The Method to my Madness

I have fallen off the budget wagon and am in process of hopping back on again.

I thought this would be a great opportunity to share with others how I set up our household budget. What system I am using and why, and how to get started.

The first step to setting up a budget is to track your spending for a set period of time. Some suggest a month, some suggest 6 months. How long varies, but every budget book I've read has you track spending as the first thing to do.

In my case, since I have merely "fallen off" and not starting from scratch, I already have a good idea of our expenditures and how the categories land. If you're just starting out, you'll want to track your spending. All of it.

How you do that is up to you. A sheet of paper on the fridge, collecting every receipt (or making your own receipt for transactions you didn't receive one from the vendor), put a sticky note on your debit card and write down every transaction. The key is to track every penny of it, for at least a month.

I'll be back in a little bit to talk about the next step in the process.