Unlike my first mistake, Failing to Utilize the Energy Tax Credit, my next mistake is one where I at least have a second chance. It’s not too late to fix this one for 2008.
2. Failing to Establish a Spending Budget
I tried to spend less, consider my purchases more, and get the best deals possible when buying things in 2007. While I did halfheartedly inventory my spending and try to get my costs down for each category, I did not establish a budget for these categories at all.
This means that things like restaurant spending and even the occasional clothes shopping spree can get a bit out of hand—I don’t even have an idea of a spending limit, I just go by what feels reasonable at the time. I need to get on top of this for 2008.
But how? Well, I’ve found a few resources which look promising:
- Spending Plan Worksheet (PDF) – This worksheet seems like a good thing to sit with and use to ensure you cover all your bases budgetwise. I like how it feels so simple.
- Flexo’s Excel Income and Expense Report Template – For years now I’ve been half-starting budgets in Excel, trying to determine costs. I need to collect my expenses more comprehensively in a template like his to predict my spending for 2008. Math-hater that I am, however, I don’t think I can actually keep these numbers up monthly going forward, so I plan to go with an online service instead for progress tracking.
- Yodlee MoneyCenter – I recently tried out this online service and am liking what I see so far. One thing I noticed was a nice little feature that lets me set goals for each category of spending. I would use this service to just import my history, but sadly it won’t allow me to import an entire year. A year from now, however, I think the Spending Reports option will be incredibly valuable for me, since I plan to keep up with categorizing my transactions here.
- Inspiration – Of course, when you’re embarking on an arduous task like collecting a year’s worth of expenses, it helps to have some motivation. One article I found compelling: Savings: Making a money-smart spending plan [Bankrate.com]
How do you handle your budget? Have any hints you can share?
Subscribe
9:32 am (reply)
Two Words: Pear Budget. That is an awesome utility. Track your spending for a month or so and use that as a guideline for your initial budget. Put that information into Pear Budget and it will analyze the data for you.
To make things even easier, I just print out the data entry page and write in numbers whenever I make a purchase, then input the data once a month. Couldn’t be easier. It also forces me to double check my numbers against my bank and credit card statements. A great control mechanism.
pearbudget.com
9:33 am (reply)
We use a budget form in excel in all of our financial counseling appointments. This allows us to show people where they are over spending and to reign in that spending.
9:49 am (reply)
I’m surprised you’ve had a hard time trackiong your spending, being as detailed oriented as you are.
I enter everything I spend into Quicken and I have categories for my spending (of course), things like eating out (with sub categories for eating out at work and other things), entertainment, clothing, golf, etc…
I don’t use Quicken to manage my budget though. I do that in Excel. I plan how much I will spend in each category and I run a Quicken report each week and import that data to Excel. That way I can’t get too far off my budget, even if I have a really bad week. Lastly, I am very willing to shift budget limits during the month when needed- that’s what makes it realistic to follow each month.
11:06 am (reply)
I don’t try to budget my spending much… only to the extent that I budget my savings, and that leaves me with a certain amount to spend. I think that typically works better.
11:46 am (reply)
Microsoft Money. Been using it since ‘95 and I can’t imagine life without it. It’s a bit tedious to setup all the accounts at first but once done the reporting, tracking and forecasting are invaluable tools.
1:50 pm (reply)
I have used yodlee now for about a year and love it. I believe it even pulled up all my previous transaction history when I set up all my accounts. I highly recommend playing around with it more and setting it up with all of your accounts.
7:40 pm (reply)
I do my budget on a note pad and have for the past 10 years. I have a mortage of less than 20% of take home pay and no other debt. I never track incidental spending but get cash every week and spend it however I want/need. When I started my financial journey I had about $20,000 in debt and I was a renter. Can’t argue with success!