Not all of us are the left-brained-accountant type of person. That does not, however, exclude you from responsible money management. Worksheets constructed just for this purpose can make even a right-brained person appear left-brained to their friends - and isn’t this what we’re all shooting for?

However, I’ve seen some tweakings on the YNAB Personal Budget that are absolutely wild at times - colors, design, layout, etc. It didn’t take me long to realize how a right-brained person had taken some money management worksheets and improved upon them in more ways than one.

If you’re right-brained, you may just have a major advantage when it comes to managing your money. How? You’re creative! Creativity will put some spice into your worksheests, making the task of money management not only more enjoyable, but more effective.

The left-brained person’s worksheets (and I’d say the basic YNAB layout fits this bill) is pretty straight-forward. You have your inflows, your outflows, and a way to manage your spending through the use of some type of budgeting tool. Those are just the basics of an effective worksheet though. Money management can be improved when you invoke the powers of your right brain just a little bit more.

You need to get creative!

It’s obvious the worksheets need those basics as discussed above, but can your right side take them any further? That’s what happened to me when I started out with the YNAB System. I just started with the basics. My right brain told me a few different things that improved the system by leaps and bounds. Your right brain will do the same!

One big change to the worksheets was the use of the previous month’s income. This completely solved the unsolvable problem of “not knowing what to budget because [I] don’t know what we’ll make.” Another right-sided solution was with the overdrafting. At first, simply out of necessity I thought you’d just carry overdrafts through the entire year. Only after really looking at it from my more creative side did I realize that taking the overdraft out of the next month’s income would reimburse whatever surplus categories had “really” paid for the overdraft, and would keep spending in check even further. Left-brained? Not hardly.

Customers have shown me some of their ingenious add-ons to the YNAB system (one person was sick of entering today’s date all the time!) that have improved it for them. And when you’ve made your money management worksheets customized to your needs, you’ll use them - and that’s really all that matters.

Whether you’re building your own from scratch, or improving upon some existing worksheets, money management is something that should follow a few basic rules: 1) quick, 2) simple and 3) effective. As you design (or customize) your own, make sure you ask yourself about those three points. Will using these worksheets make money management quicker? Simpler? More effective? If you can answer yes to all three of those questions then you’ve found yourself a pretty darn good solution. Your right brain will be needed. Don’t be afraid to have it shine when it comes to money management.

Most of us really do have the desire to manage our finances. Most people really want to see their assets grow and their debts decline. Most people, at one time or another, contemplate using some type of software (Quicken, MS Money, etc.) to help them on their path toward financial peace.

I’ve been there.

I checked out Quicken first, and actually used it during high school (yes, I was a high school student that actually tracked what I spent - and yes, I was a normal high school kid in every other way). I just tracked my checking account transactions there, used the fancy charts now and again…

Later on in life, just before marrying, I realized that Quicken would not cut it. The alternative option did not look very appealing (MS Money, which actually came free with our computer purchase and we STILL don’t use it). So in my search for an alternative to quicken, I actually thought I would try something else that would be free to me - Excel.

Looking back I realize that using Excel as my quicken alternative was hardly free. I spent tons and tons of time perfecting what became mine and my wife’s budgeting system. Excel filled the one large, gaping gap left by every piece of software I’ve seen (whether it be a big-house brand like Quicken, or a much smaller program):

The ability to budget.

What I’ve found most people are looking for (even if it’s not free), is something that will help them manage the ins and outs of their cash. Quicken does a great job of showing you what your ins and outs were, but doesn’t offer much in the way of planning what they will be.

Excel as your alternative to quicken, can be built just how you like it - because you can make it. If you want Excel to track what you spend, make it happen. If you want Excel to track what you bring in? Make it happen. And most importantly, where Quicken fails, if you want Excel to be able to help you plan where your money will go in the future? Just make it happen.

My wife and I have been using Excel for several years now. We’ve developed our own template system that we actually sell. If you don’t want to purchase a pre-made Excel system, I really encourage you to build one on your own (provided you have the free time). Not only will you end up with a customized personal finance package made just for you, you’ll also become more proficient in Excel - which is helpful just about any way you cut it.

UPDATE: We’ve abandoned our Excel system to use the unbelievably powerful YNAB Pro stand-alone version. YNAB served us well. YNAB Pro is serving is even better.

