You can spend money on a software program, buy fancy ledgers, or just jot down your spending on a sheet of paper, and have success. A budget's success hinges on the user's diligence more than anything else. Anyway, this works for us. I've shown it to friends in person, and you may find it helpful, or find something about it that you can use, tweaking it to suit your particular needs. I am sure there are ways that I could tweak it for my own use. For now, I'm happy with how it works for us, and don't want to bother changing anything with it.
The Pros
- A notebook budget is the "budget" way to begin individual financial planning.
- I use cheap spiral bound notebooks that I pick up at back-to-school sales for about 20 cents each. Each month uses one page. There are typically 70 pages to a notebook.One notebook will last several years.
- Uses basic math skills and a calculator, no fancy software program to figure out.
- It is highly portable and doesn't have an "on/off" switch. I can work my budget anyplace that I can take an 8x11-inch notebook.
- I can add new categories each month, without much hassle.
- I like that the entire page is visible and available. It is easy to update.
- Anyone in the family can either check the budget or enter an expenditure. No passwords required.
The Cons
- It can look messy by the end of the month.
- If I'm not diligent about recording expenditures, that aspect isn't accurate.
- It requires planning at the beginning of each month, which takes me about 1 hour.
- While I can access any of the information, to export info from the budget to some other document, such as tax forms, requires me to physically look something up and transfer that information myself. (This is as opposed to having a software program that I could access on my computer to transfer info out of and into some other document.)
At the bottom of this post is a full page from my notebook that has not been filled in with numbers. At the end of each month/beginning of a new month, I turn the page in my notebook and begin with setting up the page.
Just below, here, is the top bar from the budget page. The photo is not super clear, but I hope you can read it, as needed.
Just below, here, is the top bar from the budget page. The photo is not super clear, but I hope you can read it, as needed.
The Top Bar
Upper left -- income from the previous month (we live off of the previous month's income, plus any carry forward surplus from pervious months). For us, this includes my income, my husband's income and rent that we charge one adult child. My income can be composed of money that I earn through work, cash rebates from purchases, selling items, or gift cards that can be used in grocery or home improvement stores, that I earned through programs such as Swagbucks. A gift card to Starbucks doesn't really work well in a budget which requires expenditures in non-coffee drinking areas, although they are nice to have.
Upper right -- this is the carry forward budget surplus or deficit from the previous month. Our budget generally hovers around the income from the previous month, but sometimes, even we have unexpected expenses or reductions in income, especially with income that I earn, as that fluctuates vastly from one month to the next. I don't want us spending all of what I earn, or all of a windfall, in one month, but like to spread it out over several. With regards to deficits, keeping a running deficit only works if you have a cushion in your overall budget, like when we are saving for a new car, within our general checking account. We haven't bought that new car, yet, so that $3000 or so could be tapped, temporarily, to be repaid to ourselves, over the course of the next couple of months.
Lower far left -- the heading for the column for individual budget category carryovers + and - I don't actually write this heading in each month (Carryover + -), because I know, myself that is what that column is for.
Lower left -- the month (this is March's page before I added the $$ amounts)
Middle -- the total month's budget is entered at the top of the middle column. The total month's budget is close to the income amount, +/- a few dollars. If the total budget is below the income $$, the surplus will be added to the Upper Right "budget surplus or deficit". If the total month's budget is above the income $$, then I will draw from the carry forward surplus from the previous month.
Beneath the total month's budget I itemize each category's budget amount, on its line (I'll get to that in a moment). *
Beneath the total month's budget I itemize each category's budget amount, on its line (I'll get to that in a moment). *
Right -- the heading reads "spent". I don't actually write that out, as I know that is what this column is for.
So that's the top bar. There are 4 columns beneath the top bar.
Columns
Far left -- this is the carry over + or - from the previous month. This column is helpful for expenses which vary from month to month. So, if in February I budgeted $70 for electricity, but we only spent $65, I have a carryover of $5 to record in this column. That $5 is added to my monthly allotment for electricity, giving me $75 I could spend on electricity in March. Our electricity bills fluctuate from month to month, and season to season. The local electricity supplier has a wacky billing system. One month they actually visit the site to determine charges, the following they estimate (and very poorly at that). So it's very likely that my $70 or so in actual usage will be billed as $90 one month and $50 the next.
