GMR 121: The Yearly Budget Tool - Does it meet the 4 Foundational Principles of A Budget?
From using personally designed Excel spreadsheets to online apps, there are plenty of budgeting tools readily available to use to manage your personal budget. Over the next few episodes, we’re going to review some of the most popular apps and tools to see how effective they are at helping you manage your money. This week, we’ll evaluate the Yearly Budget Tool to see whether it meets all four of the 4 Foundational Principles of A Budget.
Show Notes
In the last episode, we introduced The 4 Foundational Principles of a Budget. If you haven’t created a budget, then you’ll want to listen to the last episode where we’ve gone through the 6 Steps of How To Build A Budget.
The 4 Foundational Principles of a Budget
Assign Every Dollar
Zero Based Budget - Spend on Purpose
Arrange Every Expense
7 to 9 Main Categories (housing)
Plus subcategories (rent, electricity, insurance, taxes)
Allocate It Evenly
Surplus & Deficits rollover
Looks ahead - Future Forecasting
Annual view, not monthly.
Adjust As Necessary
Tracking expenses often to ensure success.
Let’s put the most popular budgeting tools to the test!
The criteria will be our 4 Foundational Principles of Budgeting
As you listen to this, if you are near your computer, we suggest you download the Yearly Budget spreadsheet from leosabo.com so you can follow along and see how these features of the spreadsheet help you to manage your budget on the 4 foundational principles of budgeting.
The Yearly Budget Tool - Our Excel Sheet
Pre-budgeting Tracking Phase
Creating Your Budget
Actual Budget Tool (Yearly Budget)
Assign Every Dollar
Yes, in fact, once you type in your budget and have your plan, it rolls over to the next month, so you don’t have to type it out each month… very easy to use
Arrange Every Expense
Yes, it comes with most common Main & Sub Categories, plus some additional categories that you can make your own
Allocate It Evenly
Yes, you can see an annual view upfront
You can average out your expenses
Carryover both positive and negative balances
Adjust As Necessary
Yes, but it’s all manual.
Tracking expenses is a huge part of this tool, it shows you what you planned to spend, what you actually spent, and what’s left over.
It gives you the ability to deal with overspending in a positive way - rollover to next month or move money from one category to another to prevent overspending.
Positives
Manual entry keeps you connected to your finances.
You feel and see every dollar as it goes through your hands.
You have a full picture all in one place, helps you stick to the plan.
More control.
Surpluses and deficits roll-over month to month to smooth out your plan forces some habit changes.
Goals are easy to set up and manage through the “create your own sub-category” options.
Negatives
All manual entry - requires more work to manage.
Not directly tied to your bank accounts.
There isn’t hand-holding … you learn a lot as you go.
Our excel sheet is editable, but if you’re not careful, you could mess up a formula, so be careful as you edit the sheet.
You might find yourself wanting to personalize it more and that might be difficult if you don’t understand excel.
Personal Excel Sheet - Make Your Own
Positives
Total & complete customization
Full personal knowledge of how the budget works (ownership)
Negatives
All manual entry
Not tied to bank accounts
You learn as you go (will make mistakes and have to grow)
Resources
Budget Forms and Tools
David’s New Book - Jesus on Money
David’s New Website - www.stewardshippastors.com