One alternative to Excel, but along the same lines if you want to avoid Quicken (I’m not saying it’s bad, I’m just saying it doesn’t do everything, or it does too much depending on how you look at it), is to download a free spreadsheet program called Calc from OpenOffice.org. This way, you avoid the cost of Excel and the cost of a fancy personal finance package. The only thing that will still cost you will be your time (remember, that’s not free either).

Have a go at it. Build your own alternative to Quicken.

Above all, rembmer this one thing: regardless of how fancy your system is, it must help you to always: spend less than you earn.

So you want to know how to manage your money wisely…

In these technological days, the logical option seems to be to seek out the best software to do the job. Unfortunately, this “best” software is sometimes extremely high priced. As money management software becomes more sophisticated, it forgets the important aspect of your original aspiration: HOW TO

The problem with money management software these days is that it tries to manage your money for you. How it does this is beyond me. My programming skills are limited to say the least.

Does the software manage your money wisely? Maybe. But how do you know?

For instance, I took a look at Microsoft Money the other day. This money management software is sophisticated! You get graphs, charts, variances, etc…The problem with MS Money isn’t the ads that are stealthily layered into the program (although I find that almost offensive), nor is it the major amount of disk space it takes up on one’s hard drive. The problem with MS Money is that it’s too sophisticated. How will you learn to manage your money wisely if the software just does it all for you? You won’t.

Quicken is definitely a step up from MS Money, but it still lacks (I should say it doesn’t lack to really be on target) something pretty major, something that will keep you from your goal of learning to wisely manage your money.

And the irony is that the better the software gets at learning how to manage your money, the worse you become at it.

If you want to learn how to manage your money wisely then you are going to have to learn how to write down what you spend. Period. End of discussion. That’s the boring truth my friend.

Yesterday I was talking with a good friend actually. He just enrolled in a personal finance class in college. I jokingly told him I could give him the best advice about personal finance in one sentence: Spend less than you earn.

The only problem with this tip is that it doesn’t sell university classes, great books, or audio cassettes. It’s just too boring! Spend less than you earn (now buy my book, the struggling author might say). Nah, a really good personal finace coach will teach you how to wisely manage your money by re-wrapping the “advice your grandmother gave you” (Dave Ramsey) and delivering it in a new, fun, exciting way.

So, coming back around to the topic. How does one spend less than they earn? You must record every single itty bitty purchase you make. That’s the secret to financial success. You write down everything you spend and then you make sure it’s on target with how much you’re making. (By on target, I mean well under what you make).

Now I hear someone yelling: “But MS Money writes it down for me. If I am to track it myself, that means I’ll just be adding an extra step to the process of how I manage my money.” Don’t you see? That’s exactly the problem! MS Money, Quicken, Mvelopes, take away the writing down aspect of your money management process. This is where it becomes weak.

When you write down what you spend, you make a mental connection with that purchase. Even if you use your debit card and have everything recorded for you by your bank (which I do), you still need to write down every purchase you spend (I do, in the YNAB system). This process of writing things down will help you manage your money better than any fancy, sophisticated, expensive software. You must write it down yourself. You will become attached to your purchases. You will become more aware of your money. You will naturally manage your money wisely. You will see where it goes. Your money’s path will become a part of you. You will begin to spend less than you earn. And at that moment, you will be on your way to personal financial success.

Lately I’ve received a lot of inquiries about the envelope budget system, how the envelope system works, and how Excel could possibly help a person use the envelope budget system. I thought it would be worth writing an article about.

First off, let me just explain the envelope budget system in general, we’ll then get into the advantages and disadvantages of the system, and how Excel fits into the scheme of things.

The beginnings of the Envelope Budget System
While studies have shown that even grandparents are on the slippery slope of access to easy money, many of them have had certain values instilled in them throughout their life that have helped them become masters of their money. One of these values was is live within your means. A sure-fire way of living within your means was to use a trusty Envelope Budget System.

Basically, Grandma & Grandpa would receive money from work. They would take this cash and divide it up into different envelopes. The envelope might have been labeled “Groceries”, “Savings”, “Oil”, “Entertainment”, etc. They could have as many envelopes as they desired - although they probably kept it pretty simple. When they went grocery shopping they would bring the “Groceries” envelope, and pay out of the “Groceries” envelope. If there wasn’t any money in that envelope, they wouldn’t buy groceries. If there was any money left over then that was just great! When they were paid again, they would start the process of this simple envelope budget system again, refilling the envelopes.

