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Basics Beginner: Building a Budget

Introduction to Building a Budget What Is a Budget? Budgets Compare Money Flowing In and Money Flowing Out What Are the Parts of a Budget? What Does a Budget Look Like? Economizing with a Budget Budgeting Rules of Thumb How Much Do People Typically Spend on Their Expenses? What Do Budgeting Tools Offer? What to Look For in a Budgeting Tool Types of Budgeting Tools Summary of Building a Budget
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Types of Budgeting Tools

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Types of Budgeting Tools

Budgeting tools run the gamut from desktop software to online software to app software to homemade applications like spreadsheets.

Things To Know

  • Most budgeting tools are read-only.
  • You can make a good budget with a spreadsheet or a sheet of paper.

Desktop and online budgeting tools

Desktop budgeting tools are those that you buy on a CD or from a Web outlet and install on your computer. As such, they need to be updated periodically based on how you choose to update them. Online budgeting tools live on the Internet and are updated automatically.

Both types of tools can gain access to your financial data such as checking accounts, savings accounts, and investments, but online tools do this more quickly. Once they have this data, they do their magic--they provide a look at your cash flow and analyze trends in your money habits, and some even provide forecasts for you.

Most of these tools are read-only, meaning that they display your data but cannot do transactions into or out of your accounts. That is part of the security feature.

Apps

Smart phones and tablets have budgeting software, too, and they are developing at a fast rate. These application software programs (apps) have advantages over many standard programs in that they provide a lot of flexibility, customizability, and options. Many of them also focus on ease of use, due to the small size of the phones or tablets.

Homemade budgeting tools

A good budgeting tool need not be a specialized program. You can make one yourself with a spreadsheet or a sheet of paper. Here’s a simple way to make one: on paper, devote a section to your income from all sources. Devote another section to your various fixed expenses, such as rent, investments, and insurance. Devote a third section to your variable expenses, such as gas, clothes, and food. It helps to make one column for your projected expenses for these things and another for your actual expenses. A third column could record the difference between the two. After several months of keeping this budget, you can start to see where you are leaking money (in the red) and where you are coming out ahead (in the black).

If you try this but discover that you need more out of a budget tool, you will now be motivated to start researching more professional alternatives.