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?
Updated January 9, 2008 and originally published January 7, 2008.