Recently, I've been trying to get my budget under control. I went a whole year making decent money and I had nothing to show for it on my job's one year anniversary. I ended up feeling so bad about being wasteful that I blew my tax refund on a Roth IRA for the 2007 tax year. No fun for me. I had spent most of what I should have been saving on mopeds, beer, and Extreme Pizza.

Over the past two months I instituted a budget system that was very influenced by the Stackbacks system. The way I interpreted it is that I don't care about variable expenses, they're all pretty much optional. I pay myself every week into a discretionary checking account and have to find my own balance between mopeds, beer, and pizza for the week. Some weeks I'm likely to have money left over and some weeks I'm likely to hit zero. The idea is that I don't care about how much I spend on these expenses just as long as they don't collectively break the bank. In the wintery months I'll eat more delicious food and drink more expensive beer. In the summer months I'll ride mopeds more and drink cheaper beer. And who wants a seasonal budget? I want to be on autopilot.

So here's a little flow showing how my budget system works out:

Also I absolutely despise Excel. I would only ever use it if I had to, luckily I've got Numbers. Numbers makes charts and graphs that won't make your eyes bleed. In fact, they'll do the opposite... of bleeding? Whatever. Right now Numbers is being used for all of my budgeting. If you want to start a budget I would highly recommend doing it by hand, whether it is electronically or written down on pen and paper, it will help you get a better handle on what's important to you and how you spend. I've never been a fan of Quicken or any budgeting software because they are all based on systems which never aligned with how I spend. Here's an example of my discretionary expense tracking in Numbers:


I track all my weekly expenses and can see how much I have left for the week, how much I have left for the month, what my actual balance is, and what my projected end-of-month balance might be. You might notice the chart in the lower right corner. This is my favorite. A good looking graph with nice colors that tells me, visually, how close I am to reaching my budgetary limit for an arbitrary category. I say arbitrary because I use categories in my discretionary budget as guidelines, not as set-in-stone figures. That is the whole point of the discretionary account. Spend your money on whatever you want, just don't overspend.

I think everyone who makes money should put together a budget. If you're a cat you might not need to budget. The best part of budgeting is just learning about how you spend money and understanding where it goes. You can draw your own conclusions about what you should or should not do with that information. Personally, I'm a fan of a zero-debt, zero-contract lifestyle, but it probably isn't for everyone.