Well, back in those days people didn’t go into bankruptcy nearly as often, credit cards were non-existent, and money on credit was pretty tough to come by. These days, things have certainly changed, and the American people are busy lining the pockets of the likes of Visa, MasterCard, Citibank, and so on. (Even our grandparents have fallen prey to the slick-talking, sleek-advertising wiles of sexy credit!).

Advantages of the Envelope Budget System
There are many advantages to using an envelope budget system. (1) If you really stick to what your envelope dictates (which was decided upon by you while you were not emotionally tied to that little scarfy thing in the mall you absolutely must suddenly have). If you don’t have money left in “Clothing” then you don’t buy any clothing - period. This is the biggest advantage to the envelope budget system: you are forced to live within your means. Every financial advisor should tote this as the principle of financial success: You must live within your means.

Another advantage to the envelope budget system is its simplicity. You have envelopes. You fill those envelopes with money. You spend money from those envelopes. You don’t spend money from those envelopes if there is no money in the envelopes. Simple? Beautifully.

Disadvantages of the Envelope Budget System
I’ll be the first to say this: the envelope system can get a bit cumbersome for two reasons: (1) You have to divide your paycheck in cash. That means you have to go to the bank and get the right change for each envelope. This is a royal pain if you ask me. Especially if you don’t particularly enjoy going to the bank. (2) You have to remember to take the envelopes with you. My wife and I, while using the YNAB System, could not for the life of us get our grocery expenses to stay within our pre-determined budget. Finally we decided we would force ourselves to stay within budget by using the envelope system. If the cash wasn’t there, we wouldn’t spend the money.

Well, basically what happened is that we would forget to bring our grocery envelope with us when we went grocery shopping. This resulted in us having to whip out our debit card and then go to the dumb bank (see above) to “reimburse” our checking account with money from the grocery envelope. I had to do this multiple times in one month. We bagged the idea.

I considered putting the envelope in the car. My wife thought about putting the envelope in her purse. I didn’t like either of these ideas. If my wife’s purse were stolen we would stand to lose the entire month’s grocery money (instead of just having to cancel the debit card and make a trip to the awful DMV). If our car was stolen I would cry like a girl. Then when I rememered the envelope full of our grocery money for the month, I would cry like a girl again. My wife didn’t want to see that. (And I didn’t want her to see it either).

Excel in the Mix: Improving the Envelope Budget System
Pardon the push for the YNAB System in this next paragraph.

The YNAB system operates using a ‘virtual’ envelope system approach. That being said, basically what you’re getting is a list of categories or ‘envelopes’ that you put money into each month, based on the number YNAB tells you is available (I made it so easy!). When that number has been completely allocated to your ‘envelopes’ in Excel, you’re set to go.

Now, you make all of your purchases with a debit card. I suppose you could even purchase everything with a credit card and get the rewards, but unless you’re not carrying any balance whatsoever on any card, I wouldn’t recommend using cards at all. You still have a few things to master before you get to “fly the friendly skies” for free (is it really?).

So, for the sake of simplicity, you’re making virtually every purchase with your debit card. When you make a purchase, you record it in YNAB and that deducts money from your ‘envelope’. The system is pretty straight-forward. If YNAB tells you you’re out of money in that envelope, then you can’t (*ahem* shouldn’t) spend the money.

Remember, a budget should be simple. So if you’re looking to use 100 categories you’re going overboard. I use a category list suggested as a starting point by Dave Ramsey and have included that in the YNAB system.

Excel does a few things for your envelope budget system: you don’t have to get the exact change for envelopes - be exact down to the penny if you want. You won’t forget your debit card (well, some of you still will, but how can I help that?) like I forgot my envelope, you’re still able to track how much is in each envelope, and you can accumulate excess cash in your envelopes that is easily traceable.

That being said, you don’t need the YNAB system (either YNAB, or YNAB Pro) in particular. You could make your own envelope budget system in Excel.

