This is the first stage of our 5 step series to begin your budget process. Stage 1 is to establish your current spending.
If you already have a spreadsheet program this is your best choice, as it allows for easy calculations. All you really need is a pen and some paper at the very least to get you started on identifying and tracking these fees.
Organization is a large part of this budgeting process, so I recommend you consolidate how you handle your bills and expense tracking. By this I mean, you either have online banking and account management for your accounts, or you collect your monthly paper bills and organize them manually. I am a fan of the online method, but please choose whichever you are comfortable with and organize accordingly.
So now to begin. Once you have a month or two worth of bills, begin to track actual spending categories, such as
These will be whatever categories make sense for your life. Then let's add these pesky little categories that may not come to mind at first, such as
Once you see the expenses in these categories start to add up, this will provide some great motivation to keep your budgeting process moving along. It is a good idea to track all of your expenses going forward in this manner, but to provide a good snapshot of your spending habits, you should have at least 2-3 months worth of this data.
In stage 2 of Budget Planning 101 we will access our new baseline and work toward eliminating excess expenses.