Hail to Gail!

Those of you who know me well, know that I am by far Gail Vaz-Oxlade's (money guru) biggest fan!

One of the things I adore most about Gail is her no nonsense approach to money - very simply, don't spend what you don't have!!!

Her life pie is a great way of breaking down all of your expenses to make sure that you aren't overspending in any area.

Definitions:
Life: this includes food, personal care, diapers, etc.
Housing: this includes rent/mortgage, land/school taxes, insurance, utilities, maintenance, etc.
Debt Repayment: this includes lines of credit, credit cards, student loans, etc.
Transportation: this includes insurance, gas, oil changes, upkeep, etc.
Savings: this is what it is...
*everyone should have an emergency fund (i.e. as little or as much as you can) in the event that something goes terribly wrong in your life: job loss, illness/disability, or your roof caves in.

Although it takes some time and effort to break down your monthly budget into the categories and do the math to see where you're at, it's so so worth it! And the best part of this breakdown is that you now have a monthly budget listed out.

IMHO, the easiest way to track a budget is:
1. buy yourself a notebook at the dollar store;
2. write down all of your expenses (AND BE HONEST!) - from mortgage/rent, utilities, car payment, gas allowance, food, haircuts, etc. and beside each of those categories, write down the dates the payments are coming out of your bank account (do this for each month - don't forget that some months you will have three payments on certain bills);
3. on the opposite page, write down exactly how much NET money you (and your partner, if applicable) make;
4. at the end of your monthly exercise, see if you have any money left over - if you do, apply it to your debt (if you have any) or increase your savings. DO NOT BUY ANOTHER SHIRT!!! :)
If you are in the negative, you will need to start to cut back somewhere (and that doesn't mean getting another credit card).

Good luck! xo

Gail posts fabulous information to her blog everyday - it's a quick read: http://gailvazoxlade.com/blog/

Caveat: I'm not a financial planner or expert by any means, but this is a great start to preparing a tracking system.