My grandpa has told me (numerous times) how he could ride the bus downtown, get a burger, fries, and shake, see a movie, and ride the bus back for a quarter. While prices may have changed, the principles of good money management certainly have not. Take a shot at the envelope budget system and see how it works for you.

One of the most difficult aspects of budgeting is with one thing: Variability in your income.

Try a Budget Planner
Excel isn’t necessary to follow this principle, (neither is the very sleek, YNAB Pro). It might make it slightly easier to get the job done, but it can be done on pencil and paper just as well.

To make your own budget planner, (excel, pencil and paper, whatever it takes) you’ll need to know how much money you make. Is that pretty easy for you? Some people are paid on salary and they know exactly how much they will make so this isn’t a problem. Other people (like myself at the moment), are paid hourly. My hours used to fluctuate based on how much I could work between school and family, so I really didn’t know exactly how much I’d bring home each month. Perhaps you work on a purely commission basis - sometimes you bring home a lot of bacon, and sometimes not so much.

So how do you deal with the variability of your income?

Solution #1
I’ve seen plenty of finacial advisors suggest a ‘priority approach’ to your budgeting. Basically what that means is this: At the creation of your budget planner, you would list all of your spending categories in order of importance. The most important five categories might be as follows:

1. Food
2. Mortgage
3. Utilities
4. Cable
5. Insurance

I’m kidding about #4.

As you move through every category you’ll get a feel for what’s a need and what’s a want. Be honest with yourself. Basically when you’re paid you make sure you take care of these top categories first. You prioritize and you stick to it. If you’re paid $1500 every two weeks at a minimum (because your commissions fluctuate) you would want to make sure that you set aside some of your mortgage payment money from the second paycheck so you wouldn’t be left high and dry without any money for your other necessities. You want to even out your cash flow and stick to these priority categories. Your entertainment/vacation categories would come at the end of your list - but if you made a good amount of money one month then you could put a good amount towards your vacation (to be paid for later in cash).

Now keep in mind these priorities. Where people get into problems is they confuse this order. They end up buying a few wants before they’ve really taken care of #1 or #2 up there. All of a sudden your purchasing groceries on a credit card (and not just for the reward points).

If you take a hard look at the Expenses in the YNAB system, I made the default categories in a certain order on purpose: by order of priority. It helps each month to sit down and decide how much you’ll be giving before you decide how much you should spend on vacation. Also, when you allocate how much you’ll pay yourself (in the form of savings) you’ll be surprised there’s plenty left over when you get to the ‘miscellaneous’ category. The order of these categories has really helped me and my wife prioritize where our money goes.

I much prefer Solution #2. I steal a bit from Solution #1 (the priority budgeting I just mentioned) and use a method I’m yet to see anywhere else.

Solution #2
This is where I enjoy the advantages of software. Budget planner’s can have this method built in, to somewhat automate the process, or you can just track it yourself. Excel just makes it easier. And obviously a stand-alone application does as well.

Instead of having to worry about the variability issue of your income, why not just delay spending it? I talk a whole lot about this method here, and specifically about the buffer here.

If you have a great month as a salesman in January, and are paid in February for your January commissions, you’d end up spending that money starting March 1st. Let’s say you make $6,000 of commissions that are paid to you in February. You would simply let that money sit in your checking account. Then, come end of February or beginning of March, you sit down and ask yourself:

“How much did I make the previous month?” This is an easy question.

You made $6,000. You would then budget that $6,000 to be spent in March. What you made in March, you would then spend in April and so on.

So, if you’re really thinking this through, you might be wondering how the heck you could live through February if you didn’t spend any of the money you were paid during that month? That’s where your one-month buffer comes into play.

I insist that you save some money. This method is the ticket to no longer living paycheck to paycheck. But you have to live a little different for a little while - just a little while! It’ll probably take you a few months of hard work - living well below your means - to save up one month’s expenses takes a bit of fortitude, some desire, effort, persistence, sweat, dedication, and maybe a dash of faith.

Once you have that one month buffer you’ll be ready to use this method. If your expenses fluctuate with your income (you spend every penny you make? Shame on you!) then you’ll want to save an average of one month’s expenses.

On a personal note, my wife and I have used this method since we first married. We had some savings between the both of us and decided we would solve the problem of variable income (we were both working hourly at the time) by delaying spending our money for one month. Little did I know how powerful this principle was when we first started. It is really the foundation of our own Excel Budget Planner that we sell here on this site.

