I highly recommend using Dave Ramsey’s (www.daveramsey.com) Zero Budget form. There are several reasons, not the least of which is that if you have every dollar coming in allocated, then you have to think twice about over-spending in any category, because you actually see yourself having to pull money out of another budget item if you do.

In the meantime, I haven’t forgotten about my frugal living ideas.  I just haven’t posted them on here lately. 

But for those of you who, like us, may be going from an over-spending lifestyle to attempts to be frugal, I found this great website with tons of articles on getting started being frugal.  I wanted to put a link to this one on here, to help get you started.  So, take a look, and let me know what you think!  This article at Frugal Village is a great way to get started!

As always, if you have your own tips as to how you’ve made frugal living work for your family, whether by simple choice or by necessity, please leave comments and let us all know!  We’d love to hear about it!

Kim

Your cash flow tracking (how you spend your money) can be as simple as placing your receipts in shoeboxes, or as automated as downloading transactions from your checking account into Quicken or some other accounting software.  It can be anywhere in between.

For the purposes of this post, I’m going to assume that you are starting from scratch, and you will use a spreadsheet system.  If I refer to a program, I am referring to Microsoft Excel 2007, because that’s what I’m using; however, any spreadsheet software that you use is perfectly acceptable.  If you do not have a spreadsheet software, I don’t necessarily recommend going out and buying it for this purpose.  Instead, there is an excellent FREE version at www.openoffice.org

You may even be able to open Excel spreadsheets/templates in Open Office.

For this exercise, I don’t want you to start with much.  I want you to track all of your expenses for 1 month.  It would be better to have more, but after the first month, you’ll be able to create a budget, and use the “actual” column of your budget to track your cash flow.  So, since this is a short-term worksheet, just create a simple, one-page worksheet.  Label it Cash Flow.

Make one column each for:  Date, Description, Amount, Category.  When in doubt about a category, try to make it as simple as possible.  “Dining Out”, “Groceries”, “Entertainment”, etc.  Now just track… each time you make a purchase (even $1.00 for the coke machine at work), record it on this spreadsheet.  At the end of the month, create a Total Column, and total each line.  If you’re really good at spreadsheets, sort it by category.  Make sure you haven’t duplicated categories.  Color code it.  Whatever makes it easy for you to read.  At this point, don’t try to imagine what “should” be there, just record what is.  Record what you’ve spent.  If you’ve spent more than what you commonly spent on something, you can make a note.  If you’ve spent less than you commonly would on something, you can make a note.  But record what you spent!

If you can’t, or don’t want, to use a spreadsheet, there are several other options.  Use your receipts (or a post-it note for that soda), and put the receipts into envelopes that represent the categories.  Use shoeboxes.  Use a notebook and a pencil.  It doesn’t really matter, as long as it gets done.

Once you’ve tracked for the entire month, and totalled, it’s on to Step 2:  Creating a Budget.