How do I balance income and expenses?

I am already no hero with finances. But I do understand that it is all based on income and out going expenses. I tought this program would help me, I finally decided to get serious, but now I see all kind of talks about envelops etc. I managed to create a budget. But how does it work with my exenses? I should simply be able to write my expenses somewhere? So I can see the balance in one look? How much I have received and how much I give out? So I can see whats left? Or to short? I really am overwelmed and also cant find any answers? I signed up for a whole year , the pro plan, but unless I get it, and understand it,I will cancel it again. Help will VERY much be appreciated!

Welcome to Goodbudget! Yes, it can definitely help you get on track and it sounds like you’re already getting started.
You might start with the video tutorials for a better overview, but here’s the gist:
The idea of the budget is to determine how much of your money should be allocated to different things. First, you’ll enter your accounts and all the balances you want to include in your monthly (or weekly or biweekly!) spending. How much can you spend on housing? Groceries? Utilities? Transportation? Savings? (It sounds like you’re already at this point) Once you have those amounts figured out, you have your budget, so you create these virtual envelopes and put the money from your accounts in them (this is a “Fill”). As you spend money, you pull it from one of the envelopes to help you stay on track. Let’s say you budget $500 for groceries and $100 for entertainment. If you spend $200 on entertainment, you’ll have to take the extra money from another envelope. Maybe you can go light on groceries? Or put off a clothing purchase until later? Or maybe you’re working from home so you need less gas money, and you can move it into that entertainment envelope this month. But either way the money you have and the money you spend need to equal out between your envelopes.
In the beginning your expected budget may be way off. Maybe you thought $500 would be enough for groceries, but in reality it’s closer to $700. You’ll see those trends after a couple of months of careful recording. Now you have to make choices—spend less? Allocate more to groceries and less to entertainment? You’ll probably find that you adjust your budget quite a bit in the beginning but that’s ok!
One important thing to know about Goodbudget is that the money in your Accounts is the SAME money that’s in your Envelopes. The Accounts tell you which bank or wallet your money is in, and the envelopes tell you how you intended to spend it. As you make a purchase, you take money out of the envelope and the account balance decreases at the same time.
One last thing; you can enter future transactions by using the “schedule” button. (Be sure you don’t just post date them.) They won’t impact your Envelopes or your Accounts until the day they come due, and in that day they’ll automatically populate your ledger.
This is a long answer but I hope it helps!! If anything isn’t clear feel free to add on. :blush:

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Tiffany’s given a great overview above, but I just wanted to also suggest our Help Centre for further reading! It has the video tutorials Tiffany mentioned, as well as a lot of the more commonly-asked questions and answers.

The forums here also have some discussion of what others have been confused about in the past, which can be helpful (sometimes the way you want to phrase a question isn’t always the way the Help Centre might have written it, and while it has a lot of info, it doesn’t cover everything!)

Have you ever listened to or read anything by Dave Ramsey? He advocates strongly for the “envelope system”, where you take actual physical cash and put it in actual paper envelopes. You write on each envelope what the money it contains is to be spent on, Groceries, Gas, Clothes, etc. Those envelopes are a tangible implementation of your budget. The argument is that spending cash is more psychologically “painful” than other forms of payment (so you’ll think twice about impulse purchases) and that seeing an empty envelope is far more motivating than some vague idea of what your checking account balance is at any given moment. The purpose of using physical cash and physical envelopes is to train yourself into planning your spending and sticking to the plan.

Goodbudget simply takes that practice and makes it more convenient for those of us not interested in visiting the bank every payday and carrying physical currency everywhere we go. If you are budgeting with a spouse or family, everyone can see via the app on their phones how much virtual Groceries money is left in the virtual Groceries envelope, instead of having to remember who is holding the paper Groceries envelope with the paper Groceries cash in it.

You say you created a budget but aren’t sure how it works with your expenses. You may have created “a” budget, but it sounds like you have not actually created your budget, since your expenses and budget are the same thing! Start with creating an envelope for every expense based on how often you pay it. My “Mortgage” envelope is monthly, my “HOA Dues” envelope is quarterly, my “Christmas” envelope is annual, etc. Set the amount for each envelope accordingly. Now add your accounts to Goodbudget. Checking, Savings, Wallet Cash, PayPal Balance, anywhere you have liquid assets that you spend on expenses can be added to GB as an account. The total value of all your accounts is now shown as your “Unallocated Balance” in Goodbudget. This means you have that money but have not yet allocated or assigned it to any purpose.

This is where we circle back to the paper cash and paper envelopes as an analogy. Imagine you went to the bank and took out all of your money as cash, came home, and counted out $1000 for the Mortgage envelope, $500 for the Groceries envelope, $100 for Pet Food, etc, etc until all your envelopes are full and you hopefully have cash left over. Or it may be the case that you run out of cash before all the envelopes are full. This is what you do using the “Fill Envelopes” button in Goodbudget. You are taking the Unallocated balance (i.e. all your money) and allocating it to your virtual envelopes. You don’t have to allocate every dollar to an envelope. You can allocate only what you plan to spend and leave the rest Unallocated as your emergency/slush fund to draw from when needed. Or, you can create extra envelopes specifically named as Savings or whatever and allocate until your Unallocated balance is zero. Your Unallocated balance might reach zero before all your envelopes are full. In that case you will need to fill the envelopes that must be paid soon, and wait until you receive new Income to fill the rest.

Now the last piece is recording every transaction. You (and/or your spouse/family) must religiously enter every expense immediately in the app, or save every paper receipt and designate one person as the family accountant who records expenses promptly. That is the only way to keep the balances in Goodbudget an accurate snapshot of reality. If you want to know if you have anything left in the “Restaurants” envelope to go out to lunch today, you need to be sure that it’s balance is current. Just as you would look inside your paper envelope and see a $10 in it, therefore you would have to choose McDonalds instead of Olive Garden.

Only with accurate information will you be able to control your “outgo” and ensure it is less than your “income”. In the paper envelope and paper cash system, it is these moments where you run out of cash days before payday, or don’t have enough to fill the envelopes completely even after a payday, which prompt you to change your behaviors. You might eat at restaurants less. You might start using coupons for groceries, you might cancel subscriptions to lesser used streaming services, etc. Especially when you are beginning from a state of disorder and debt, these moments can be quite motivating (i.e. terrifying). It can also be quite illuminating to realize just how much money you’re actually “wasting” on things that aren’t very important compared to shelter and food. Most of us have a terrible memory for what we spend, especially on habits like fast food or Starbucks which are relatively small on their own but add up like death by a thousand papercuts.

If you can muster the discipline to keep Goodbudget up to date with income and outgo, then it’s very useful, but if you’re still in “hair on fire” stage you might want to stick with paper cash and paper envelopes until the fire is out and you have established a budget discipline you can stick with. And that’s the ultimate goal here… behavior modification… discipline. The only way to spend less than you make is to know exactly how much you’re spending and whether or not you actually have it to spend. You have to directly connect your spending to your income and learn to plan ahead. Our modern financial system has essentially divorced spending from income. Anything you want is just a card swipe or a fingerprint tap away. Literally everything can be consumed now and paid for “later”. Left to its own devices, the market will leverage your future income for their current profits until there’s literally no more leverage left and then you’re stuck to either grind away for years to deleverage or declare bankruptcy and label yourself financially radioactive.

So stick with it, brother, refuse to play that game. We’re all here to help.

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