When you couple delaying your spending by one month along with prioritizing where your money goes first, as discussed above, you will find there is enough money coming in! 99% of people make enough money - they just don’t manage it!

I encourage you to give this system a try. I don’t mean necessarily that you purchase my system, I simply mean that you should give this principle a try. Save one month’s expenses. Prioritize your spending. Live on less than you earn. Have a good night’s sleep.

When beginning a personal budget, Excel worksheets should be considered a viable option. I’ve spent the last several years developing a system of worksheets that make a personal budget simple, easy, and — most importantly — effective.

Excel Worksheets
Personal budget fiascos happen when we attempt to anticipate what we’re going to make instead of actually knowing what we’re going to make. Especially for those people with irregular incomes, a personal budget can be a real challenge. How do you know how much money you’ll have in January? In February? Excel worksheets alone won’t solve your answer. It’s how the worksheets come together that forms the foundation for success with your personal budget.

A Personal Budget Solution
I’m the founder of the YNAB Personal Budget System. It consists of Excel Worksheets that are professionally done. My wife and I have used this system since we first married. When we were getting ready to marry, I realized we would need to watch our money. We were both in school full-time with low-paying part-time jobs. It should’ve been a recipe for financial disaster. It wasn’t. I developed this system that helped us then and still helps us have financial peace of mind.

Don’t be misled. A personal budget is only as powerful as the person who uses it. No system will solve your financial problems. Only you can solve them. I’ve just found that my Excel Worksheets system works the best, is a cheap alternative to expensive and cumbersome systems like MS Money, or Quicken, and offers a powerful, unique system of managing your cash flow.

Success with Your Personal Budget
The success of your personal budget depends not on how much you make, but on what you do with the money once you have made it. These Excel worksheets are tailored to a unique cash flow system that I invented through trial and error. It works!

Get started learning about this unique personal budget system by going here. You’ll learn four steps to cash flow management that should be followed to find success with your own family or personal budget. Begin now!

Of course I’m biased towards using Excel as your budgeting solution. I sell a product designed just for that! Aside from the obvious play on words in the title, there are certain tips you should be aware of if you really want to Excel your Household Budget. I’m going to outline the five I think are worth keeping in mind.

1. Join budgeting with another habit.
2. Pocket your receipts.
3. Set long-term goals.
4. Set mini goals.
5. Keep it seriously simple

1. Join budgeting with another habit
You might have already used this with some other good habits you’ve wanted to acquire. I do this with budgeting and have found it to be very successful. When I come home in the evenings and check my email I open up the budget and enter any purchases I might have made during the day. I’ll usually yell to my wife (if she’s not right there with me) to see if she made any purchases. The thinking and recording takes about 1 minute.

You’ll want to make sure you associate your budgeting habit with something you already do very regularly - daily if possible. I chose checking my email because I do that every night after dinner, I’m already at the computer, and usually my wife is around if we have to talk about anything to do with the budget.

I don’t think taking a shower is what you’ll want to use unless you use your computer while in the shower…at any rate - one way to Excel your household budget is to solidify that habit of writing down your purchases - whether you use the YNAB set of Personal Budget Excel Spreadsheets or a pencil and paper, to excel, you must record!

2. Pocket your receipts
This is plain and simple. When the cashier asks you to if you want a receipt, say “YES!” Stick it in your pocket. Don’t stick it in your purse. Things get lost in purses. If you want to stick it in your wallet then leave a portion of it sticking pretty far out so you will see it when you take your wallet out of your pocket at night. This isn’t rocket science, but it’s pretty important.

I don’t necessarily use the receipts to record purchases - only on occassion. Really what it helps you do is to remember to budget. At night, when you’re cleaning out your pockets you’ll remember you bought that unhealthy cheeseburger and you’ll record it in the budget. I want to reiterate, whether your household budget is Excel, or a pencil and paper, you must record your purchases!

3. Set long-term goals
A sure fire way to get burned out when trying to do something new is to not have any real direction. If you really want to Excel your household budget then you will have long-term goals in place that will keep you faced in the right direction.

Do you want to have the house paid off? Get rid of credit card debt? Retire early? Retire comfortably? Save for a vacation to Europe? Whatever it may be, long-term goals are essential to the life of your household budget. Excel won’t set your goals for you, you have to do it.

