I hope you all are doing well. I’m doing great. The weekend has just started for me.
Today, I would like to continue on reconciling your budget.
This will actually be a 3 part series, not a 2 part series. I didn’t know this was going to be a lot of information to share. I apologize about this.
Yesterday, we talked about how to keep track of what you earned and spent.
Today, I would like to tell you how to record that information into your source of choice (from last blog post).
Next week, we will do the actual reconciliation of your budget.
As I mentioned yesterday, you need to find a place to record what you have earned and spent.
Now, I am going to tell you how to record that information properly depending on the source you use.
Here’s what you need to do if you decide to record the information into a notebook (find a way to keep months separate such as color coding):
- Have a page for just your income. On this page, record all of the money that went into your main bank account (and the date the money went into your account).
- Make a page for each expense you have. Record all of the money you spent on each expense on that specific expense page (e.g. Receipts for groceries need to go in the Food or Grocery Expense page) and put a date next to it (the date you spent the money for that expense).
Here’s what you need to do if you decide to record the information on a spreadsheet software program:
- Use the spreadsheet document you recorded your budget on.
- Create 2 more columns on that document
- Use the first column to record what came in and out of your account
- Use the second column to record what you have left over.
- On the second column, start your first or second cell with the total income you had coming into your bank account (To get that number click that cell and put an equal sign and the first deposit amount and then the plus sign and then the second deposit amount and so on). Record all of your income on that cell.
- On the first column (where the expenses go) record each transaction for a certain expense to the cell that corresponds to the row of that expense on your budget. For example, let’s say you bought $100 worth of groceries for 2 weeks. You would find the cell on the first column that would correspond to the grocery expense you recorded in your budget. Next, you would put either (=100+) in that cell or add the 100 to the other amounts you spent on groceries that month (=125+100+)
- Next, go back to the second column you created. Find the cell that corresponds with the first expense you have created for your budget. In that cell you will put an equal sign and the letter and number of the cell you recorded your income in. Put a minus sign after that cell letter and number. Then, put the cell letter and number of the first column (you just created) that corresponds with that expense.
- On the cell for the next expense in the second column, put an equal sign in that column. After the equal sign, put the cell letter and number of the cell above. Next put a minus sign. Then, put the cell letter and number of first column (you just created) of the corresponding expense that you are working on after the minus sign. Keep on doing that until you have all of your expenses with this formula.
- If this sounds confusing, please check out a spreadsheet I did last October (click the link below) to see what I’m talking about.
Here’s how to record what came in and out of your account with a checkbook register:
- Record the transactions like you normally would in a checkbook register (e.g. Date, place, and amount)
- After you record the transaction, put an initial of what the expense went to (e.g. “G’ for Groceries) or if it was a deposit initial it as “I” for income.
Now, here’s how to record what you earned and spent in an accounting computer software program:
- For money coming in, record it as a deposit with the date and amount that went into your account.
- For money coming out, record it as a check with the date, amount, and the appropriate expense account.
- Or see if the software program allows you to import the transactions from your online bank account (if you use online banking) to your software program and code them to the proper account. My only issue with this is that some names of stores are different on the bank statement versus the name your are familiar with (e.g. A Shell station could be labeled Three Grandmas Inc and you wouldn’t know what it went to- unless you kept the receipt).
- If you have questions regarding this, please go to the Help menu of your software program and they should tell you how to do this properly. They usually have online support as well to assist you with this.
Please let me know if you have any questions.
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Next Wednesday, we will discuss the actual reconciling part of budgeting.
Thank You and Have A Great Weekend