There are numerous ways to budget. NCN over at www.ncnblog.com has numerous budgeting techniques with step by step instructions and nice pictures ;). Here, I will just mention what worked for us.
I have been married for over 15 years. My wife and I both came from different cultures and different upbringing. When we first got started, we agreed that we did not want to spend more than we earned and we did not want to argue about personal finance decisions. We also had more than $10,000 in credit card debt. Remember, this was before mint.com. Folks were using Quicken or Microsoft Money to track spending. We just did not have the personality to track every penny of our spending, which is the first thing people would suggest if you want to start budgeting.
Our budgeting technique was easy.
- We stopped using credit cards completely.
- We also agreed on a cash budget of $250 per week. This would include everything except bills. i.e. it would include all shopping and food related costs and emergencies, if any. To keep in perspective, my take home pay was approx. $1600 every 2 weeks.
- We would not question on how we spend the money. If we are done, we eat rice and beans for the rest of the week.
It helps that we both were reasonable spenders. None of us were attracted to $500 jeans! We did this for 3 years and it worked perfectly for us. It kind of became second nature to keep our spending in check. We paid off our credit cards and started building emergency fund. We did not care that we were not earning points on credit cards.
Nowadays, we use mint.com to track our spending. We check it once every couple of months or whenever we remember.
Conclusion is budgeting does not have to be complex or take up a lot of your time. Focus on key goals, pay yourself first(401-k), pay all the bills (including credit card bills) then figure out how much you have left to spend.