Almost everyone agrees they need a budget but most of us don’t have one. The biggest reason most don’t have a budget is that the process is a major time suck. This blog explains how to build and maintain one efficiently.

Successful budgeting requires A) Creating a budget, and B) Keeping score against your budget. Here are some tips to make this process easier, along with how much time each step requires.

Creating a budget (1 hour)
  1. Instead of starting from scratch, begin the process with a budget template. There are many but Tilly likes this one, Simple Budget Template because it helps you take into account the important item: savings. This template has done much of the work for you in terms of set up. (10 minutes)
  2. Build your budget on a monthly basis (not an annual basis). This way, you’ll be able to see how you’re progressing against your budget each month. (1 hour)
  3. Hint: To establish an amount for each expense category, look at your expenses over the past six months to get monthly averages. Make sure to take into account both recurring and one-off expenses. Don’t forget to budget saving money – including for retirement, and short-term emergencies, and big purchases down the road.
Keeping score against your budget (30 minutes each month)
  1. Download a software that automatically connects to your bank and credit card accounts and organizes expenses by category. Tilly clients have been successful with Quicken which costs between $4 to $10 per month. There are other options that accomplish similar results such as Mint, Every Dollar, and Personal Capital. (30 minutes)
  2. Transfer the budget you created from the template spreadsheet into the software to keep score each month. Programs like Quicken will memorize multiple transactions from vendors and insert the expense into the proper category going forward once you’ve got it set up. (1 hour)
  3. Check your transaction data monthly to make sure you’re on track and within range. You may need to tweak some of the categories to get them closer to your actual spending patterns. Analyze the results against your budget periodically to see larger trends and find ways to optimize your expenses. (30 minutes each month)

Voila. Sure, there is still some work to do but once you get a budget set up like this, it mostly runs itself. Good luck and please let Tilly know if you have any questions. If you’re not already a client, we’re happy to assist with 15 minutes of advice for no charge.