Friday, July 31, 2009

The Benefit of Having a Plan - July Savings and Spending

Yesterday I wrote about my July income. The other part of the equation is comparing my spending and saving to my budget each month. Here's the breakdown for July:

In most areas I was right on target with my budget. This has been something I have been really working on a lot over the last year - not only figuring out the numbers, but also figuring out how to make it all work. I've written a lot about making finance personal, and gotten a lot of great comments in agreement from all of you on how budgets need to be customized to the person. There is no "one size fits all" budget. Of course, once you have a budget, it can't just be some sheet of paper that gets tucked in the back of the drawer - for far too long that is what I used to do. I'd make these great budgets and live with them for a month or two before I forgot about it or got bored with it. This past year I have found that my budget needs to be a living, breathing, changing document. It has to have the flexibility to fit with my circumstances, but also, I need to find ways to make my circumstances fit the budget.

A couple of examples are my Car Maintenance and Gift funds. Each month I was allocating a set amount to each of these areas, figuring that some months I would spend it, and some months I would save it and add the extra to my emergency fund. But you know what? Life doesn't work that way. Some months there are multiple birthdays, weddings and special occasions - other months have none. It is frequently feast or famine. I found that in the quiet months I would end up with extra in my budget but in the busy months I always ran short. Car Maintenance is the same way. There are months I don't need to do repairs, but on the months that I do it was almost always more than amount I was budgeting. It took me awhile to realize that what I needed to do was have small saving accounts for these items and have the amount automatically put into them each month. That way my budget comes out right each month and the money is there when I need it. This is working far better for me than the old system.

The other change, that I have mentioned before, is the use of the envelope system...

If you've been reading my blog you know that I've been trying an experiment of using the envelope system for Grocery and Home Improvement expenses for the past two months. These were tough areas for me, I had set budgets for them that I knew I could live with, but was regularly going over. The envelope method has helped a ton in this area! This month I spent all of my Grocery money, but I didn't go over. In my Home Improvement fund I actually have $26.00 still in the envelope!

But once again, this month I learned something about myself, or perhaps I should say I was reminded of something that I have known about myself - I am a planner and I work much better with a solid plan. Usually I make make bi-monthly menus and plan my grocery shopping accordingly. That way I always have a list of dishes I have all the ingredients for, ready to go. I come home, pick something off the menu and start cooking, knowing it will be something I like and that everything is at hand. This month was kind of a wonky month. For some reason I didn't make my menus, instead choosing to wing it. Not smart. I just don't improv that well, especially when I am busy. I spent all the Grocery money, but with very little left over and actually running short at the end of the month. It was fine, I mean I had food I could eat, but I had a couple days where I had to get a little creative there. That wouldn't have happened if I had planned better. So, tomorrow I plan on sitting down with cookbooks and menu planning pad and being a lot more organized for August. I will feel better, eat better and spend less.

Interestingly I not only spent all my Grocery money, but I actually went over my Dining Out budget. It was only by $22.14, but still. Some of it was that I was a bit more social this month, and I am totally okay with that - spending time with friends and family is important to me, but some of it was dining out because I didn't have a better plan. Again this goes back to the difference between knowing I have great food waiting to be made and served up, and having to come up with something on the fly with the weird ingredients I had on hand. Sometimes it seemed easier to grab a meal out. That's something I can fix by simply making a menu and stocking up on some healthy ingredients for quick on-the-go meals.

The other area I went over in my budget was my "Misc." category which this month paid for my haircut the other day and some expenses relating to the garage sale. Again, it was only by about $20, but with a little better planning, that could have been avoided.

However, I was able to save considerably in a few areas - my utilities were way down (I do the budget plan and they reset this month, giving me one month of gas that was prepaid,) and auto fuel was also low. My electric and cell phone bills were also lower than budgeted. That, combined with my home improvement excess, (minus my overages) means that I was able to save $192.37 this month! Money not spent is money saved baby! It will get added to my income meter on the right there and be moved into the House Painting fund. Sweet!

So, over all July wasn't my best month, but not the worst either. Some lessons learned, for sure. On both the income and the savings side, I am expecting August to be even much better.

Photo by: Djnn76


Angelica said...

That´s what I keep saying to myself, especially since I started tracking down my expenses and budgeting. If I, for instance, need to withdraw cash from my debit account, I´d rather plan when to do it, or I´ll have to withdraw in the first machine I see and pay extra. If I need to spend all day in the town, I need to plan what to eat, how and where, or I´ll end up spending far less than intended. I was going to write a post about it, yours is great :)

Dawn said...

Thanks Angelica - although you should write your own post too, I love reading other people's insights. I like your comment the atm - I have an account that reimburses me for fees now, but not that long ago I used to run into this problem on a regular basis.

Moonblossom said...

I have money taken out each pay day for these expenses and honestly what happens to me is I forget to take that checkbook with me when I go to buy those specific items I'm getting better but I used to forget it every time and end up using my debit card on our regular account. I also use a spreadsheet for these expenses only that someone gave me and I love it.

Dawn said...

Moonblossom - I could see how that would be frustrating! Fortunately I have everything on me pretty much all the time, my "envelopes" are separate pockets in my wallet. I've been using a spreadsheet too and I've been very happy with it.

Dee said...

I have been waiting all month to be able to post this comment!

I came in under my food budget by $3.97! Lol.

I just started reading your blog about two months ago (?) and read about the success you had by using the envelope method for your grocery budget. My budget is the same amount ($125), but I would always go over, sometimes by a whole lot.

So I took out the amount in cash at the beginning of July and have stayed under :) It was hard, but actually having to fork over the cash made me re-think food decisions.

Jessie said...

"My first piece of advice on menu planning is to be honest with yourself and make menus that actually reflect how you eat. Know your schedule and how long you will have to cook each night."

Great advice!

Dawn said...

Dee - That is awesome!! Good for you. In some ways you saved a lot more than that $3.97 - because you didn't go over. I am so glad it is working for you too.

Thanks Jessie!