Article Series: Taking Your Barefoot Investor Budget to the Next Level with the MoneyFormula app!

MoneyFormula App

PART 3 - Your Barefoot Budget and Spending Review

With 60% or more of your income going to your Daily Expenses we'll look at the easiest way to budget your expenses using the MoneyFormula app!

In PART 3 we'll tackle your Barefoot budget

The 4-Step budget

Step1. Budgeting in 5 minutes

Step2. Quick spending review

Step3. Fixing budget surprises

Step4. A budget you can afford

A realistic and happy budget

TIP - New to MoneyFormula? Find out how it can help you with your Barefoot Investor finances by referring to the Barefoot Investor Overview.

Article Series: Taking Your Barefoot Investor Buckets to the Next Level with the MoneyFormula app!

OVERVIEW - The Barefoot Investor + MoneyFormula App

PART 1 - Setting Up Your Barefoot Investor Buckets

PART 2 - Your Barefoot Mojo and Grow Buckets

PART 3 - Your Barefoot Budget and Spending Review

PART 4 - Your Barefoot Fire Extinguisher Goals

Show less

Please Note: MoneyFormula is independent of, and is in no way affiliated with, endorsed by, or associated with Scott Pape or The Barefoot Investor. This information on this page is for illustrative purposes only and should not be interpreted as an official endorsement or partnership. You are not required to have read The Barefoot Investor to use the MoneyFormula App.

If you've read barefoot investor or would like to manage your money like a pro, MoneyFormula will make your life easy and help you save! My experience has been fantastic, and any questions I had, Matthew was able to answer efficiently. Could not reccomend MoneyFormula enough!

The 4-Step Budget and the MoneyFormula App

To complete your first Barefoot Investor budget in the MoneyFormula app we are going to do four things, which we will cover in more detail below.

A Budget in Four Easy Steps

Budget your expenses

Review your spending

Fix any budget surprises

Make the budget affordable

STEP 1 - Budget your expenses in five minutes

The first thing we are going to do to set up our Barefoot budget is take a guess at our current spending and expenses.

Within the MoneyFormula app there is a list of spending categories in the budget and we can easily enter our planned expenses against each.

Your Barefoot Investor budget - the app allows you to easily enter your planned expenses.

All we have to do is select Edit option in the budget and then enter an amount for each spending category along with how often it happens (e.g. weekly, monthly, etc.).

Barefoot Investor Budget App - Add Expenses.

Your Barefoot Investor budget - enter an amount for each of your expenses into the app.

The trick here is to go through each spending category and quickly estimate what you spend; in under five minutes if you can. You can always come back later and update the budget numbers once you have reviewed your actual spending.

Once you've had a shot at entering your amounts for each spending category, your budget will instantly show you the percentage and total amount going to each main category.

Barefoot Investor Budget App - Total Expenses.

Your Barefoot Investor budget - the app will chart the percentage total of each expense category.

You can dive into the details of any of the category totals to get a breakdown; for example if we want to review our Daily Living Expenses simply select it from the list.

Barefoot Investor Budget App - Detailed Expenses.

Your Barefoot Investor budget - the app lets you chart the breakdown of any expense category.

In the example above we can see in our budget that our estimated Groceries spending makes up 44.0% of our Daily Living Expenses.

We can also view all the amounts entered into the budget by selecting on a category, as shown below.

Barefoot Investor Budget App - Expense Amounts.

Your Barefoot Investor budget - the app lets you easily review the amounts for any expense category.

QUICK TIP

Want to follow along with this article?

You can also start entering your details, set up your first budget and run your first spending review straight away.

Simply sign in below (any device) or download the mobile app from the app stores!

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STEP 2 - Review your expenses and spending habits

While planning and budgeting your expenses is a good start, an important second step is to check where you are actually spending your money.

I like to call it a Spending Review but you might have heard it called a Bank Audit, Expense Review, Forensic Audit, Budget Audit, etc. - all the same thing.

In the MoneyFormula app the Spending Review tools make this a really quick and easy job.

You simple nominate your spending accounts, import your transactions and run the reports; and we'll quickly go through each below.

Nominating your spending accounts

To start the spending review you have to confirm the accounts with expense transactions you want to include in the budget.

In my example, I have two accounts. The Daily Expenses bank account and Expenses Credit Card that is paid off each month; and you can see them highlighted in the list below.

Your Barefoot Investor budget - the app lets you nominate the spending accounts to review.

Nominating a spending account is as simple as editing the account and setting the Spending Categories flag to "Yes" to include it in your budget spending review (or setting it to "No" to remove it)

Barefoot Investor Budget App Spending Account.

Your Barefoot Investor budget - set the Spending Categories to Yes for each spending account in the app.

Importing and Categorising Spending Transactions

Now that we have nominated the accounts we simple need to import the latest transactions for each account.

Three months of spending is a good start, or go with twelve months if you have annual expenses (otherwise these will get missed).

Once you have download your transactions from your Internet banking site (normally in OFX, QIF or CSV format) and saved them to your device; you just point MoneyFormula at the file to import them.

Barefoot Investor Budget App Spending Import.

Your Barefoot Investor budget - the app lets you import all your latest spending transactions.

The MoneyFormula app comes with full instructions to help you import transactions; so I won't go through them again now.

With our transactions loaded we can start picking spending categories for each and let the Category AutoMatcher kick in and do most the work for you.

Let's look at a quick example

Barefoot Investor Budget App Spending Transactions.

Your Barefoot Investor budget - choose a spending transaction in the app.

If I select the Coles transaction to expand it, I can then select the required Spending Category from the list (you can also start typing to filter the list first).

