Wednesday, November 5, 2008

October Round Up - Money Tracking Revisited

Well, shoot. I thought I was doing so well in October, but after crunching the numbers, I didn't do nearly as well as I had hoped! Do you know what the problem is? I can't seem to keep up with my daily finance tracking.

So, here's the thing: I did really well in certain budget categories, namely utilities and auto fuel. I was under in electric, water and fuel and hit exactly on target for all the others. I also was under budget on entertainment, dining out and gifts. However, certain other categories got me: car maintenance (and the too expensive oil change), purchases for home improvement projects and that one that gets me every time, "Misc." This time it was a combination of Health and Beauty items, the fantastic conference I attended, and the books I bought to sell online. Each month it is something different for this category, which makes it hard to budget for. The only good news is that my over spending was less than it has been in other months.

What bothered me though, was that I was surprised by these over expenditures. Had I known I was doing it that would have been one thing, but I was actually blown away. For example, I knew I was probably over in the Home Improvement category - but not by as much as I was!! It is not that the purchases aren't worthy or that they won't help save money in the future; I bought landscaping stones to try to prevent a drainage problem, a hot water heater blanket, window seal kits for my tenant - all understandable purchases. The problem was that I thought I was $10-$15 over, when I was more like $40. I know what the problem is, of course, it is because I haven't been doing my daily spending tracking.

The problem is I am just not good at jotting down every expenditure; I forget or I put the receipt in my purse to add later or whatever. I just seem to have a mental block about doing it. So, when I crunched September's budget I carefully used my monthly bank statement to verify the numbers I had been keeping on my budget. I made a few adjustments, but overall it worked out well. So well, in fact, I decided to just use the monthly statement this month - BIG MISTAKE!

By not adding in my purchases each day, I just lost track. That step of taking my daily spending and putting it into the correct slot in my budget spreadsheet is a constant reminder to be frugal. Had I been doing it, I am sure that I would have purchased less or deferred some of the purchases to this month. So, I have a solution that I am going to try for this month. Pretty much every weekday I check my bank accounts online just to make sure things are running the way they should. When I do this, I am also going to have my budget spreadsheet open and handy so I can add the previous day's purchases. For the most part I pay for everything with a debit card and as fast as stores process purchases these days, I should be pretty up to date with everything.

The one hole in this solution is, of course, cash. Not quite sure what to do there, though typically I make very few cash purchases. I am just going to have to make a strong effort to remember them so I can add them to the spreadsheet. Big cash purchases are easy to remember - it is the small stuff (like parking meters) I forget. But then again, a parking meter or two isn't going to break my budget.

I am still pleased with October, however. My cash income was up nicely and I was able to make some changes that resulted in measurable savings. Overall I was able to spend less than I took in, which is exactly what I am looking for! Now, let's see how November goes, shall we?

Photo of his rent by: velo_city


Lise said...

*nod* This is a great argument for looking at your finances EVERY DAY. This is something I have issues with, too, and I inevitably look at my finances just in time to see them flying out the window.

Also, rather than having your books to resell go in "Misc," you might want to create an "Inventory" category. This was too you can see the return on investment you're getting.

Catie said...

I feel your pain! Been there. But now I cross-reference my online account with my budget every couple of days and it's much better. For cash, when I take cash out I note it off to the side of my budget.... that way even if I don't remember every single purchase I at least know I took it out and I can look over receipts. No more surprises, that's my goal!

(having said that..... I had surprises in October too. I am cutting myself some slack because I had an out of town conference, a bachelorette party and a wedding...)

Dawn said...

Lise - In my budgeting software I do have it marked as an inventory expense. However, I put it in the Misc field in my planned monthly spreadsheet because that purchase was kind of a one time thing, one of those opportunities that was too good to pass up. I don't know that my selling books online hobby is going to be a regular thing yet so I am not ready to make purchasing inventory a regular part of my monthly spending.

However, I do track where all my books come from and keep records of which books sell, so I can easily see ROI, but those are in different spreadsheets.

I have found that I need to both check every day as you suggest, but also keep a running total. I was checking each day last month, but what I didn't see was how those little $10 - $20 Home Improvement expenses were adding up! yikes!

Dawn said...

Catie - thanks for your note about cash. I did that for the first time this month because since I was using only my monthly statement - I had NO idea where that cash went. I think that is a good idea though. If I take cash out for a larger purchase - the $27 I took out for Torch Club for example, I can put that in a category but the other $13 (since cash now only comes in $20 increments) I could put in the cash column off to the right.

And yeah, you had a very expensive month this month! Definitely cut yourself slack - it was just one of those months where a bunch of things hit at once.

Mary@SimplyForties said...

I understand parking meters but wouldn't you get receipts for most of your cash purchases, which could then be used to do your daily expense tracking? October was a tough month for me too. Doesn't say much for the looming Holiday season if we're all falling apart in October!

Anonymous said...

I just found your blog. Good luck on the house payments. It's got to be hard doing it alone.

Dawn said...

Mary - Yes. You are absolutely right. But then the problem seemed to be putting the receipts in a place I would remember them... then remembering to enter them into the daily tracking log. Both of those seemed to be an issue. The other one I ran into was the farmer's market, which is where I try to buy a fair amount of my fresh produce. No receipts there and I always forgot how much I spent.

I actually have my Christmas budget set - now I just need to get lists from the family so I can start shopping early for good deals! But I am with you - lets hope November and December are a bit smoother than this month!

Dawn said...

Moving on up! - Thank you so much for stopping by! I appreciate your good wishes!