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When my former husband and I first got married, I knew that managing money was important. It was only logical to make up a list of all of our expenses and see if we had enough money to pay them.

I knew that there was only x amount of money available for each item, etc., so I wrote things up and evaluated. And on paper it always worked out, just barely.

But no matter how hard I tried, it never actually worked out in reality.

It got very frustrating, and I gave up. In fact, I’ve never really had a official “budget” since. (Instead, I have a spending plan, which is a much more palatable way of handling things that works for me.)

One of the big reasons that my budget never worked out was that I was doing it backwards. I listed out all of our expenses, and then tried to see if we had enough money to pay for them, or tried to get enough money if we didn’t. My then-husband was also not involved. I was the designated “money person”, and so I made the budget up and presented it to him.

That just doesn’t work. What would have been more likely to have worked (at least a little better) would have been for us to come up with the list together, and agree to it.

Another problem was that I never sat down and figured out what it was that was actually causing the problems. It wasn’t that “well but we weren’t expecting that expense, next month will be better”. It was that I wasn’t facing reality. I wasn’t expecting the unexpected, or taking into account things I regularly forgot about and spreading them over the entire year (like car insurance or Christmas). I also didn’t realize that we were spending way too much money on transportation expenses as a percentage of our income.

The thing is, it’s normal to have a few problems with a spending plan (especially if you make very little money) when you’re just getting started. It takes time to adjust things to where they work. Instead of getting upset or giving up, step back and analyze. Try something different. Make small adjustments. Get what’s really important to you in there. If you’re going to go out to eat once a week, actually put it in the plan instead of telling yourself that you won’t and then doing it anyway.

The key is to make a spending plan/budget work for you instead of the reverse. Make it something that helps you get to where you want to be, instead of this dreadful thing that you “have” to follow.

The following is a guest post.

If you are wondering how you will be able to afford all the things that you want in the future, be it new cars, home improvements or holidays, it is hard to see how that will happen when everything that you earn is accounted for. A debt management plan is usually used for people who are suffering financial hardship. There is absolutely no reason why you cannot complete a plan of your own and seek some debt advice or debt consolidation help and see where in your finances you can take positive action to avoid the worst case scenario of declaring bankruptcy.

A debt management plan is the generally the last course of action before an individual is forced to accept bankruptcy. By saving now and saving regularly you can avoid the threat of bankruptcy, a little financial planning and saving now will mean that you are in fact, creating your own debt management plan. A debt management plan is usually done with a debt advisor who scrutinizes your income and essential expenditure and looks at what is left available to pay off any outstanding debts that you have. There is huge merit in looking at your finances in this way and instead of paying off extra on debts with the remaining money put the money into a savings account.

When you are struggling to pay for every day things, saving for the future may seem way down on the list of priorities. However, if you can put a little aside each month you will begin to see it build up into a fund that will mean you can pay for those unexpected expenses without having to borrow more money. Once you begin the cycle of borrowing money from banks, loan companies or getting hire purchase agreements you are setting the groundwork for paying too much in the long run for your goods. Not being able to make your payments may ultimately lead to being in a bankruptcy situation.

Thinking about where to put your savings is a big decision and seeking out some professional savings and debt advice could help you in the long run to find debt solutions as well as a savings plan. If you need instant access to the money or need to be able to write cheques or use a debit card then you can put money in a current account. Current accounts however, have low interest rates. To make the most of your savings, it may be advisable to compare accounts from all the major banks and building societies. ISA’s offer tax free savings but frequently getting money from the account is limited and payments in are regulated. It is vital that you consider what is right for you and your situation. If you are facing bankruptcy having money in an account that you cannot access will not aid you. The money will be considered with your other assets in a bankruptcy process.

Savings are a personal issue, only you are aware of what you need to put money aside for, when you need to access it and how many accounts you need. Make sure to do your research carefully, by considering what you are saving for and perhaps seek some professional saving or debt advice as
they will be able to help you make the most out of any money that you have available.

There are all types of credit cards. Many have different purposes. A balance credit card is not just used for making purchases. It is designed to help people pay off bills and other debts. This makes it easier to manage multiple credit cards, some of which may have high interest rates. When calculating one’s bills, it is important to figure in interest and fees. One will soon see that if they consolidate their bills and put them all on one card, they could end up saving a significant amount. The following includes some basic information about balance transfer credit cards and what people can expect from them.

Save a Lot of Money
When a person consolidates their credit cards and transfers smaller balances to this new balance transfer credit card, he or she will save a lot of money. Some cards have incredibly high interest rates – as high as 25% – which means that paying down debt is incredibly hard. Cutting the number of interest rates one has to juggle means that a person will cut down how much money they are paying credit card companies. The saved money can then be used to pay down debt.

Streamline Bill Paying
Having to juggle six bills or more a month can be incredibly tiring. This means not only paying the interest rates and fees on these cards but it makes it more difficult to pay off one’s debts. Consolidating debts and placing them all on one card is smart because it means a person will only have one credit card and one interest rate to deal with. This relieves a lot of stress and confusion.

A New Line of Credit
A balance transfer credit card often has a far higher balance than traditional cards. This is important to note since it can free up credit for people who had been struggling with a maxed out set of cards. This line of credit is great if an emergency comes up. Once the card is paid down, too, one’s credit score will also increase. Thus, this new line of credit helps a person secure their finance future for the short- and long-term. This is a chance to save for a rainy day and to help manage debt.

A balance transfer credit card is a smart investment for people who have more than one credit card they are trying to pay off. With low interest rates, a high balance, and a reliable way to streamline bill paying, this is a smart option for people trying to manage their finances.

I track my income and my spending each month using two methods. I’ll write about the first method now, and then the second method tomorrow (since this was getting a little long).

For the first part, I use an OpenOffice spreadsheet to input everything I spend and everything I make by category.

The major categories that I use for expenses are housing, household expenses, entertainment, pets, auto-related expenses, business expenses, health & appearance, and personal spending. Each of those major categories has about 10-12 smaller headings under them.

For example, in the entertainment category, I have Netflix, movies in the theater, snacks, dining out, travel, hobbies, gardening, and events (meaning concerts, plays, etc.) These little subcategories match up (for the most part) with the way I enter things in Quicken.

I don’t think most people have nearly as many categories as I do, but it works for me and I like to see the breakdown. It helps me keep things where I want them to be.

I have my income broken down by source as well, so that I can easily see what I’m making the most money from and where I could maybe make better use of my time. My expenditures and income are then totaled up automatically by the spreadsheet each month. I’ve been doing this since 2007, and it’s interesting to see what things have changed and what has stayed the same. I enjoy tracking because it helps me pay attention, and when I pay attention I’m more likely to get to where I want to be.