Monday, October 10, 2011

September Budget Review

After you create your budget, do you take the time to go back and review to see where you actually ended up compared to where you wanted to be? It's a good idea to do this on a regular (monthly) basis so that 1) you can see whether you are sticking with your budgeted goals, and 2) determine if any of your budget line items need to be altered. Let's take a look at our September 16-30 budget to give you a bit of practice.

Recurring Budget Items
First up are the recurring expenses - these are expenses we pay every month and can reasonably estimate what the cost will be (rent, utilities, food, gas). As you can see, we overspent in the food category by quite a bit but were way under for gas (yay working from home!). Overall we were about $55 under budget on recurring expense items. If you find yourself way over or way under on an expense item that should have little to no variance in cost every month, think about changing your budget to better reflect these recurring items It may free up some money that you could put towards another budget item.

Non-Recurring Budget Items
 Non-recurring expense items are a little more difficult to deal with. They may include unexpected expenses such as a car repair, one-time expenses such as your dog's birthday present (guilty), or any "splurge" items you buy during the month that shouldn't be included as a recurring item (Groupons). As you can see we had quite a few non-recurring items in September. Both car registrations were due and we decided to splurge on a Groupon for a bartending class for Mike (potential career move???). We also transferred my post-tax bonus amount to our savings account. Finally, we had some personal expenses (haircut) and some medically related expenses (that parking money is because Mike has to pay to park when he goes to physical therapy- which just seems lame to me).

How Did We Do?
Overall, we were right in line with our recurring expense budge, but one area we need to try to keep more in check is the food line item. This period we did go out to eat a few times when we felt busy and hadn't properly prepared for food during the work week. To reduce our expense, we really need to plan our meals for the week and create a Sunday shopping list for these meals. We have found that when we go to the grocery store multiple times during the week we end up not shopping with a list, buying "extras" and spending more.

As far as the one-off non-recurring items, we need to better determine if the purchase is truly necessary - wants vs. needs. We definitely had a few items we could have done without or tried to spend less on. Duke's $25 toy wasn't too necessary even though he did turn 10 this year which is a huge milestone!!!

Overall Budget Grade - B

Upcoming Challenges: We are swimming in medical expenses right now with one of use recovering from surgery and the other trying to find alternatives to surgery but most likely preparing for it in the near future. This is one of the reasons we have started an emergency fund because we are aware that medical expenses could be a large part of our budget over the next 3-6 months.

Successes: Despite some unexpected and pricey vet bills in early September and some one-off expenses that couldn't be avoided, we are happy to report that we are paying cash for everything. We don't really feel like we have very much money right now since it is being eaten up by these one-offs. But a few years ago many of these items would have gone right on the credit card. Progress!!

Stay tuned,

Do you do a monthly review of your budget and compare it to what you actually spent? Do you get any value out of an exercise like this? Do you use any more automated ways (like Mint) to do your analysis? Send your suggestions our way!!
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