July 28, 2012

How to manage your budget with Agile?!


There are many different ways to manage your home budget. Web tools, iPhone apps, even bank sites offer us a variety of ways to help us balance our home budget. 
And of course, there’s the Agile way. A simple board and some sticky notes.
Lets take this young couple for example. They’ve just moved in together, and they are trying to see how their budget fits together, and how they can control their expenses. By the way, it’s the same when students or flatmates live together - anywhere there’s a common budget.
When you use an apartment wall to visualize your budget, it reduces tension. Instead of uncomfortable silences when neither side is too sure of what and when to bring the subject out, the budget is right there, in front of your eyes.

Getting things out to the open. This is a key to success.
Visualizing the budget and using the Scrum framework may help a lot doing it.
This means that you plan the budget together, and see them as shared responsibility. Each one puts up his own expenses, and the couple discuss it for a few minutes every day or two.
Take the students for instance. As soon as they pinned their budget to the fridge, everyone could see it. Every one shared the same budget and the same responsibility. It belonged to everyone.
So, how do we do that ?
1.    First, create a baseline:
Each person shares a part of their income to add to the common budget, and you set a time frame for the budget - say, a month.

2.    Define your budget categories:
Discuss together what expenses categories you should have. Talking together (the Agile way) is an excellent way to open up and discuss the issues at hand.

Categories may be health, transportation, living expenses - it’s up to you.

If you like you may even drill into one or two categories and flesh them out a bit. Daily expenses can be sorted into groceries, personal supplies, clothing, and so on. 






3.    Label each category:
Label each budget categories according to its relative size in the group and visualize it. Visualization is the heart of getting things done. Seeing it means you own it, and you can control your actions.

You can estimate your budget based off past experience, or by just discussing the limits you want for each category.




4.    Mark the expenses daily:
On a daily basis, each person tallies the actual expenses for each category. You can see very quickly what you can REALLY expect for each category.

Meet up each day for five minutes, and talk it over.

Visualizing and talking about the budget makes it to be better understood. You know the “why” and the “how to do things” and you can quickly solve misunderstanding or balance your expectations accordingly.

Look at the following chart. It takes you literally seconds to see exactly what takes the most budget, and where everything stands. Now, you can make informed decisions.






Once a month, sit down together, and plan for the month ahead, taking into account all the things you have learned from the previous month’s experience.



5.    Burn chart:
You can use the burn chart to track your budget and visualize a bit more. Obviously if you don’t need it then don’t use it.

What do I mean? Well, the initial state of the burn chart is the initial budget.

We then mark what the budget is for each day. We can easily follow our burn chart and see if we are ahead of budget or losing track of our expenses.



If we find that we’re short on money in some areas, we can see where we have some spare budget, and change accordingly. By doing this, we can also see our real world equirements, and how we solved them - so we can make the necessary changes to the budget for the next time.
You can use the same techniques to manage a project budget, youth group budget, wedding budget - or whatever budget you want.

2 comments:

  1. This is so much more than i needed!!! but will all come in use thanks!!
    App Developers

    ReplyDelete
  2. Thanks you!!! I will be glad to hear the usage find it useful for. :)

    ReplyDelete