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The 90-Day Pre-Budget
By Jacquette M. Timmons Monday April 19, 2010
Jacquette M. Timmons is the author of "Financial Intimacy: How to Create a Healthy Relationship with Your Money and Your Mate
," and founder/CEO of Sterling Investment Management, Inc., an investment education and financial coaching firm. When budgets lie
I don't believe in traditional budgets, and here's why.
Whenever I teach a financial workshop, I ask participants, "Raise your hand if you know how much money you spent last year and on what items?” Very few people raise their hands. And that's precisely why budgets don't work.
Budgets aren’t about numbers—they are about patterns and choices. Few people are aware of their true spending patterns, thus their efforts to live by a budget often fail.
What most people really need: a pre-budget.
Before you build a budget
- Get to the truth about your money habits. Track your spending—with a notebook, spreadsheet or software—for 90 days, uncensored. Don't just focus on your bank and credit card statements: Analyze your cash spending, too.
- Ask yourself: “Does my spending reflect my priorities? Where do I want to make adjustments?”
- Use the pre-budgeting period to compare your financial ideals to the reality of how you handle money. How might you construct a budget based on your strengths as well as your weaknesses?
Bottom line
The 90-day pre-budget system gives you a reality-based foundation for your financial plan—which is why it has a higher stick-to-it success rate. Tell us how you plan to rebuild your budget.
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Written by A. Kaplan, April 19, 2010
I'm all about Mint.com these days. The budgeting platform is so easy to use and it tells me everything I need to know about where I am overspending so that I can tweak it.
Written by Laura Pagles, April 19, 2010
We plug our spending into personal accounting software and are floored when we actually look at the pie chart view! Aside from cutting back on the little stuff, like fancy coffee, we're not budgeting yet. The next step is to challenge ourselves to cut costs on pieces of the pie, rather than giving up pie!
Laura P.
@fatwallet
Laura P.
@fatwallet
Written by Mel, April 19, 2010
I do track my spending on Quicken - sometimes. Is mint.com easier to do? I fall behind on categorizing everything on Quicken until I have to do my taxes. But I really want to get a handle on where I can (reasonably) cut back on that pie!
Written by Kenia, April 19, 2010
@Mel - I use Quicken, and have never touched Mint.com, so I can't compare. But on Quicken, it should automatically categorize your spending for you. I do notice, however, that some things aren't categorized correctly (i.e. if I buy a gift from Target, it will categorize it as 'households' so I have to manually switch it over to 'gifts'). With time, I learned how Quicken likes to categorize the different places I shop at, so I keep a seperate pile of reciepts that I know for sure I'm going to have to manually correct. For example, I bought toothpaste at Vons, but I knew it was going to categorize it as 'groceries,' so I kept that reciept and about once a week I go through just those reciepts and make those corrections. All my other categorized expenses just get a quick scan.
Anyway, don't know if that helps you with streamlining your categorizing process, but I hope it did.
Anyway, don't know if that helps you with streamlining your categorizing process, but I hope it did.
Written by Beverly, April 19, 2010
I budget on a 26-week payday for each bill that is annual, and 7-payday budget for all quarterly bills, etc., and have done this for a lifetime of adulthood, passed on by my dad. My dad was a PRO by trial and error and he passed on what did and did not work. The man KNEW what he was doing. He has since passed, and I write this in HIS honor. Thanks dad!
Written by Kristina , April 19, 2010
I have an Excel workbook that tracks my spending for the past 4 years. A new spread sheet tracks spending for a year in both generic categories (fun money, groceries with a budget of 200 each month) and in specific categories including gas, electric, rent, water/sewer/garbage, cc payments, medical bills, different savings categories (vacation, car and renters insurance, house down payment, investments, retirement, gifts, etc. ). I have used this process for the past five years and know where the 98% of my money is going.
I can also use it for planning patterns. I know that my renter insurance payment and car renewal are both due in November, my car insurance is due in August, where I will be with vacation savings in 5 months, how can I plan for a vacation in 2011, how the savings is for gifts, etc.
