Track Your Spending using a Backwards Budget

Are you like me and have tried putting together a budget a few times over the years? I get one written out and then abandon it. Is that you, too?  I’m not a budget person, so instead I do the backwards budget system. Why not give it a try?

A few weeks ago we talked about creating a money map. Grabbing a pen and paper and figuring out where your money is coming from (work, side gigs, social security, etc) and also how your money is going out (mortgage, groceries, utilities).

At that time we weren’t worried about actual dollar amounts.

It’s all about recognizing money in, money out. Also recognizing things you might want to set up savings accounts for, and figuring out how to bridge money gaps.

I’ve never been much of a budget person, though just about every financial expert out there tells you to create a budget. Generally that means tracking your income – money coming in – and allocating every dollar of it to a specific category in your budget.

I’m still not calling it a budget. This is about tracking your spending.

The Boomer & Echo spreadsheet

That being said, I do use a budget spreadsheet for tracking my spending.

If you go to Boomer & Echo’s website, you can find the spreadsheet on this post

Look for the download link and click. This is an Excel spreadsheet, so you need Microsoft Office on your computer to access it. Once you have the spreadsheet saved to your computer and open, there’s a button at the top that says “Enable Editing”. Click it. If you don’t, you won’t be able to add any numbers or make changes!

If you’re looking for budget help, you can read the article for more instructions. I like this spreadsheet because it’s already prepopulated with tabs for every month of the year, and many of the expenses I use are categorized. Formulas have been set up to populate the monthly income and expenses at the top left of each month.

The first thing I do is ignore the first tab in the spreadsheet called yearly projection. However, if you’re gung ho about budgeting, then you go for it! For me, this is about tracking my spending.

I don’t fill in the “projected” column either because I’m just tracking my spending, but you might find it handy. It’s easy to type over any category and fill it in with a category that you spend money on. For example, I don’t buy toys, so that row becomes “horse boarding”.

The Savvy Ladies spreadsheet

I also found another budget spreadsheet that might work really good for tracking spending

Save it to your computer to get out of the “read only” status. Also click “Enable Editing” if you see it at the top of the spreadsheet.

It seemed a little odd when I filled in January wages and it prepopulated the rest of the months. However, I was able to go back and change each month. Many of us don’t have consistent income. Especially since the pandemic hit.

I ran into trouble when I tried to click on a cell anywhere in the Health category. To fix this, go to the Review tab. One of the tabs is to “Unprotect Sheet”. Click that and it should work.

The same prepopulating thing happened with rent, which might not be a bad thing because that’s usually a fixed monthly expense that doesn’t fluctuate. This was a good worksheet because it showed everything on one page. I might switch over to this because, well simplicity. And I can embrace change! Right?!

Unlike the Boomer & Echo spreadsheet with Canadian financial products listed, the Savvy Ladies has US financial products listed. It also supports Google sheets.

Either way, a person can type over a category that doesn’t apply to them and put in something that is a recurring income or expense or savings product. I liked that Savvy Ladies has “pet boarding” as a category, though it came under the “Vacation” heading. I can ignore the “vacation” thing and just call it horse boarding.

If you don’t like either of these spreadsheets, do a search for “spending tracker” and find something that works for you. There are apps to help track spending, but that’s more of a younger person’s thing. I need the bigger keyboard and screen from a computer.

Simplicity here. What works for you is a system where you’ll actually devote yourself to tracking your spending.

What’s going where

The first thing you have to do is start filling in the blanks.

Go back two or three months and start inputting your spending aka where your money goes.

So get prepared to spend a little time doing this until you get yourself caught up.

This could be complicated if you use multiple methods of payment for spending.

For me, I use one debit card for grocery shopping, buying gas, and shopping that’s connected to my checking account. I just pull up my online banking and I can see the money coming coming out that I spent. From there I plunk the amounts into the spreadsheet.

If you use credit cards, this will get a bit more complicated. But you can do it! Don’t give up! Let’s figure out your spending and get going on the backwards budget!

First off, let’s point out the obvious. We want less stress in our lives and one of the ways to achieve that is to be debt free. The idea is to avoid using credit cards and running up credit card debt. I use credit cards for online shopping, emergencies, and travel. The cards don’t get used that often. Each card is used a handful of times a year just to keep it active.

