com/wp-content/uploads/2016/01/sample-budget.xlsx