Say Goodbye to Living Paycheck to Paycheck: Forward Budgeting and the Digital System

forward-budgeting-and-the-digital-system

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By now you are familiar with both forward budgeting and the digital system.  There are different tools that can be used to track forward rolling digital finances as with the other systems.

Envelopes

While it is completely feasible to use an envelope system for your budget, it may be a bit more complicated for this type of budgeting.  You can use a printable, a digital envelope tracking system, or tangible envelopes.  This system is a bit more difficult because your funds are electronic and because there are a lot of places to look at the end of the month to transfer money into the savings account.

Check Register

A check register would work great if you prefer not to use a computer based tool to track your finances.  Each month, use your check register to track every transaction.  At the end of the month, transfer all your additional funds to your savings account.

A note to make on this is to keep a running balance on your account.  For example, you can keep $1000 in your checking account each time.  Thus, if you had $1700 in your checking account at the end of the month, you would transfer $700 to the savings account and $1000 would stay in the checking account.  A buffer like this is a great way of preventing over-drafting your account at the beginning of the month.

Computer Spreadsheet

Computer spreadsheets are a great way for tracking your digital finances.  A computer spreadsheet would work just like a check register. You would record each line on the date it occurred and then create an extra line for the transfer at the end of the month.

Additionally, you could create your spreadsheet to look like an income statement instead of check register.  With this method, you can use each column for a new month so you can see multiple months at a time.  You can also drag the formulas across the page to project for any period of time.

Forward Roll Spreadsheet

spreadsheet

Another way to track using the spreadsheet is to use one color for transactions that have not taken place and another for finalized amounts.  For example: At the beginning of the month, have all the amounts blue.  Once each transaction has been made, change the color to black.  Originally you may have $75.00 blue in Electricity but after the expense occurs, it could say $73.24 (the exact amount) in black.  This will help you keep track of which expenses have been paid.

There are also many posts related to this type of a spreadsheet that can be found here.

Apps/Programs

There are many apps and programs designed to track expenses.  If you would like to track your finances digitally but are a bit overwhelmed by maintaining a spreadsheet, an app or program is a great choice.  Apps have many great visuals and other features.

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Say Goodbye to Living Paycheck to Paycheck: Forward Budgeting and the Cash System

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This post is part of a series.  To start the series from the beginning, click here.  To browse through the series, click here.

Forward budgeting, also known as the ‘forward roll’ is also a three-step process.  Each month, you project your expenses and savings.  At the end of the month, any funds that weren’t used will be transferred into your savings account.  This process repeats each month.

Envelopes

The envelope system can be used in a similar method to reverse budgeting.  The only difference is that you don’t put a set amount of money into the Savings envelope at the beginning of the month.

Instead, allocate the money into the spending envelopes.  At the end of the month, move any money that is left in the envelopes to the Savings envelope.

envelopes

Paper

Using a printable is a fun way of tracking your finances.  There are many budgeting printables online that would be a great solution for your spending tracking and savings rollover.

Computer Spreadsheet

A computer spreadsheet is very helpful when using the forward roll method.  The main point of the forward roll is to maximize saving potential.  A computer spreadsheet can help you to project your savings over time.  This is very useful when saving up for a large purchase like a house or a car.  You can find multiple examples of tracking the forward roll method with a spreadsheet here.

Apps/Programs

Apps and programs are a great way of tracking spending but can become very complicated when tracking cash.  I recommend using either a paper tool or a spreadsheet to track cash finances.

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Say Goodbye to Living Paycheck to Paycheck: Reverse Budgeting and the Digital System

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This post is part of a series.  To start the series from the beginning, click here.  To browse through the series, click here.

A digital budgeting system utilizes credit cards, checking accounts, online interfaces, apps, and many other technological opportunities.  All your budgeting and tracking is kept in digital form and you are responsible for sticking to your budget without having tangible money to stop you from over-spending.

Budgeting Tools

Envelopes

Envelopes are a great budgeting option for the digital system as seen above in the cash system.  The main difference here is that the envelopes are digital and act mainly as a tracking device rather than a place to hold the money.

The digital envelope budget tracking downloadable is a great tool to use to track your budget one month at a time.  Start by allocating each portion of your paycheck to an envelope and noting the amount allocated on the top of the envelope.  When each bill comes due, note the actual amount of the bill and subtract from the allocated total to determine how much is left in that digital envelope.  Note that throughout the whole process, the funds will all reside in a savings or checking account.

Once you have your amount left, you can transfer the money to and from envelopes as needed.  This envelope tracking system can also be printed to track your budgeting.

Yes, you can use a printed tracking tool while having a digital system such as a bank account for storing your money.

Digital Envelope Budget Tracking

digital-envelope-budgeting-tracking

Check Register

If you are using a checking or savings account to store your money, chances are the bank has provided you with a check register.  This isn’t the best tool for breaking down your budget into separate categories but this is a great tool for making sure you don’t spend more than you have.

Every time you make a transaction, note the transaction in the ledger lines of the check register.  You will always know how much you have left in your account as long as you make sure to note every charge and deposit.

Computer Spreadsheet

Computer spreadsheets are a great way to track your digital funds.  This helps you break down your finances in any way that works best for you.  A computer spreadsheet is by far the most personalized method for budget tracking.

You can find budgeting spreadsheet tutorials here.

Apps/Programs

Apps and programs are also a great way to track digital finances.  Most banks have an app where you can see your funds instantly.  There are also other apps that can connect to your bank and create different graphs and spending charts.

Apps and programs are not as personalized as a spreadsheet and typically only show past finances rather than future finances.  Because of this, it can be difficult to create your budget for each category every month.

On the plus side, many apps and programs take virtually no time and you can see your breakdown of spending and saving instantly.

If you are interested in learning more about apps and programs, do a quick search in your platform of choice.  Example: For apps, search the Windows app store, IOS app store, or the Google Play store.  For Programs, use your preferred search engine.  One of the main programs for personal finance is Quicken which works much like a physical check register but can quickly draw up charts.

 

 

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