Budget BFF (Part I)

In 2011, forget about diamonds or dogs. A budget is your new best friend. Like any good friend, your budget BFF will listen to financial goals, provide sound advice, and help you focus and reach your potential. What more can you ask? This relationship is a two way street. We have a role to play in nurturing the ties that bind.

Track Your Spending

Never rush into any new relationship. This includes a budget. Your budget will only be as useful as the information used to create it. I undertook a tracking exercise for about a week by recording every purchase. Your recording choice is a matter of preference. I am honestly old school to the core so I use MS Excel. It’s handy, no learning curve, and alleviates my propensity to add incorrectly.

If you prefer a more sophisticated tool, try Mint.com. This free, online tool tracks your spending, helps you develop and manage a budget, and provides savings and debt repayment suggestions. Mint.com does require access to your banking and credit card accounts to retrieve transaction information. After reading the fine print, I found that the company makes a “nominal fee” from any suggested savings plan you select. If you are comfy giving a third party access to your financial accounts, this tool is quite nifty.

Would you like to track your spending on the go? There’s an app for that. Again, Mint.com provides a FREE iPhone app. Cnet.com gives it a decent review. If you want to dig a little deaper, Deskescape offers the full featured iPhone app, Budget, for $1. With either option, you’ll want to make sure your phone is passcode protected. Let’s not give prying eyes full access to any personal data if you ever lose your phone.

Tracking is a very important step in building the budget BFF. Remember, garbage in garbage out. So take some time to complete the exercise. Next post, we’ll put it together and breathe some life into this relationship.

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