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What Is A Budget?

Where Does The Money Go?

Like dieting, budgeting sounds hard. Who wants all that agonizing self-restraint? It sounds about as fun as washing dishes. But the payoffs are high, and a budget doesn’t always have to mean scrimping and no dessert.

What Budgeting Really Means

Although budgeting may seem complicated, basically it just means planning ways to live on less than you earn. It means writing down what you think you’ll spend and what you actually do spend, keeping a record of money flow in order to control where it goes. When you know where you’re spending, you can set wise priorities for the limited funds at your disposal.

Buying on impulse may sound like freedom, but the resulting debt is not. Budgeting can allow you to splurge sometimes without feeling guilty-simply because you know you really can afford it. Controlling money earns the freedom to use it wisely.

You can get a good start on budgeting by using money management software, such as Quicken or Money, and by following the steps outlined below.


Estimate Income

First, you have to know how much you will earn during the year. That amount should be divided by either the number of weeks or the number of months in the year to give you the maximum amount per week or month you can budget.

Estimate Expenses

Next, estimate the amount of money you need. Here is a list of categories you may need to consider when estimating your expenses. Housing payments, car payments, insurance, medical expenses, car maintenance, gas, personal allowances, entertainment, books, household expenses, and savings. These categories should be broad enough to cover all expenses, yet specific enough to identify different types of purchases.

If you usually write checks or use a debit card for your purchases, going through your checkbook and BECCU statement are excellent ways to determine how much you need to spend in certain categories. If you’ve used cash, however, and have no records, you may need to make some rough estimates and then revise them later if you need to. There’s nothing quite so frustrating as deciding you probably need $100 a month for food, only to realize later that you actually need $150. If you don’t already know what you’re spending, it’s easy to underestimate expenses.

Record Expenditures

The key to making a budget work is recording expenditures. The easiest way to track spending is to use a debit card or check which makes the transaction information easily recorded, such as the date, amount, and type of purchase. This information can be imported directly into money management software from your online banking.

Filling Out a Budget Sheet

Next, fill out a budget sheet either on paper or in a computer program that realistically reflects your needs and accurately records your expenditures. Each week you should gather your debit receipts, checkbooks, cash purchase records, and match the budget amount with the amounts spent during the week. By comparing the budget to the actual expenses every week, you can see if you will need to start economizing in the food category or if we have finally saved enough for the new winter coat.

At the end of the month, you should compare the monthly expenditures in each category with the amount allocated in your budget. If you have money leftover (or amount overspent) it is accounted for in the next month’s budget. If you overspend by five dollars, for example, then subtract that five dollars from the coming month’s amount; if you underspent by five dollars, you can add that amount.


As time goes on, some category allotments need fine-tuning. You may end up consistently over-spending in some categories, yet underspending in others. Provided you spend within your income and can honestly admit you’re not overindulging, your budget will still work. Simply realign the categories to better match your needs and spending patterns. One potential trap for beginning budgeters is overzealousness. A budget is by nature dynamic. Changing category allotments doesn’t necessarily mean spending is out of hand.

Benefits of Budgeting

A budget can become a monetary mirror. It reflects your financial frivolity or frugality. When you may be in a spendthrift mood, the budget will help keep you in line. A budget charts progress toward goals. With a budget you can know exactly what sacrifices are necessary to reach your financial goal.

A budget also provides instant feedback on financial status. When you want to know if you can afford something, the first place to look should be the budget. A budget need not be inconvenient, time-consuming, or confusing. The hour or two it takes each month to record expenditures is a profitable investment of time. Like any worthwhile habit, it may be frustrating getting started. But when you budget, you have more-more money, more freedom, more peace of mind.

Where Does The Money Go? by Robin Zenger Baker

“We are working towards buying our first home . . .

and being able to have a plan has been really helpful. The free budget counseling is a nice perk as a member that we really have appreciated!”

Brittnie & Ty L.

Member since 2014

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