This column also allows us to save, within our checking account, for upcoming expenses, like a new water heater (this past fall, for instance). I can have a line for water heater replacement built in to the budget, and we put aside a small amount every month for this specific expense. Or, something like shoes or a new coat. We don't need new shoes or coats every month, but I can feed the savings for shoes/coats, through the clothing budget, setting aside $10 to $15 each month until we have enough for that purchase. By saving for specific expenses, we refrain from robbing something important like a new water heater, to buy shoes; but we insure that those shoes will not be put off indefinitely, and the money will indeed be there, at some pre-determined point.
Deficits in this column are infrequent, as we try to always be prepared. They do come up, but can only be afforded if there are significant surpluses in other categories. When I am buying the year's supply of laundry detergent, as a for instance, I will buy it when I find a super great deal at Cash & Carry, in the large buckets. That alone will use up everything in the Non-food Household category. What if that is also the month that I buy a 6-month supply of bathroom tissue, as that may also be on a great sale? I will carry a deficit in that category, into the next month, to cover both of those purchases, as I know that these aren't items which we use carelessly or extravagantly, but more on an even level. And we'll be able to get back to no deficit in just a short amount of time.
Left (just under the month heading) -- this column is for the name of each category. I budget every single expense category. If something comes up that doesn't fit any of our current categories, I add a new category and include it in the budget, like when I finally got myself a phone and a bus pass. I try to keep required expenses separate from non-required ones. So, something like Home Maintenance and Repairs is separate from Design/Interior or Landscape. A repair on a household appliance is necessary. I pretty new vase or flowers for the yard are not. Whenever I am making out the budget, if money is especially tight, the required categories get the funding, and I minimize the non-required ones.
There's a category titled "Extras". I don't have a name for this category, but it covers non-required expenses like a "just because" gift to someone, or a coffee out with a friend, or I put some money in the red kettle at the holidays and I need to account for it. We also have an "Entertainment" budget. this is for family entertainment, which could include eating in a restaurant, going to the movies or a play, or paid parking for an otherwise low-cost outing, any of the above, but reserved for family stuff.
We pay for part of our daughter's phone service, so that is included in the list. I have a specific amount that I feel I am willing to pay towards their phones. When they use more minutes than what I will pay for, they pick up the rest of the tab for the year. My husband has an iphone through his work, so that phone isn't included. Our landline is bundled with internet, so those two items are on the same line.
Center column -- this column is for the dollar amount budgeted for each category. On each line, to the right of the name for the category, I write in how much money I want to budget towards those expenses. When my month's budget is set up, this column is completely filled, top to bottom. I total all of the categories's budgets and the total needs to correspond to the income in the top bar. I often need to rework all or most of the numbers to get the total budgeted amount within the income. The pink sticky, here, indicates this is the column for category budgets.
*After developing a budget that works within our income, I put the total amount of the budget (which will be close to the Income figure) in the Top Bar, as mentioned above in Top Bar -- Middle.
*After developing a budget that works within our income, I put the total amount of the budget (which will be close to the Income figure) in the Top Bar, as mentioned above in Top Bar -- Middle.
Right of budgeted amount for each category -- this is where the page gets messy over the course of the month. I use this area to keep a record of all expenses in each category. As I bring a receipt into the house, I record the $ spent on its category line. I do not record individual grocery purchases, however, as I now do that online. I just track a total $ amount for each month on that line. Before tracking groceries online, I used the back of the page for details of the groceries for each month.
For any additional large expense which requires a lot of detailing, such as a major home renovation, I track the budget, expenditures, and remaining balance, for that particular category, on the back side of the page, as I did with groceries for many years.
I hope this explains how a notebook budget works, for anyone curious. Feel free to ask questions, and I'll be happy to answer or clarify anything.
For any additional large expense which requires a lot of detailing, such as a major home renovation, I track the budget, expenditures, and remaining balance, for that particular category, on the back side of the page, as I did with groceries for many years.
I hope this explains how a notebook budget works, for anyone curious. Feel free to ask questions, and I'll be happy to answer or clarify anything.
