Using this guide


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Money in, money out 

“Duh,” you may be thinking, but managing money starts with understanding how this magical quantity gets into your hands. 

It may appear on a regular basis because you have a job that gives you a periodic paycheck. Or it could arrive annually on your birthday because Grandma remembers you with a $10 bill and a sweet card. It’s possible that you check coin slots on vending machines and earn a decent few dollars a week. 

Whether the sources of your money are reliable and regular or strictly by chance, it’s important you’re aware of them, because they help you budget. 

Pizza, textbooks, cell phone bills, movie rentals… all that wonderful money has a knack for disappearing. Monitoring where it goes is very important in figuring out how much you’ll need tomorrow, next week or next month. Keeping track of what comes in and what goes out—and knowing how to plan accordingly—is called budgeting.

Shoebox budgeting

Do you feel like you’re broke all the time and don’t know why? You can have everything you need in life just by being organized with your spending and saving. Shoebox budgeting comes from Trent Hamm at thesimpledollar.com and Larissa Walkiw, 2008 Young & Free Alberta Spokester (see video below). This budgeting tool will let you turn your financial life around, help you get the things you need and let you plan for getting the things you want.

Step 1: Track your money

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  • Start with two shoeboxes: one called “OUT” for the money you spend, and one called “IN” for the money you earn.
  • For every dollar that comes in and every dollar that goes out, keep the related statement or receipt. Save ATM receipts also!
  • If it’s easier, use a notebook to track every expense. File your daily receipts in the notebook as well.
  • At the end of the day, put all your receipts into “OUT” or “IN.”
  • Do this for at least one full month.

Step 2: Sort your receipts

  • Find a wide-open space and divide all the receipts in your “OUT” box into categories.
  • Choose categories that make sense for your lifestyle. For example, a “Movie Rentals” category might be more helpful to you than “Entertainment.”
  • Break out items on your receipts that fit in different categories. For example, if you bought some awesome jeans and dish detergent at Target, use a slip of paper to write up a new receipt for the detergent (including any tax) and subtract that amount from the original receipt. Put the new receipt in “Household,” and the adjusted awesome jeans receipt in “Clothing.”

Step 3: Add it up

  • Use the chart on the next page to calculate the total for each expense category. You can also easily create this in a spreadsheet so the computer can do the calculating for you!
  • Next, calculate your earnings.
  • These two figures will tell you where you stand financially. (Hint: The goal is for your earnings to be higher than your expenses!) 

Step 4: Reduce your spending

  • Look through your categories and see where you could cut back some of your spending. See the Tip Box and the examples on the next page.
  • Start with the areas that will be most manageable for you.
  • In some areas, you won’t be able to save much—that’s OK.
  • Fill out your reduction plans in the middle column, and calculate what you expect your savings to be for next month in the right column.

Step 5: Set your budget

  • Write out your budget categories and new category goals for the next month.
  • Choose five of the savings ideas you identified that you think you could stick to for the next month. Write them in the middle column.
  • Estimate how much those ideas could save you in each category, and subtract it from the total in that category.
  • Add an extra category called “Flexible.” This will be for emergency or unexpected expenses. Write down an amount that equals 5% of your earnings. (If you haven’t used any of these funds, you can deposit them in a savings account.)

Step 6: Repeat it!

  • Continue saving statements and receipts and filling those shoeboxes every day.
  • Live your life as you normally would—just incorporate those five small changes.
  • At the end of the month, tally everything up. You may find you’re a little under in some categories and a little over in others. As long as you know why it happened and you didn’t exceed your overall goal, you’re doing fine!
  • If you made all of your goals, congratulations! You added real change to your life, and money to your pocket. 

Step 7: Work it!

  • The more you track and sort and reduce and repeat, the better you’ll get at it.
  • If you’re feeling comfortable with your budgeting so far, add a few more of your reduction ideas to your everyday life.
  • If you did even better than your budget and have extra cash, add another line for debt repayment or, if you have no debt to repay, savings. Write the amount of extra cash in that new line.
  • Always review your budget at the end of each month and make adjustments as needed.
  • The goal with budgeting is to keep in tune with your spending. Don’t overdo it! Just make the changes you know you can stick to. The better you get, the more changes you can add until you’re a budgeting fiend!

Tips and tools

Here are some cool ways to reduce your spending:

  1. Check DVDs out from the library (free) instead of going to movies (very expensive) or renting movies (sort of expensive).
  2. Examine your cell phone plan and see if you can reduce your usage OR reduce any additional services.
  3. Buy used textbooks—by posting a want ad on Craigslist or on your university or  community bulletin board
  4. Eat a few extra meals at home.
  5. Cut back on your coffee or other favorite beverage, or make it at home and carry it with you.
  6. Install a programmable thermostat to save on electricity.