ABC Budget Worksheet- use it to declutter your spending

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If you have been feeling the pinch with your money lately, you are not alone. According to a recent study by the Center for Financial Services Innovation, nearly half of the people in America (47%) spent more than or equal to their income in the last 12 months. Despite a fairly strong economy, many people in America are financially struggling. Overspending can create major stress in individuals and families, and most of this stress can be easily alleviated by making small tweaks to your spending habits. This can happen when you make important decisions about what to cut from your monthly budget. Out of our own struggles with money and budgeting, my husband and I came up with our own ABC budget worksheet to help us clear unwanted spending.

What is a Budget and Why No One is Doing It?

Budgeting allows you to create a spending plan with your money. When you have a simple budget in place, it ensures that you will always have enough money for the essentials as well as extras. Having a budget can keep you out of debt and even help you get out of debt over time.

But a recent poll by Gallup found that only about 1/3 of Americans keep a monthly budget.

So why don’t more people use a budget?

Most people find budgeting difficult because they don’t see an immediate reward. Making a budget and then repeatedly updating it requires diligence and work. Also, people might hear the word budget and then it automatically makes them feel like they can’t spend money on the things they want. There might be fears surrounding what would be found out by sitting down and crunching real numbers. Some families might even avoid looking at where they are spending money because it could create arguments and debates.

So is having a budget worth it?

In my personal experience, yes, having a budget helped me become more financially stable and successful. What I like about having a budget is it helps me see exactly WHAT I am spending my money on every month. So in reality, I am not really using a budget to make sure I only spend a certain amount of money. I’m using it as a tool to determine where I can cut out unnecessary expenses. It helps me determine what is important and what isn’t.

I’m guessing the reason why most Americans don’t keep a budget is because it’s tedious work. But I don’t think people realize the clarity that budgeting can bring. Plugging the numbers into a budget each month is just one step. Deciding whether you actually need to be spending your hard earned money on something can help you determine what is a priority.

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Budgeting only works if it is simple

If you think of budgeting as creating a clear spending plan for yourself, then it greatly simplifies the process. My husband and I came up with an easy way to decide what stays and what goes from our monthly expenses. We came up with our own method based on the idea of decluttering our expenses and called it the ABC budget worksheet. You can get this worksheet along with other free financial printables here.

What are the ABC’s of Budgeting?

Every time we need to spend money on something, we place it in a category on the ABC budget worksheet.

A is for Allow or Acceptable- these items must stay.

B is for Bettering Yourself, Better Life, or Business Expenses- these items are not necessary to survive but they improve the quality of your life.

C is for Cut it or Cancel- these items could and probably should go.

Steps to decide what to cut from your monthly ABC budget worksheet

List out your expenses on an ABC budget worksheet.
Categorize them as A (allow), B (better yourself), or C (cancel).
Eliminate the ones that are in the C category right away.
Decide what can adjusted or reduced from the A and B categories.

What are typical items in each ABC Budget Category?

What items tend to fall into the A category? Shelter, food, toiletries, and basic clothing.

What items fall into the B category? New clothing, education, automobile expenses, cell phone, business expenses, insurance on home and car.

What items might be in the C category and need to be cut or canceled because they are draining your budget? Recurring charges, music, apps, gym memberships, cable, subscriptions, entertainment.

How to make even more adjustments to your ABC budget worksheet?

Once you cut back or cancel items from the C category, then you go to the A and B categories to determine what can be adjusted. Can you increase the deductible on your insurance to lower the cost? Should you reduce your home size or get a roommate (mortgage is often one of the biggest expenses)? Can you exchange your car for one that doesn’t use as much gasoline?

Tips for Creating an ABC Budget Worksheet

Budgets help people manage their money better. They can help you become mindful of your expenses and income. Having an ABC budget worksheet also allows you to know exactly how much you are spending in each category. Here are some tips for creating a budget for yourself or your family.

Choose whether you want to use a simple spreadsheet or an electronic version

There are great tools that I recommend such as Personal Capital that help you manage all of your finances in one place. I also love using Quicken. With these tools, you can connect accounts such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more. You can also use the Free ABC Budget Worksheet provided and just write in your expenses and then post this to a board or refrigerator.

Track your income and expenses

It’s important to get an idea of where your money is coming and going. It wasn’t until I started tracking my income and expenses that things finally started to change in a positive way for me and my family. To track things properly, you’ll want to start keeping your receipts (especially things you pay with cash) and also get out all your credit card statements as well as bank statements.

Then you’ll want to tally everything up and place totals under categories on your ABC budget worksheet. When you get a real picture of what you are spending, you will probably be shocked. I know I was. It was a big wake-up call for me, and it helped me realize that I was overspending money.

Start with your income

Income can come from many sources. Don’t forget to think about places where you might be receiving aid such as financial aid from parents, gifts, etc. But the most common sources of income are from work, side jobs, real estate property, investments, and passive income. Learn how to start your own business or side hustle here.

Try to use realistic numbers for your income, as you want a real picture for your budget.

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Categorize your expenses

How often do you scrutinize your expenses? By using a simple snapshot where you list out your expenses, you will have the chance to actually SEE exactly where you are spending your money. Then you can decide if certain items can be cut out or reduced. The ABC budget worksheet provides space to list all of your expenses.

Start by listing out the major items which are necessary for everyday living, such as your home or rental, food, automobile, and toiletries. List these as recurring bills and give them a category A, B, or C. Remember A is for allow, B is for a better life and C is for cancel.

Here are some common expenses you might incur monthly:

Home- Mortgage or Rent, Utilities, Insurance, Property Taxes
Car- Car payment, Insurance, Gas, Maintenance, License and Registration
Phone, Internet, and Cable
Food- Eating out and Groceries, don’t forget coffee!
Clothing and Toiletries
Entertainment- Travel, Movies, Books, Clubs, Concerts, Sports
Charity, Donations, Church, Gifts
Children and Pets
Health- Insurance, Vitamins, Doctors, Prescriptions
Education
Savings and Investments
Taxes

Revisit your ABC budget worksheet monthly

I recommend revisiting your budget monthly with the intention of spending less each month. It’s fun to challenge yourself to become more clear about what things you really need in your life and bring you the most joy. I found that every time I checked in, I was amazed at certain categories and just how much I was spending.

One way to create the habit of spending less is to create a 30-day no-spend challenge for yourself. Pick one spending habit you want to break such as buying coffee and challenge yourself to not spend money. You could even allocate the saved money towards your investment fund when the month is up! Learn how to set up an investment account for yourself here.

Make Budgeting a Family Affair

Also, make sure to include your family members and get them on board with budgeting. It helps immensely if everyone knows about the family finances. Even if one person manages the bill paying, it’s still a good idea to have family meetings once a week (at least once a month) to go overspending. This way everyone can be on board with the same money goals.

What do you think of budgeting? Do you believe in it? What are your experiences with using a budget?

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