How We Designed Our Budget Step 4-Notetaking

Hi there Folks~ Mr.CBB here…

If we’ve learned anything about budgets over the past year it’s that you need to learn how they work before you carry out one.  I admit we jumped in feet first and have learned along the way. This tactic hasn’t been so bad but it can get frustrating, especially if budgeting is a new world for you.  Learning first then proceeding step by step is what we should have done.

What we’ve learned over the past couple months is that there were ways to simplify our budget. We found errors in our budget and now realize that we need to have a completely separate Emergency Savings account. You will see all the changes when I post our February 2012 Budget Update.

The one thing that has helped us to make these changes is that we kept such detailed notes. This is why I am taking you to this topic in Step 4 Notetaking.

Notetaking is an essential part of budgeting. Why you ask? Let’s take a look together here:

Scenario:

When you were in high school and the teacher taught you a subject did you take notes? Probably, right?

Why?

  • So you could take the notes  home and study them to answer questions on a test and to educate yourself for further development.

Then why do you take notes when you budget?

  • Simply because you can’t rely on just your memory when doing your budget!  It’s also to educate and for further developing  knowledge of your finances. You will and I repeat, you will forget!
If it’s been a long while since you were in school you can read Ten Steps to Good Note Taking. They even touch on abbreviations which will help shorten your notes in your budget spreadsheet.

Notetaking with-in your budget is exactly the same as taking notes in class.  So if you found that easy this will be a breeze for you. The end mark reflects either a plus or minus in your budget.  Essentially a fail or pass. A fail only means you need to make improvements. Trust me when I say no one ever has a perfect month. That’s why emergency savings are imperative.

Notetaking with-in your budget is important for 3 reasons:

Reason 1

You can make reference to certain receipts- When you input data into your spreadsheet and make notes you can easily pull the receipt if/when needed.

An example would be;

  • February 19,2012- Wal-mart Spent $42.00 Used $4.00 coupons Paid $38.00
  • Notes: Bought vegetables, dog food,DVD-Twilight. Pd with Cash, Credit Card ( which one and who’s), Date of  receipt- You now can easily reference what you purchased or at least have an idea.
  •  We typically would put in high ticket items one’s that we could return. That way if you need to return it, open your spreadsheet and find what month of receipts you need to pull out.

Con- If you fail to track this data you might have to go looking for a receipt which you have packed away in a file folder and have no idea what month to look in. This will waste unnecessary time.

Reason 2

To track extra income or important dates that may have occurred throughout the month- When you sit down to do your month end budget you won’t need to think back x amount of days to what may have happened. Entering important notes such as -sold item on kijiji made x amount of dollars you have that information readily available to you.

Con- If you decide not to keep up to date with important notes you run the risk of your budget not balancing or being incorrect. If you want your budget to truthfully show your finances you must be dedicated to this task.

Reason 3

Simply to educate yourself on your spending habits and where and what you are spending it on.

Recap: In this step we learned-

When designing our budget we felt it was imperative to have a note section to document any key notes for easy reference. This task has saved us lots of time and headache. Budgeting helps to control our expenses to help us become financially debt free.

Next Step: How to keep all your bills organized? This is important because if you aren’t organized it may lead to frustration and failure when budgeting. Keep an eye out for this up and coming post! If your desk looks like this it will be a MUST read for you!

Until then if you are new here at Canadian Budget Binder get caught up on earlier and related posts below!

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Photo Courtesy of: Copyright (c) <a href=’http://www.123rf.com’>123RF Stock Photos</a>

Copyright (c) <a href=’http://www.123rf.com’>123RF Stock Photos</a>

Mr. CBB
I’m from the UK and now a recent permanent resident in Canada. I bought my first house at the age of 21 after University then my second at the age of 24. I’ve always been fascinated with personal finance, savings, learning to make money and watch it grow while combating debts along the way. Canadian Budget Binder is a place where I get to share my experiences with personal finance and learn about yours along the way. I hope you stick around and check me out on Twitter, Facebook and Pinterest where I am active on all social media sites. Cheers, Mr.CBB
Mr. CBB
Mr. CBB

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