Budget Tracking

I've been at this saving and frugal life for two years. You would think that I had figured out the best way of budgeting my money and not over spend. After helping some others with their budgets recently I realized that I had fallen out of practice and was turning back to my wasteful ways!

Admittedly, I was not taking on massive debts, or buying cars, or anything. But my daily spend had crawled back to pre-frugal days. Eating out for lunch daily, buying coffee, miscellaneous impulse purchases... What used to be a 600/mo budget for all the "non-bills" categories, turned into a $1,500+/mo budget.

When a big life change occurs, money and budgeting can take a backseat. I experienced this first hand when I bought a house last August. My budget had, quite truthfully, gone out the window. My "daily" credit card was racking up anywhere from $2,500-$3,200 dollars a month (I was still paying it off in full though!)! Ouuuch. At the time, I attributed this to move-in expenses and construction. And that was partially correct. I am doing a lot of DIY home improvements which can be expensive. Purchasing lawn care equipment, tools, and other needed items to go from renting to owning accounted for a portion of those expenses. But that might account for maybe $5,000-$7,000 these last 12 months - roughly $500/mo. So where was the rest of the expenses coming from?

Mostly, it was from unchecked spending. I wasn't tracking my expenses. I had fallen back into the old restaurant habit, the quick and easy lunches, mindless amazon purchases, getting new gadgets... All sorts of things that people waste their money on!

So while I was helping others get their budgeting straightened out I realized I was not following my own advice. I dug my heels in and recreated a budget, looked where I was spending my money again and sat down and talked with my Fiance to make sure we were on the same page.

I had recommended a program called You Need a Budget (YNAB) to the folks I had been helping, but realistically I hadn't used it myself. I was going off the recommendations and accolades of others. I thought now was a perfect time to dive into this application myself! It is a fantastic program, though their method takes a little bit to get used to.

I have two tools at my disposal now and both will be vitally important to get back on track and kick my savings into high gear again:

YNAB is forward looking. Great for creating a flexible budget, planning ahead and figuring out how to get out of your debts as quickly as possible and see, every day, where your money is going.

Mint is best used as a rear looking application. It has the ability to set "budgets" yes. But it's real power is the automatic gathering of data paired with analytics. What is your net-worth trend? How much did you spend on automotive expenses last year? What was my investment growth? How much equity do I have in my home?, etc...

YNAB has allowed me refocus on every single purchase. It has made me painfully aware of where I am spending if for nothing else but their manual input process. No longer do I grab a cup of coffee and not even look at the price. I have to look at the price, input it and see my budget for "coffee shops" go down.  My budget for coffee shops is $15/mo by the way - that allows me a 'treat' on Fridays. If you still have debts, put that additional $180/year towards paying those off.

Tracking your budget is by far the most important thing you can do. Especially if you have bad spending habits you are trying to break. If I have a $15 a month budget for coffee, and I use Mint.com, I may see at the end of the month that I went over budget when I get a report or go in to look - and that's important to know - but with YNAB I input the transaction and see the "$15" budget line drop to "$11.27" for what I have left - while I'm still standing in the shop. It puts the number in front of you every time you make a purchase.

Tracking a budget like this - one transaction at a time - will make you painfully aware of where every cent of your money is going. You'll easily find where money is 'leaking' from your budget and why instead of spending $600 a month you are spending $1500+.