Even though you’ve gone through the past couple of months, the spreadsheet might not accurately reflect your spending. At this time, just get used to inputting the information.

The current month or next month might be when you start tracking your spending with better accuracy.

Most of your “spending” will be on basics like rent, groceries, utilities, transportation, and clothes. These big expenses, especially housing, are eating up your money. Once you start tracking your spending, you’re going to notice all the little expenses like buying a chocolate bar or an ice cream cone. A dollar here and a couple of dollars there and a few more dollars to buy a burger and you’re at $20 real fast. The next thing you know you’ve spent $100 without thinking too much about it because you bought a box of donuts for your coworkers and treated yourself to a new coffee mug.

If you remember from the figuring out your money post, “spending” is what happens to your money after it hits your bank account. Spending includes money you’re allocating to an emergency fund, a vacation fund, a new car account, etc.

Working this out backwards

You need to know how much money is coming in and how much money is going out.

And then figure out how to bridge any gaps.

Once the dollars are staring you right in the face on a spreadsheet with the past couple of months spending, you can figure things out better. Like how to stop spending in one category and reallocate that money to a different category like new furniture or an emergency fund.

I only bring up the new furniture because I have a serious sagging couch issue…

Once you’ve decided what method you’ll use to track your spending, here are the steps to take:

  1. Get info from your account statements (bank and credit cards)
  2. Input the info onto a spreadsheet or app.
  3. Watch for spending patterns.
  4. Be prepared to make adjustments to your spending.

Yeah, I make it sound easy.

The big work is gathering your accounts to input your spending for the past couple of months. If that’s really not your thing, then just start today. Moving forward, starting right now. It’ll take you a couple of months for you to really recognize your spending patterns, but that’s better than not doing it at all.

It’s like that old proverb. The best time to plant a tree was 20 years ago. The second best time is now.

If you want success, the best time to act is now.

Try these strategies
  1. Does your bank send you texts everytime money goes in or out of your account? Sign up. The texts might annoy you enough to think twice before buying something. If not, they’ll help you input that expense to your spreadsheet in real time.
  2. Calculate your wages into expenses – how much time do I have to work to buy something? If I work two hours, I can buy a pair of jeans.
  3. Do you regularly use credit cards? Take them out of your wallet. Cut them up. Put them in an old margarine container, fill it with water, and put it in the freezer. Do whatever you have to so you don’t use them. Imagine how nice it’ll be not to have to scrape together at least the minimum amount every month to pay the credit card company!
  4. Once your spending tracker spreadsheet is up to date, at least once a week spend time keeping it current. I catch myself up whenever I log in to pay a bill or check if transactions went through.

Every month will be different. Some months you’ll have more expenses than others.

You don’t need a budget

Now that you’re recording everything, you can see how much money you need each month for your spending.

That’s your survival amount.

Are you making enough money from your job every month to cover the survival amount?

That’s all you need to do. You don’t need a budget. You just have to make sure that you always have enough money in your bank account every month to cover your monthly expenses.

If you have a gap, you either need to find a way to get more income or reduce your spending. The Penny Hoarder is a good resource with articles on saving money and making money.

Don’t be scared to trim your spending. This might only be temporary until you’ve accomplished your goal, like paying off the credit cards. Don’t eat out as often or buy coffee on your way to work. If you cancel your cable service, cancel you landline phone, move your money to a bank or credit union with no monthly fees, you’ll save at least $100/month that you can spend somewhere else like building up an emergency fund.

For more ideas, read 7 Easy Ways to Save at Least $2,000 a Year!

Focus on expenses (spending)

There are always going to be things you need (housing, food) regardless of how much income you have.

Tracking your spending will help you get your financial situation under control. Start by tracking your spending, and this can help you get out of debt and saving your money for funding an emergency fund and retirement. Saving your money is way better than paying off credit card debt – because it’s all your money! Not the credit card company’s money!

When’s the best time to start using a backwards budget? Today!

More reading:

Figuring Out Your Money12 Things I Quit Buying to Help Save Money

How to Save Money and Bust Debt


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