Getting Financially Fit in 2012: Make a Budget

by Beth Montgomery on December 28, 2011

The new year is quickly approaching. I can’t believe it’s almost 2012.
With each new year, often comes goals. Among the most popular goals for the new year is saving money. So, to help you get ready for 2012 with a plan to get your budget in better shape, I’m going to be offering a few ideas to help cut your spending.

The first – make a budget!

The end of the year is a great time to do this, since you can look through the last year of receipts and spending to get a good idea of where your money goes each month.

How or where you make your budget doesn’t matter. It’s really all about what works for you. The easier it is for you, the more likely you are to stick to it and that’s the most important part!

While making your budget, keep in mind that big idea of this is not only to set a foundation to track and manage your spending in 2012, but also get an idea of where your money is going by looking at your spending in 2011.

Options for Making a Budget

While the options for making a budget are endless, from expensive software to an old fashion pen and paper. But, here are a few popular choices!

The Envelope Method
The envelope method is great for you if…

  • Manage your spending better with cash
  • Tend to overspend with debit and/or credit cards
  • Want a very visual way to manage your budget
  • Don’t want to mess with software or programs

The Envelope Method, often taught by Dave Ramsey, is simple and to start all you need are a few envelopes.

First, label each envelope with your spending categories. You may get as detailed as you’d like. Make envelopes for items like Groceries, Dining Out, Mobile Phone, Cable & Internet, Savings, To Donate, and other categories where you regularly spend money each month.

Next, using your history, figure out how much money you spend in each area and set a budget for that category. If your mobile phone bill is $75 a month, you know you’ll need $75 in that category to be able to pay it. Start with the non-negotiable categories, such as utilities, house payments, and other bills first. Divide your monthly income into all the categories until it’s all accounted for and write the final numbers on the envelopes as your budget.

As your income comes in, divide the income into your categories and place it in your envelopes. At first, while you don’t have savings, it can be difficult to fill envelopes, but concentrate on the bills that are a priority and are due soon first. Any money left over should be put into savings to build up a nice nest egg for your family. This can, of course, be deposited in the bank, unless you like keeping your money rolled in socks in your sock draw or are still holding tight to your piggy bank.

The idea is that you only spend the money in that envelope for that category. So, if you don’t have money in your Dining Out envelope, guess what? You don’t dine out. Of course, you may mark a few envelopes, such as Dining Out or Entertainment, as categories to borrow from in an emergency. If you take money from your money held aside to get your hair cut to pay your house payment on time and avoid late fees, that’s fine. Your hair can wait. But, you don’t want to take money from your car payment to buy a cute outfit. In the long run, that will do more hurt than help.

Free Budget Software

FREE online budget software is for you if…

  • Like visually appealing views of your finances, like graphs
  • Don’t want to spend a lot of time on your budget
  • Need on-the-go options, so you can manage your finances anywhere
  • Like multiple features and options for setting goals and tracking
  • Want text alerts when you’re about to go over budget

There are a few online services that help you manages your finances for FREE online, but my favorite by far is, designed by Intuit, the creators of Quicken. is awesome and makes managing your finances so easy. First, register online, then attach your financial accounts to track them all in one easy spot. Then, make a categories for yourself. will track your finances through your accounts, automatically placing your spending into your categories, essentially doing most of the budget work for you! You can set limits for each category and even attached your mobile phone, so you’ll get alerts if you’re about to go over your limit for a particular category. also offers great visual graphs, goal setting, and other features to take your plan to the next level.

Simple Spreadsheet

My husband is not a geek like me, but he is all about saving money and seriously managing our finances. While I try hard to push him towards more modern methods, like online banking, I’ve only managed to get him to drop his pen and paper for Excel and that works for us just fine.

A simple spreadsheet method is for you if…

  • Want simple features and information
  • Are good with spreadsheet software
  • Don’t want your financial information online or linked
  • Love spreadsheets

For many, creating a spreadsheet is simply and the possibilities are endless, depending on your skills. But, if you need inspiration or help, here’s a few examples:

  • Microsoft Templates– A huge area to find just about any good example to get started on your budget!

Stay tuned for another tip on how to get financially fit in 2012!

Don’t forget to check out Part 1 of Getting Financially Fit: Setting Goals

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