>> Avivah, could you share more details about how you track and budget? It’s one of those things we know we should be doing but never do. I’d love to get a better handle on tracking and budgeting, but even the idea overwhelms me. <<

I so much understand this! The more time that’s gone by without tracking, the more overwhelming it feels.

There’s a huge emotional relief that comes when you get clarity about what’s going on with your money. Even when you think it doesn’t make a difference to you not knowing how much you spend on what, there’s an energy drain from ignoring something that you know you should be paying attention to.

Get ready to do some homework – give yourself a week to get this done. Starting is the hardest part; once you’ve started, you’re on your way to bettering your financial situation so don’t put this off.

Step 1 – The first thing to do is to print out the last three months of your bank statements. Some people recommend twelve months and this is ideal since you can see your yearly spending pattern, but I think three months will give you a good idea and isn’t overwhelming.

You’re going to track two things: your income and your expenses. You can do this with pen and paper (that’s what I do) but a spreadsheet is a good option if you are inclined, and it’s nice to have the math done for you. Some people use budgeting apps; I’ve seen many recommendations for the YNAB (You Need a Budget) and Every Dollar trackers. They both have free versions. My husband once bought the paid version of YNAB and said it was very good, but obviously, it’s just a tool and if you don’t use it, it’s not going to help you. An advantage of the apps over a spreadsheet is the interface with banks in the US but I don’t know of apps that interface with Israeli banks. (If you know of any, please share that with us in the comments!)

Step 2 – Make a list of whatever income you have – salary, freelance, child benefits, disability payments, alimony, etc. Add that up and write your total income for the month, for each of the three months.

Step 3 – Now make a list of all of your expenses. You have two kinds of expenses, fixed and variable. Fixed expenses are fairly stable and predictable from month to month; variable expenses fluctuate from month to month.

Here’s a list of fixed expenses:

• mortgage/rent
• property tax
• utilities – water, sewage, electricity, gas
• insurance – car, life, house, health
• communication – internet, phone, mobile services
• building maintenance fee (vaad bayit)
• tuition
• day care/babysitter
• extracurricular activities/tutoring
• house cleaner
• therapies
• bank fees
• debt repayment

Variable expenses:

• food
• take out/restaurants
• baby supplies – diapers, etc
• pet supplies
• makeup/cosmetic procedures
• haircuts
• medical expenses
• dental expenses
• home maintenance
• car expenses – repairs and maintenance
• gas (for car)
• transportation – buses, trains, tolls
• clothing/shoes
• computer maintenance
• appliance/furniture purchases
• holiday expenses
• gifts
• vacation

These aren’t going to include every possible expense, so add your own category if you find something that you spend on isn’t included above.

Now, total up the expenses in each category for each of the three months. Then total all of the monthly expenses for each month to get a total for your monthly spending.

You’ve done it – you’ve faced your worries about what you’re going to find, and you’ve tracked your expenses. Now give yourself a huge pat on the back for your accomplishment!

Once this is done, you’ll have solid information to work with to create your budget.

Is there anything that surprised or discouraged you? Don’t worry about it. This is just a starting place. There’s plenty of change possible to get you where you want to go.

Make a commitment to get this done in the next week. You may dread thinking about it but once it’s done it will be a relief and it will really help you.

Avivah