New Year's Resolution (Budget) Update!

Well, with everything going on lately with Jackson, I started to trail off a little on my budget tracking but got back on the horse this week because I really wanted to see what things looked like after not changing any spending habits, but just tracking how we spend and where. This was actually a really good distraction so it worked out well!

I actually did pretty good over the month of January keeping things updated until last week. Here is a little bit about what my system was and some lessons learned for moving into February.

• Set up budget tracking sheet starting from a template I found on Bank of America's website. You can read more about how I set up my sheet here.
• Set time aside every Monday and Friday at lunch to do a quick review of what we had spent/earned over the last few days.
• Monday's and Friday's seemed to work out well because we get paid on Friday's and it was easy to keep track of our weekend spending on Monday afternoons.

Lessons Learned from Month One:

• Lesson Learned #1: Do not put in any advanced payments or income in the spreadsheet until it actually happens. For example, we use online bill pay. It got a little confusing when I would "take credit" for paying a bill in the spreadsheet when it was just set up, as opposed to waiting until the money actually came out of our account. This made reviewing and tracking things a bit harder. The same applied for our income. I can easily look up how much my paycheck is going to be for the following week, but found that it was easier to track if I waited until the actual money was in our account to "take credit" for it in our spreadsheet.
• Lesson Learned #2: The more line items you add in the spreadsheet the better. I started lumping a few things together, but found as we spent money, they really needed to be broken out. I ended up adding 10 different "Unplanned" categories by the end of the month which helps me understand what exactly we spent money on.
• Lesson Learned #3: Use comments to make sure you remember important things. At the end of the month, it was clear that we spent more than we brought in for January (more to come on this) but our bank account didn't look all that bad because we ended up transferring money. That wouldn't have shown up in our spreadsheet unless I made a note. Ideally, we want to get to the point where transferring money is only an emergency kind of thing.
• Lesson Learned #4: I'm not sure I figured out the best way to do this yet but I need to find a better way to track any credit card purchases throughout the month. I mainly used our online banking that shows all of our accounts, including mortgage, etc. But we had a few out of the ordinary expenses (like surgery for Shamus) that we put some money on a credit card for. So unless we paid for something using our debit card, it didn't show up on our spreadsheet.

Okay, so I know this is probably really boring to most people and probably way TMI that you don't care to know about but I figured that budgeting is something that a lot of people struggle with (us for sure) so why not share what works well and what doesn't for us. My mom is probably freaking out thinking I am going to post all this financial information online, but I know better than that so don't worry mom....I'll be really general. Ha!

Observations/Notes for Month One:

• January was a "learning" month for sure. We had a few changes from last year that we had to wait and see how things shook out and we certainly had a few surprises along the way that we will hopefully get to avoid in some of the upcoming months (things like changing insurance companies so seeing exactly how that was going to affect our income).
• Our overall income was pretty close to what we were expecting but was a bit lower for the month because of our insurance changes.
• We had several expenses this month that we weren't planning for which ended up ultimately leading to our need to transfer some money. Things like:
• A huge emergency vet bill to cover unexpected surgery for Shamus.
• My student loan payment kicking back on.
• A big increase in medical bills (from December that hit in January) because of our multiple sonograms, which is exactly why we switched insurance plans.
• An unexpected car repair bill of almost $200 for a new windshield.
• But one good thing about spending more money then we were planning was because I paid extra on a few of our credit cards to get some small bills paid off before Daycare payment #2 starts. We actually do pretty good with credit card purchases, but tend to get a few small ones that just linger around. So although we spent more, some of the that money went to "good" as well.
• As far as how much we spent on our "normal" expenses versus how much I estimated was pretty close.
• Things like mortgage, line of credit, daycare, car payments, insurance payments, gas and electric, etc (the big hitters) were right on target.
• We didn't spend as much money as we were expecting to in a couple of places like cost of dog walking (because of snow days), tolls, Costco (diapers, wipes, etc).
• We spent more than our estimate in a few areas like credit card payments (where we sometimes made two payments in one month, or I ended up paying more to get rid of a payment), parking costs, gas and groceries (we were over $200 higher than our estimate here).

So where does all of this leave us? This exercise really helped me understand exactly where we are spending money and exactly where we need to focus on cutting back. So here are our focus items for February:

• Plan better or include estimate for home improvement (we spent $271 in January for new kitchen faucet, bathroom fixtures, etc)
• Plan better or include estimate for Birthday presents/gifts for family and friends (we spent $195 in January and I was surprised to see how high this expense got so quickly)
• Reduce purchases of the liquor store (we spent $106 in January at the liquor store which isn't terrible, but we could probably cut back here a little - sorry honey!)
• Reduce money spent on ordering food & buying lunch (we spent $238 in January so we could certainly cut out some expenses here)
• General purchases (we spent $314 in January on just stuff like at target, or baby clothes, etc). So we need to keep a better watch on those small store trips, because they can sure add up!

We have a better idea of what our income will look like in February but I need to go in and add some additional estimates for some of the "unplanned" expenses, and update some of our February estimates based on January actuals. I also need to figure out a good way to keep track of anything that we end up putting on our credit cards (hopefully nothing)!

If you made it this far...you deserve an award!!