4. Set mini goals
Right along with long-term goals for your family or household budget, excel with some mini goals that are attainable in a very short time frame. Set a goal to have a certain credit card paid off in the next two weeks or two months, save $100 each month, save the money you need to buy that new couch you want - but this time you’ll buy it with cash. Mini goals will keep you motivated and that will be key. Your household budget should motivate you, not make you depressed.

5. Keep it Seriously Simple
This might be the most important aspect if you really want to Excel your household budget. You have to keep it simple! I can’t stress this enough. If your budgeting takes more than 2 hours per month then you’re making it too complicated (unless of course, you love budgeting, and want to spend several hours each month crunching numbers). You’ll need to monitor three aspects of your budget:

* Inflow
* Planning
* Outlfow

Make sure you record every inflow. If you’re familiar with the YNAB system of an Excel Personal Budget then you’ll note there’s room for inflows (Primary & Supplemental). It’s important these are tracked.

With planning, you need to make sure you’re doing it each and every month. My wife and I usually budget on the last Sunday of each month. Sundays are much less hectic and lend themselves well to sitting down and planning the next month’s purchases for a few minutes. The YNAB system’s budgeting page allows you to move down the categories and budget money into each category that will be spent during the coming month. You’ll need to have some sort of planning built into your household budgeting system. As you budget each month, you’ll get faster and faster at it. My wife and I “excel” in this area. It usually takes us about 15 minutes each month.

Finally, you’ll need to watch the Outflow - and that means every single one. If you buy a soda at Wal-Mart for $.25 then you need to record it. The YNAB system’s outflows takes care of expenses. You simply record the date, a short description, and the amount.

In summary, remember to keep things simple. You don’t have to use YNAB or YNAB Pro to budget effectively. However, I personally haven’t seen anything better for effective household budgeting. Excel is an extremely powerful tool if you want to create your own budget also. Feel free to ask me a question about using Excel effectively to set up a household budget.

A few simple household budgeting worksheets will help you immensley. I suppose you could say I’m one of the few who actually enjoy the household budgeting process. I guess that has to do with my accounting education. This is not the case for most people, and we can all count our lucky stars for that. Imagine a world full of people who loved to budget - boring.

However, whether you like to budget or not is totally and completely irrelevant to the fact that you still must do it. Stop whining. If you were running a business, would you not keep track of how much you made? Would you not keep track of how much you spent? Let’s look at how a business runs a little closer:

A company sells a widget. The company incurs costs associated with that widget. Let’s say the company is a retail company, so they purchased the widget from a widget manufacturing company. What would happen if the retail company had no idea how much they were paying for each widget? And what if they didn’t know how much they were paying for the lights in the store, the janitor service for the always-nasty bathroom, the store itself? It would be tough to run a business.

But suppose this retail company also didn’t know exactly how much it made? Disaster.

Now, why, why, why do you think that you and your family are any different? If businesses can go bankrupt because they don’t keep track of what they earn and spend, then what makes you think that you won’t go bankrupt in the same way? You don’t even have to purchase a budgeting system to get started. Simply make a few simple household budgeting worksheets on paper and go!

If you have no desire to attain any type of financial security, then by all means, continue ignoring the age-old advice of managing your money. However, if there is even an ounce of desire in you to master your household budget then you have a chance. Remember, you are the boss. You control the money. Only you can change your habits.

The word “budget” conjurs up fears in the hearts of many people and I still haven’t quite figured out why. Household budgeting takes such little time (with some pointed worksheets, even less), but brings such huge returns! People will spend inordinate amounts of time reading and listening to ads about how to get rich quick. Here on the internet we’re saturated with ideas of how to make money, join this affiliate program, use this easy road to success, get a percentage of advertising fees…the list goes on. And people actually spend time and money playing with these get-rich-quick schemes. If they would invest just a miniscule fraction of the time they devote towards all of these dumb ideas into setting up a household budget - and stick to it, they would see an instant return on their time invested - guaranteed.

There is no reason, absolutely no reason why you are not on a household budget. You can throw excuse after excuse at me but the fact of the matter is this: If you are not managing what goes out and what comes in then you will will never reach financial security - period.