Budgeting for many people is a far fetched idea that becomes more complicated once you take into account the many forms of income and expenses that an individual may have. We often only use budgeting when times are tight or when we have a specific goal in mind, for example a holiday. GnuCash is a simple accounting software that allows users to track their spending day to day, plan upcoming expenses, and better yet still have money left over for unforeseeable events (We all have crashed a car).
GnuCash can be downloaded for FREE (https://www.gnucash.org) and is easy to set up on Mac, Windows and Linux. The program allows you to select relevant accounts that you would use and edit them to suit. For example:
Here is mine:
GnuCash is uses a double entry bookkeeping which means for every transaction that you enter, you have to debit one account in order to credit another or vice versa. This is awesome because it ensures that you know exactly where you money is coming from and going to at all times and avoids bookkeeping errors.
For this example I spent $322.80 for travel insurance for my friend and I. This has been credited from my transaction account when we went skiing in France, reducing the balance.
This then appears in my Chamonix expenses as a debit, increasing the balance. You will also note he paid me back and therefore I have a rebate (or credit) of $161.40. This also appears in my transaction account.
Sometimes I cannot be bothered adding transactions as there are just too many, especially if you have been on holiday. GnuCash has a feature for this. All online banking websites will have a place to export your transaction statement often in QIF or QFX format. While I have no idea what the letters mean all you then have to do is go into your account on GnuCash, select import -> the file type you data is in -> your data file.
It has many funky features that can be exploited to make your budgeting easier and the best bit about it is their is a treasure trove of videos on Youtube (https://www.youtube.com/watch?v=aqAaScYVeRQ) if you get stuck.
GnuCash has forced me to be more accountable for my money and be able to keep track of it. I know exactly how much i’m spending day to day and what is costing me the most (currently is Food & Drink).
While I don’t intend to cut back on my Beer consumption, being empowered to make this decision is vital. If my income was halved tomorrow I know exactly where cost saving measures could come from and sadly not enough people have to power to do this. Budgeting doesn’t need to be complex, tracking your money and planning for future expenses means you will be empowered to make more knowledgable financial decisions.