How I Make My Budget Work?

I don’t recollect specifically writing about my budgeting techniques. So here goes.

I used to have a detailed budget for my monthly expenses. I used to put specific targets for each expense item — salaries for domestic help, groceries, eating out, clothing, entertainment, fuel, cellphone bill, utilities and what not. I used to track and chart each expense item in a spreadsheet. But I used to miss most targets each month. Consistently.

I switched to a different system — the BIG picture budget.

Now, I set aside a certain amount of money as my monthly expenses. I dip into this pool as and when I need to meet an expense. Salaries for domestic help and groceries go out within the first couple of days of a month. Everything else happens as and when they happen during the month. What I chose to spend on consciously adjusts during the course of the month. In one month, I might have spent more on entertainment and in another month, I might have spent more on eating out. But so long as I’m within the BIG picture budget, it really doesn’t matter where I spend more and where I spend less.

I’ve been using this system for quite some time now and it works well. I don’t recollect regretting not doing something just because I didn’t have the budget for doing that. And since most of the mandatory expenses happen early in the month, there are no “Oops!” moments towards the end of the month. I also keep aside a teeny weeny buffer, you know, just in case…

Now, how about you? How do you budget?

9 thoughts on “How I Make My Budget Work?

  1. My Budget is very simple and controlling very disciplined manner. i just calculate average amount for each expenses and pay through credit card and pay full due amount on every 1st day of month.

  2. I too tried to have a expense report but its difficult to do that. My expense are paid mostly by cash. So my common tracking of monthly expense is the amount i withdraw each month + sodexo coupon utalised.

  3. @Irshad:

    Yeah. I remember trying that too. Printed an expense report template and carried it in my wallet. Always forgot to enter the expenses!

    By the way, do you transfer a fixed amount to a different account each month and then withdraw from that account?

  4. After trying few software/sites, I formatted one Excel spreadsheet to record all transactions and allocate expected budget for each section/group in beginning of month with a view that it should be easy enough that a non-tech person can update it. Its has been almost an year and I’ve clear picture of all income/expenses. I’d happily share it in case anybody interested to have a look.

  5. Hi,
    I have subscribed to your blog via feedburner and diligently read through all your updates. First and foremost I must thank you for being so transparent in sharing your thoughts, ideas and actions with us. I did not know about the extreme retirement concept and many other such things. Though I too try to follow a very frugal lifestyle. I have subscribed to other frugal blogs but sadly have not come across a pure frugal Indian blog.

    After a chance conversation with one of my colleagues, I came to know about the GNU Cash software. Its a wonderful way to track your budget. It takes a little used to at first but is very useful. It follows the double bookkeeping concept. I have started using it from last week and have been updating it daily. You may try it out and write about it for other readers.


  6. @bhaskar:

    Thanks for your kind words. It’s what makes my writing worth. It’s wonderful to hear that you’re adopting a frugal lifestyle. Maybe you could share your experiences with readers of this blog?

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