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5 Stupid Financial Mistakes I Made in 2007: Failing to Establish a Spending Budget

This article was written by in Planning. 7 comments.


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. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Along with her partner, Sasha owns and manage six residential rental units. Sasha endeavors to support the causes and organizations she believes in through more conscientious spending practices. View all articles by .

{ 7 comments… read them below or add one }

avatar Colin

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

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avatar The Saving Freak

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.

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avatar Eden

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.

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avatar Another Dollar

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.

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avatar Steve

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.

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avatar Jon

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.

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avatar susan

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!

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