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Play the budget game — and win

Approach budgeting as a game and you may find it actually fun instead of mind-numbingly boring.

A budget is all about tracking and reporting your sources and uses of income. It answers two important questions: “Where’s my money coming from?” and “Where’s it all going?”

Before you get started, and in order to make the process more suspenseful, first jot down how much you think you’re spending on food, entertainment, travel, clothing, charity, investing, etc. Then record how much you want or need to spend on each category.

Next, gather information. Take one to three months and record all your financial inflows and outflows. Save every single receipt. If you don’t normally ask for or keep receipts, do so during this period. Also, carry a small notebook in which you record cash transactions. If you spend a few dollars on coffee each morning, jot down each time you do so. If you do some odd jobs for a few extra dollars now and then, record that too.

After the information-collecting period, sit down with all your records: a big bunch of receipts, your checkbook, your pay stubs, credit card statements that accompanied your bills, and that little notebook. Also grab some paper, a pencil and a calculator.

List all the inflows and outflows. Group them into categories and total the amounts. For example, list all your eating-out expenses and all your supermarket expenses. Then lump them together into a “Food” category. Calculate what percentage of your income is spent on food. (Calculator hint: Divide the amount spent on an item by your total expenses to get the percentage. For example, $1,200 divided by $32,000 is 0.04, or 4 percent.)

Finally, step back and see what you have. You should be looking at a fascinating detailed record of your cash management. Compare your actual expenses with your initial estimates and see how close or far off you were. Assess whether you’re saving and investing as much as you want to. See what changes you need to make in order to meet your goals.

Making budgeting a game can help you win in life.

Ask the Fool

Q: When an officer, director or owner of a company sells thousands or millions of shares, who are the buyers? For example, on each of many days in January, Gateway founder Ted Waite sold around 200,000 shares. — Don S., Kearney, Neb.

A: The shares are sold in the market, where for every seller there’s usually a buyer. The catch is that if there are many more shares for sale than there are interested buyers, the price will drop — until it reaches a point at which buyers will buy.

Those 200,000 shares might seem like an awful lot to us, but remember that in the course of a typical trading day, many major companies can experience a high volume of trading. In recent months, about 3 million shares of Gateway have been bought and sold each day. By contrast, Microsoft’s average volume tops 65 million shares, and The Washington Post Company’s is just 15,000 or so.

It can be smart to examine insider purchases and sales for companies that interest you. Some occasional selling is routine for many insiders, but if an executive is unloading a large portion of his shares, that can be a red flag. When insiders buy, though, it’s hard to take that as anything but a bullish sign.

Q: What’s the best place to find a list of stock symbols? — G.J., Kailua Kona, Hawaii

A: One easy place to look is on your computer. Click over to many major financial Web sites, such as or Near the box where you’d enter a company’s ticker symbol, you’ll usually find a link titled something like “Symbol Lookup” or “Ticker Search.” The Internet has made many tasks very easy.

My dumbest investment

My dumbest investment was AstroPower, a solar energy company. It had no earnings, and I had no knowledge of anything in its financial statements. I just felt that solar power is great. I bought some shares at $30, ignorantly. I then bought more at $8. I sold last year at 50 cents per share. Lessons learned: Look for value through earnings or cash flow and don’t believe hype. — Ellis Clarkson, Santa Cruz, Calif.

The Fool Responds: Ouch. Your mistake wasn’t in focusing on solar power, but in investing without any research. Even in hot industries, not all companies are equally promising. A year ago at, we noted that just four companies account for more than 50 percent of the market for solar cells: Sharp, Kyocera (NYSE: KYO), BP Solar, a division of BP p.l.c. (NYSE: BP), and Shell Solar, a division of Royal Dutch Petroleum (NYSE: RD). We also pointed to Evergreen Solar (Nasdaq: ESLR) as a possible long-term winner. It has roughly tripled since then. Another way to profit from solar power is to install it, perhaps via solar water heaters.


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