For the first time in several years, I decided to design a budget for myself. I’ve never been a fan of budgets. While I used one when absolutely necessary to get myself on track initially, after recovering from low income and high expenses, I decided to ditch the idea when I was comfortable spending significantly less than I was earning. My prevailing thought was, Why restrict myself if I’m managing to spend only on necessities, save for short-term goals, and invest for long-term goals?
Budgeting is great, even necessary, for people living pay check to pay check or if living is otherwise tight. It’s a great tool if it is implemented intelligently and if it is flexible. There’s no reason to beat yourself up if you’re over one category by 10% for example, particularly if you can balance out the difference in another category or in another time period. The budget has to make sense as well. Don’t set the budget too low to reasonably meet or too high to be pointless.
Part of using a budget is reconciling your actual spending against your budgeted spending. I intend to do this on a quarterly basis this year, which will smooth out some of the monthly bumps. As this is the first time I’ve worked with a budget in a long time, I thought it would be a good time to review the first month. Additionally, the MoneyBlogNetwork is encouraging a writing project this month on budgets, so the timing works out well.
Continue reading to see my first Actual vs. Budget report. Click on the thumbnail to zoom in on the data.
My salary was as expected in January. I’ve received no raises and no bonuses so far, but my other income was higher than expected.
As far as my expenses go, I did a good job of staying under budget, despite the bottom line. I didn’t go grocery shopping in January, apparently. I’ve been surviving on the food I’ve had in the apartment as well as dining out and ordering in. You can see in my Dining Out category that I was a little over budget. My power spending was higher than budgeted only because I paid for two bills during the month of January. My tax spending was higher than usual because I also included a quarterly tax payment for 2007.
I purchased a new phone this week, a BlackBerry 8830, which necessitates a data plan. This means that for the rest of the year, I will be over budget in this category. My monthly plan will run about $60 after my employee discount. I got a good deal on the phone as well.
My budget doesn’t include all expenses, just the ones I intend on monitoring. Perhaps it needs to be more comprehensive. Does anyone have any suggestions for improving my budget or the Actual vs. Budget report?
Updated February 10, 2011 and originally published February 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.