AI Money Apps Can’t Replace Good Old Pen and Paper
With so many resources available, many rely on budgeting apps and software to manage their finances. While I’ve personally recommended all sorts of personal finance apps for budgeting , I have a confession. My favorite budgeting tool isn’t the latest AI-powered app . Instead, I will always use good old pen and paper to track my expenses. And I’m not alone in this . That’s why going “old school” and budgeting with pen and paper has its benefits when you want to keep a close eye on your spending.
How Manual Budgeting Can Help You Save Money
As we ‘ve said before and as you’ve probably noticed in your life, touching and giving away money hurts inside your brain. So if you need a mental push to stick to your budget, the physical form of pen and paper is much more effective than checking your online bank account. I think of this as adding a kind of friction that apps simply don’t provide. To say the least, spreadsheets can quickly become overwhelming and frustrating; Pen and paper is a way to take small, manageable steps and get your spending under control. Let’s look at some practical steps to help you get started with manual budgeting.
Track where your money goes
The most important question to answer is: where does my money go? Don’t settle for ratings here. Look your spending habits squarely in the eye. Gather together recent bank and credit card statements, bills, your most recent pay stub, and any other documents describing your income and expenses. This gives you a complete picture of your financial health.
Make a list of the sources and amounts of your regular income, such as your after-tax salary, alimony payments received, and income from other jobs or investments. Let’s sum up the income.
From here, consider taking out another sheet of paper for broad expense categories. Write down general expense categories such as housing, utilities, transportation, food, debt payments, entertainment, etc. Leave enough space to write amounts next to each.
Fill out and add up expenses
Let’s look at some of the budgeting basics that apps make so easy, but that we want to use in a more practical way to eliminate these difficulties. Use your bank and credit card statements to allocate amounts for each expense category you list. Items such as rent, internet, car payments, or insurance fall into their respective categories. Use a calculator to add up the expenses in each category. Then add all the categories together to get your total monthly expenses. Then take your total income and subtract your total expenses to find your monthly balance.
Tips for using your budget effectively
Once your budget is set, be proactive about using it each month, tracking actual expenses versus budgeted amounts to avoid overspending. Sounds simple enough, but what makes pen and paper so effective also makes it difficult: effort.
Get into the habit of taking notes throughout the day as you spend your money. Alternatively, you can sit down once a month and transcribe your bank statements into your budget on physical paper. What makes apps superior to paper these days is the convenience of having your phone in your hand at all times. One solution to this problem is to keep a budget in a handy notebook or schedule a physical seated budgeting session. Send yourself a monthly calendar invitation.
Another tip for using pen and paper is to physically write down the things you want to buy before you buy them . Use these bank statements to indicate which items are on your official “shopping list.” By reading through the items on this list, you can make a more informed decision about what you really need.
If you’re struggling with reckless credit card use, a practice budget is a good way to start spending money more consciously . Use the actual act of writing down your finances to increase self-awareness and responsibility for your spending habits.