In the last installment of my Budgeting 101 series, I’d like to share how easy it is to create and manage budgets in Pearbudget. Now that you know how to track your daily expenses and learnt about the different types of expenses, all that’s left to do is to create budgets and enter the amounts into the spreadsheet.
Step 4: Creating Budgets in Pearbudget
After figuring out which expenses go into which categories on the Start Here tab, scroll down. Pearbudget allows you to create budgets for each expense on the same page. How do you calculate a budget? Unfortunately, there’s no exact science to this. The easiest way to calculate a budget is to estimate how much is spent on a particular expense per day or per week and then multiply the figures accordingly.
Here’s how I budgeted my monthly lunch expenditure:
Plan: to spend $6 per working day on lunch.
$6 x 20 working days = $120
Hence, my lunch budget for the month is $120.
Of course, you can also give the budget a little padding to allow yourself an indulgent treat now and then. For people who are new to a frugal lifestyle, this really helps ease the transition. I usually give myself an extra allowance of 10 – 20% more a month:
$120 x 120% = $144
Hence, my lunch budget for the month is $144.
Do this for every expense until the sum of your little budgets comes close to your monthly income.
Tip: If you’re budgeting for more than what you earn, it’s the most basic sign that you’re on the express train to personal debt. It’s like eating more calories than you burn and wondering how you stopped fitting into your skinny jeans.
Step 5: Entering Your Daily Expenses into Pearbudget
Here’s the easy part: take 5 minutes a day to enter your expenses into the corresponding date and month of that expense. You’ll find that the spreadsheet automatically adds up your daily expenditure and calculates the difference between what you planned to spend and what you really spent.
Tip: I suggest entering your expenses daily or at least every few days or so, in that way you’re constantly aware of your expenditure. If you discover that you’ve been spending too much daily, quickly adjust your spending before it’s too late.
Step 6: Analyze
After you’ve tracked your expenses for a month, you’ll start to spot spending patterns that can be controlled. After a month, I discovered that I was spending too much money on clothing and quickly reduced my shopping budget by 40%. Sticking to it is a whole other matter of course. 
Pearbudget also includes a handy Analysis tab to study your spending patterns over a course of a year. Incredibly handy.
Conclusion
In my enthusiasm, I wrote three posts on budgeting in one day! I hope this helps anyone who would like to learn more about budgeting as a form of money management. Comments and thoughts are always welcomed. 
