First, a little theory. The heart of MFE is its budget. The goal is to have a balanced budget for every month. No money should spill over from month to month.
It is important to setup a budget correctly and refine it over time to make the most out of your finances. The way the budget works is by organizing your
transactions into groups and then further into categories. A group is like a bucket which contains categories. For example you could have Income, Bills and Personal as three groups. Groups are useful
for totalling transactions and getting a more general view of your finances. Within each group you have categories. Your transactions will all end up in one category or another. Each category has a
budgeted amount, an actual amount which is the sum of the transactions in that category (for that month) and also a difference between the two. The budgeted amount is your goal for that category. For
example you could budget $400 a month for groceries. The actual amount will show you how much you have actually spent so far in the month you are viewing. And the difference will tell you how well you
are doing against your budget. Ideally your total budget should be zero. That means you have perfectly balanced your income and your expenses. This does not mean that you
should spend all your money every month, rather, if you have any money left over after budgeting for all your expenses, you could add an entry for savings. So instead of carrying money from one
month to the next, move whatever is left over to a savings account. Growing your savings and paying off your debt could be the most important things you achieve by organizing your finances.
Let's go through an example:
In the example above, we have a $2000 a month salary. Once all bills, loans, etc. are paid and you take some money for yourself, there are still $50 remaining. Whenever the budgeted total doesn't
balance out to zero, you have a couple of choices: If it adds up to a negative amount, you have budgeted more than you earn. You need to review your budget and reduce one or more of your categories' budgeted amounts
to balance it out. If the budget total adds up to a positive amount, you can either increase some of your budget amounts or put the difference in a savings category. At the end of the month, you can
move the remainder to a savings account for example.
Now, if you compare the budgeted against the actual, some columns match exactly (Water, Internet) while others vary from month to month (Mobile phone,
Gas). So at the end of the month when all other transactions have been entered, you should modify the Savings category as to make the actual add up to zero.
This means that from month to month, you will be saving more or less than what you budgeted, depending on the other variable categories.
To add a new budget category, select Budget, and go to the top "add" row. There, enter the catetory's details. If you need to move a category from one group to another, simply update the Group column to either a new or existing group.
Note: Amounts which reflect earnings (such as salary, interest, etc.) are positive. Amounts which reflect expenses (such as loan payments, bill payments, etc.) are negative.