I hate to budget. I never even had one until a couple of months ago. Sad to hear considering I used to own a national company and was responsible for the payroll of my employees. Scary. Anyway I have found that it is necessary to have this tool to navigate the financial hurdles that are bound to creep up. In all honesty, I can say that for the first time in my adult life I feel good about where we are financially. Ironically we are making less money than we ever made before in our entire working careers. The "feel good" part is that I know that the bills will be paid, I know that we are saving money, and I know that there is enough money in the bank for our needs. No more worrying that since the checkbook isn't balanced whether we will be overdrawn. No more wondering if I paid a bill or not. When you keep track of your money things like that just don't happen anymore. It is a nice feeling.
1. Notebooks, pencil, & paper - this is the method I use. Sure I would love to have those fancy pie charts and it would be nice to click on a link and know exactly what your net worth is but I am a busy person and I hate doing a budget so 30 minutes once a month is about all I would like to spend on this since I will never get that 30 minutes back and I would much rather being doing something else with my time. I do it because it is necessary, just like check ups at the doctor. Your notebook budget does not need to be fancy. Here is mine:
Notice the Target clearance sticker in the corner. I revise the budget once every month for the month coming up. So for April's budget I set aside some time to write out the bills on the corresponding paydays. Each penny is accounted for. We pay some bills with the first check and some bills with the last check since we are paid on the 1st and the 15th.
So it may look like this:
59.75 life insurance
In this notebook I also have my Financial Goals for 2008. If you look closely you will see that I have highlighted three of them. This means that I have succeeded in obtaining them and crossed them off of my list. Granted there are a bunch more goals to meet but the very idea of crossing something off a list gives you a sense of forward momentum - that you are accomplishing something or moving, albeit slowly, towards what you said you would do. I am a chronic list maker and crosser-off- er.
I keep this notebook on my desk so I can refer to it often and be able to access it pretty easily to find out financial information. Again some people may spend a lot of time using Quicken and Microsoft money or other programs. I would rather spend my time on something besides seeing how much money I don't have. But don't get me wrong - this is a very necessary and critical step to your being financially independent one day. Do not skip it. Just don't spend all day on it. Spend time with your kids or your parakeet or doing something to contribute to your love of life instead.
2. Online services - Pear Budget , Mint and others - I have heard good things about these sorts of online services. The only thing is that it takes a lot of time to plug in your information and the very idea of someone else having that much financial information on me would make me nervous.
However you decide to handle a budget does not matter, just make sure you do it.