The Noob’s Guide to Budgeting

What is a Budget?

A budget is simple. So simple, it’s only three words : In and Out. The money you have coming in (income) vs money you have going out (bills + expenses) is what you should be keeping track of. A budget gives you an idea of where your money is going and is helpful to figure out if there’s a way to save more of it.

We can use a simple spreadsheet to track it all or for the more tech savvy people, we can use budgeting software or money management websites like Mint. Whichever you are most comfortable with is fine. I suggest starting with a spreadsheet though because it’s quite a deal easier to learn.

Why a budget?

I know what you’re thinking. Budgets are lame and I know every single bill that comes into my home and how much extra cash I have at the end of the month. Let me just say this:

I still recommend that everyone take the time and carefully write down every bill that you pay. It’s easy to forget them!

If you’re trying to maximize your contribution to your dividend growth portfolio then knowing how much you’re going to spend in a given month is pretty paramount. If you have an extra $200 dollars a month to invest with, then you know you can safely deposit that into your account and not have to worry about any bill you forgot to pay!

The Noob’s Budget Spreadsheet

The spreadsheet that I provided tries to fundamentally be as easy as possible.

First off, go ahead and click the following link to download.

You can import it to your own Google Docs Account or just download it as a Microsoft Excel file. If you don’t own Microsoft Word/Excel, you can download the open source office software Libre Office for free and use that program to work your spreadsheets.

The spreadsheet has provided sample values for reference. You can simply change the values where appropriate and then delete the ones that do not apply to yourself.

 

  • Input your monthly income into Columns A& B – If you have multiple people with income (husband/wife, etc), go ahead and replace their names and income or delete what you don’t need. After you provide the value, the total in B:15 should update with the sum.

  • Input your monthly bills into Column D & E Remember, if you have an expense that’s paid quarterly or yearly, go ahead and calculate what it would cost monthly. Delete what you don’t need and after you’re done, the total in E:15 should give you the sum.

budget_ss_bills

  • Provide estimates for food and gas into Column G & Hif you’re unsure what this amount is, go ahead and take a guess. I’ve provided two additional sheets in the spreadsheet that will help you keep track of how much you’re spending. Right now, they are unlinked with this value. Once you get an average cost, go ahead and input the values into the Budget sheet.

  • I also provided columns to track your net worth if you feel like knowing where you stand with that. Just fill them in and your current net worth will be in K:18.

 

The extra income you have leftover will be calculated in H:18. Anything you have extra towards the end of the month can be added to your dividend growth portfolio!

Budgeting isn’t as scary as some people make it out to be. If you’re worried about not having “just in case” money, you should already have an emergency fund to help alleviate that before you’re investing anyways!

Need an example? Read up on my own budget.

Your budget can also answer some easy questions on whether or not you can afford something you’ve been thinking of buying. But no matter where you are in your life, it’s important to have a basic budget to help you!.

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