It takes me about 30 minutes at the beginning of the month (when I pay my bills) and about 10 minutes to update each week if something has happened to make my future plan change.
I love approximating when I pay off debt where the best usage of that payment should be based upon what it happening that month or the nest three months.
Using this planning tool I know what I am going to do if the state cuts my pay check to minimum wage (cut out EVERYTHING that is optional savings, cancel cable, how to get my total expenses to $1,300/month, etc.), if I still have a 15% cut in salary for another year (maintain the status quo from this past year), if the state gives me back the 15% and my 5% raise in July (pay off all cc debt by Feb 2011, savings for a nice vacation with mom in Sept 2011 to Ireland, double up student loan payments to pay off in three years, increase retirement savings to $1,800 a month, etc.)
It has proved to be something that allows me a great deal of freedom in planning for the future by seeing what happened in the past.
I am also happy to share it with anyone who asks!
I can also use it for planning patterns. I know that my renter insurance payment and car renewal are both due in November, my car insurance is due in August, where I will be with vacation savings in 5 months, how can I plan for a vacation in 2011, how the savings is for gifts, etc.
It takes me about 30 minutes at the beginning of the month (when I pay my bills) and about 10 minutes to update each week if something has happened to make my future plan change.
I love approximating when I pay off debt where the best usage of that payment should be based upon what it happening that month or the nest three months.
Using this planning tool I know what I am going to do if the state cuts my pay check to minimum wage (cut out EVERYTHING that is optional savings, cancel cable, how to get my total expenses to $1,300/month, etc.), if I still have a 15% cut in salary for another year (maintain the status quo from this past year), if the state gives me back the 15% and my 5% raise in July (pay off all cc debt by Feb 2011, savings for a nice vacation with mom in Sept 2011 to Ireland, double up student loan payments to pay off in three years, increase retirement savings to $1,800 a month, etc.)
It has proved to be something that allows me a great deal of freedom in planning for the future by seeing what happened in the past.
I am also happy to share it with anyone who asks!
Written by avalenzuela, April 19, 2010
Kristina, I use an Excel spreadsheet too and it's pretty helpful, but yours sounds a little more sophisticated than mine. Would you mind sharing?
Written by Jennifer, April 19, 2010
I too use mint.com, and it is sooo amazing. We tried Quicken but just couldn't get it to work right. It was such a hassle I gave up. And then I got on Mint.com. I can't belive how easy it is to track everything. I really like how you can split a payment. This has helped a lot with tracking our cash. I can split an ATM withdrawal into as many categories as I want. Example
$100 cash withdrawal breaks into...
$35 - baby sitter
$40 - educational expenses
$25 - entertainment
$100 cash withdrawal breaks into...
$35 - baby sitter
$40 - educational expenses
$25 - entertainment
Written by Laura, April 19, 2010
I use Quicken, it's a love/hate relationship for me, but it is working. We have been entering all our spending for years, but didn't use it to budget. In January 2010, I ran the numbers for last year, other than the shock factor of interest and bank fees, I was totally motivated to get a budget set up. It took me 2 months and then another 2 months of tweeking. I know this is working, my family hates it, but all our cards are paid off and I feel so in control now. Money is funneled into savings accounts for annual bills, seasonal expenses, vacations and am working on our emergency fund.
Written by Arlene, April 20, 2010
Recently found this site and I'm thoroughly enjoying the posts as well as all of these helpful comments.
Kristina, I would LOVE to have your spreadsheet. Currently I'm using a template that I actually found on a Bank of America webpage. It's pretty basic but good for a start.
Kristina, I would LOVE to have your spreadsheet. Currently I'm using a template that I actually found on a Bank of America webpage. It's pretty basic but good for a start.
Written by k, April 20, 2010
Years ago, I used msn money to track my expenses and try out budgeting. I didn't really like the functionality of it so I switched to an excel spreadsheet I designed myself. It's not as sophisticated as Kristina's but does just fine for my purposes. At any time I know what I need to pay from each pay check and how much I have left of my other spending amounts.
I would like to look into mint. sounds like it might be more what i need than msn money was.
I would like to look into mint. sounds like it might be more what i need than msn money was.
