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how to budget

Budgeting

Charting A New Course To Financial Security

Let a simple graphic help you get the financial picture

If you’re on a fixed income, you understand the challenge of finding extra savings to build a nest egg for retirement, major expenses or simply to leave something behind for your family. Aside from the difficult — and in some cases, impossible — task of finding a way to supplement that income, the most important first step is getting a handle on where all the money goes.

A pie chart does the trick. And you don’t need to know how to use a computer to create one.

If you’re unfamiliar with a pie chart, the idea is simple. Gather your spending data; break it into categories like food, utilities and gas; and convert the information into a circular graphic that displays each category as a color-coded percentage of the whole “pie” (which represents 100 percent of your spending).

You can do this by hand, of course, but who has the time? If you’re handy with Microsoft Excel or a free online service like Google Spreadsheets, you can create one in minutes. A few Web sites, such as Chartpart.com or Yellowpipe, make it even easier. Just plug some number and categories into a form and you’ll get a custom pie chart that can even be embedded in a blog or personal Web site.

Once your information is displayed graphically, you may be surprised by the results. It’s one thing to watch Game of Thrones on HBO and feel like you’re getting something of value; it’s entirely another to see that those 100 channels and premium offerings are sucking up five percent of your annual income. Better to ditch the cable, get a digital antenna, subscribe to an online DVD service like Netflix and stash the savings in a “rainy day” or retirement account.

Is your Starbucks habit having unintended consequences? Does your pricey subscription to People mean the difference between living small and saving big?

Such small, incremental changes to wasteful are much easier to identify with some organization. And those modifications are critical to ramping up your savings for the things in that really matter, like a more comfortable retirement or a safe landing when life spins out of control.

It’s as easy as, well, pie.