Barefoot Investor Budget App Spending Categories.

Your Barefoot Investor budget - choose a spending category from the list in the app.

When we save the above changes the Category AutoMatcher tool finds another 27 Coles transactions and automatically matches and updates them for us - just like that!

Barefoot Investor Budget App Spending AutoMatcher.

So while you still get to do the important bit on deciding and reviewing where you have been spending your money, the MoneyFormula app automatically does the repetitive bit for you - so you only have do things once!

Review your recent spending

With our transactions imported and auto-matched, it is time to find out where we have been spending our money.

The Spending Review automatically give you an instant spending summary by grouping up all your transactions for all of your nominated spending accounts.

Barefoot Investor Budget App Spending Summary.

Your Barefoot Investor budget - the app provides you with a spending summary of your recent transactions.

You can also select any of the Spending Categories to get a breakdown so you can quickly find out where you have been spending your money.

Your Barefoot Investor budget - use the app to drill down into your spending habits.

STEP 3 - Fix your budget surprises

Now that we have planned our expenses and we have completed an initial review of our spending, for our third step what we want to do is compare the two and make sure we are being realistic.

My Coffee Problem

If I set up my budget to spend $50 a month on coffee - that's great.

But if it turns out I am actually spending $500 a month, well - that's not so great, for my budget or my caffeine levels!

The MoneyFormula app makes it very easy to check this, and all we do it dive into Spending Review detailed view which gives us the budget and actual amounts.

Your Barefoot Investor budget - select an expense category to compare your budget and actual amounts in the app.

For example, if we select the Daily Living Expenses we get a complete list of the actual amounts and the budget amounts.

Barefoot Investor Budget App Bucket Amounts.

Your Barefoot Investor budget - use the app to review the largest transactions in the expense category.

We can also quickly review the transactions that went into the spending totals by selecting the transaction line.

Barefoot Investor Budget App Bucket Transactions.

Your Barefoot Investor budget - the app also lets you sort and view all transactions in the expense category.

By default the 10 largest transactions will show up, but you can select Show All if you need more information and you can change the sort order by selecting the different headers (date, description or amount).

As you review your spending, your transactions and your budgeted amounts, you can now start updating your budget to make sure it is realistic based on your recent spending history.

STEP 4 - The budget you can afford

Now that we have something resembling a realistic spending plan there is one final step, and that is to check you can afford it!

There is no point having a perfectly balanced budget, only to find it requires five times your income to work!

The good news is the MoneyFormula app automatically shows this information on the budget every time you update it; and will warn you if you over allocate the income you have available.

Your Barefoot Investor budget - the app will show you your remaining spending buffer.

If we go to the budget screen we can see the amount of income available for our planned expenses; our planned expenses amount and the difference between the two.

In our example above we can see that our spending plan of $8,522.17 is realistic as we have a $227.83 buffer.

A realistic and happy budget

After completing the four steps above you should now have a realistic budget and a good starting point for your Barefoot journey.

Maintaining your budget going forward is as simple as reviewing your latest spending from time to time (e.g. once a month) and making any adjustment as you go.

"I LOVE BUDGETING!"
said no busy person EVER!

At this stage, while I don't expect you to be jumping up and down in excitement over your budgets...

... we've at least seen how the MoneyFormula app will do most of the heavy lifting for you and free you up for the more important things in life - like drinking coffee!

What Next?

The budgeting tools covered in this article will put you in a good position to set up realistic amounts for your Blow Bucket.

Once you have worked out your Daily Expenses needs, you can split the rest of your take home income between your Fire Extinguisher, Smile and Splurge accounts.

PART 4 - Your Barefoot Fire Extinguisher Goals

In PART 4 - Your Barefoot Fire Extinguisher Goals we are going to take things up a notch and see how the fire extinguisher works and how MoneyFormula will show you in real-time when goals will complete and how much you will save.

We'll also look at the different debt strategies you can apply, advanced mortgage planning and even how to check your loans for hidden bank errors.

The Barefoot Investor book

If you have come across this article and you are not one of the million+ readers who have read The Barefoot Investor then you should probably head over to Scott Pape's website and grab a copy. Find out what all the fuss is about with his enjoyable and down to earth approach to finances and his focus on date nights, serviette strategy, unique bucket names and simple barefoot steps.

Article Series: Taking Your Barefoot Investor Buckets to the Next Level

OVERVIEW - The Barefoot Investor + MoneyFormula App

PART 1 - Setting Up Your Barefoot Investor Buckets

PART 2 - Your Barefoot Mojo and Grow Buckets

PART 3 - Your Barefoot Budget and Spending Review

PART 4 - Your Barefoot Fire Extinguisher Goals

Show less

For more information on how MoneyFormula can help you with your Barefoot finances refer to the Barefoot Investor Overview.

Don't Miss Out!

See for yourself why MoneyFormula is the best Australian budgeting app for your Barefoot Investor finances!

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Simply sign in below (any device) or download the mobile app from the app stores!

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PLEASE NOTE: The information in this article is general in nature. It does not take into account your personal objectives, financial situation or needs. Please speak to a qualified financial adviser if you need specific advice on your finances. MoneyFormula / HomeMoneyManager operate independently of, and are in no way affiliated with, endorsed by, or associated with Scott Pape or The Barefoot Investor. The information provided is for illustrative purposes only and should not be interpreted as an official endorsement or partnership. The Barefoot Investor is a trademark of Scott Pape. All rights reserved. This page uses the term for descriptive purposes only, and no claim of ownership or affiliation is made.