Written by savyconsumer, April 20, 2010
I use a spreadsheet to manually manage my budget and itemize expenses. I checked out Mint.com and though its concept and usefulness is attractive, you have to give them your bank user id and password - so they can login and pull your bank data! I'm thinking not such a good idea to give strangers my bank login info and what if there is a security breach, will my bank reimburse me for any lost money, will mint.com? Something to think about....
Written by Meg, April 22, 2010
I signed up for JustThrive.com - similar to Mint. It is scary to put all your usernames and passwords in, but Thrive is very reassuring -- they say that all their employees use Thrive so they are personally concerned about security. Thrive has been great for me - it's not perfect, but it forces you to look at your spending and also yells at you (via comments when you log in) about overspending.
A major issue with both Mint and Thrive is that they only load a previous month or two -- so it takes probably about 6 months for the system to understand how you spend and get paid. This means that in the budgeting tab, Thrive is a little confused at first, but now that I am 2 weeks in, it's getting better.
There are also 24-48 hour delays in uploads of information from your banks. So while you want the instant gratification of seeing a credit card bill paid or your salary filling up your bank account, Thrive doesn't show it in real time. On the other hand, it's great to have everything in one place. All savings accounts, 401k, checking etc.
Also for those on this thread looking for budget spreadsheets, there's a daily worth posting that has a great spreadsheet available to all. It's a google docs one that I think MP wrote about.
A major issue with both Mint and Thrive is that they only load a previous month or two -- so it takes probably about 6 months for the system to understand how you spend and get paid. This means that in the budgeting tab, Thrive is a little confused at first, but now that I am 2 weeks in, it's getting better.
There are also 24-48 hour delays in uploads of information from your banks. So while you want the instant gratification of seeing a credit card bill paid or your salary filling up your bank account, Thrive doesn't show it in real time. On the other hand, it's great to have everything in one place. All savings accounts, 401k, checking etc.
Also for those on this thread looking for budget spreadsheets, there's a daily worth posting that has a great spreadsheet available to all. It's a google docs one that I think MP wrote about.
Written by Imagm, April 25, 2010
Kristina and Beverly, Sounds like you both have it together. May I get a copy of your templates. I have a very simple template and it's not helping. Thanks a million.
Written by TenaH, April 28, 2010
Kristina would you please email me a copy of your templete for Excel I would greatly appreciate it. email it to
This e-mail address is being protected from spambots. You need JavaScript enabled to view it
Written by GC, May 04, 2010
I'm a member of Associated Credit Union (www.acuonline.org). They have FinanceWorks free when you login to home banking. It is so cool. You can budget, bring all of your accounts into one place (which can be a little scary to see the first time), and a lot more stuff. It's from Quicken, which I think is Intuit. But it is an unbelievable tool to use.
Written by maria, May 12, 2010
i discovered dailyworth.com just a couple of days ago and have been reading everything with great interest because i really need tips on budgeting, saving and money management in general.
websites like mint or quicken were not known to me (i live in europe and i am not aware of any such sites being used here) and reading through the comments i learned about them and checked them out. apparently one has to give one's bank login and password information, in order for these web sites to help with your budgeting/savings/investment, etc, for free...
i have to say that it's so scary even thinking about giving some web site owners this kind of information, just because they tell me that they would like to "help" me, "for free"... ?????!!!!!!
websites like mint or quicken were not known to me (i live in europe and i am not aware of any such sites being used here) and reading through the comments i learned about them and checked them out. apparently one has to give one's bank login and password information, in order for these web sites to help with your budgeting/savings/investment, etc, for free...
i have to say that it's so scary even thinking about giving some web site owners this kind of information, just because they tell me that they would like to "help" me, "for free"... ?????!!!!!!
Written by Crissy, May 21, 2010
I recently starting using My Debt in Focus, it was introduced to me by my credit union. It is free and you do not need to enter any account information such as: user names, passwords or account numbers. All you enter is your balance and amount of your monthly payment and how much you pay each month. This tool will help you to lower your debt faster. It also helps you to see where most of your money is going. Try it out http://debtinfocus.com/
