There you have it, I’m a frugality blogger and I suck at budgeting. I sat down this week to set up my first budget in nearly two years (I’ll get into why I had a lapse-in-budget in a bit) and man, it was stupid hard, even for me. I’m really thankful to everyone that filled out the frugality survey I’m sending out this week (if you haven’t taken it yet, please do, it’s short and it helps a lot!)- I was probing for information on how to make this blog better and what topics would be most helpful around frugality, including thrifting, couponing, debt repayment, and yes, even budgeting.
Turns out, overwhelmingly, “budgeting” has stood out as the biggest frugal frustration for most of you, as well as the overwhelming topic you want help with, right behind dealing with debt. Holy cow- I am not the only one who struggles with budgeting!
On Sunday night, I sat down with my honey to go over my budget and I started to quickly realize two things- using a budget as a money system can be really overwhelming and confusing when you have fluctuating expenses and income. Additionally, I had the epiphany that I was terribly underestimating what I was spending in each category- namely, groceries and gas. I could remember what I spent on clothes and fun purchases pretty accurately (even with a vague figure) but when it came to gas and groceries, I was blissfully unaware of what things actually cost.
So, why didn’t I have a budget for well over a year? Back in graduate school, I had a very fixed income and was very fixated on managing my expenses. I didn’t have a car, health insurance and I wasn’t saving up for major purchases. I lived off of $800 a month and my budget while totally sucky, was easy to manage. Fast forward to graduation 2012- I was living off of irregular freelancing income, I moved across country, lived at home, sold off my stuff and both my expenses and my income were in constant flux.
Now that things have settled down in 2013 and both my income and expenses are somewhat regular, I noticed that the problems I was having each month wasn’t unpredictability with money, it was totally me. My money was predictable, I, on the other hand, was not. At the end of the month for the past three months I’ve been wondering where it went- I was making more, but spending more, but I couldn’t tell you where it was going.
This past weekend I set up a budget, and even if you suck at budgeting like I do right now- you have to set one up. Even a vague, underdeveloped budget will provide you great insights that you otherwise overlooked.
– You will instantly see where that “mystery money” disappears to each month.
– You will be shocked at how much things actually cost each month (I underestimated fuel by $75 and groceries by $100 a month, eek!)
– Even if you fail to meet your budget (which you will!) you will start to recognize patterns in your spending, and thus, your behavior.
– You will see exactly why you’re not meeting your savings or debt repayment goal and where to carve room into your spending.
So, how am I finally taking the reigns and not sucking at budgeting?
I’ve set up a budgeting spreadsheet in Google Docs that set up what I predict I spend each month in categories such as rent, gas, insurance, my Roth IRA, fun, groceries and dining out (I keep food in two separate categories since I’m going to be heavily tracking and attempting to cut my grocery bill). I chose to do this since I’ll be tracking both my spending and the spending the beau and I do for groceries, household items and big purchases/saves so we can both contribute to the doc from wherever we are.
So, after setting up my guesstimate of my budget, I set up my accounts in Mint.com and imported my credit card and banking data. I also set up a coordinating budget within Mint to match the guesstimates I’d made on my spreadsheets- i.e. $95 for gas, $250 for groceries, etc. That’s when the shock hit… at that point in the month (July 28th) I had imported all of my transactions for the month (it does so automatically, super simple) and it will plug those transactions into the parameters of the budget for each category, and within an instant I could see where I overspent.
GASP! LOOK AT ALL THAT RED. I still have adjusting to do with categories, but even my “generous guesstimates” were WAY off. Now I know exactly what I’m dealing with, where my money is going and mostly- I can confront the financial myths I tell myself when it comes to my spending.
Note: “Shopping” is one category I need to tailor since I haven’t edited the transactions and categories enough to be super specific. “Shopping” in Mint is currently set up to encompass my fun purchases, purchases from Target (which can include a ton of different budget categories), pet stuff and sometimes race registrations, so obviously I need to fine tune that and recategorize both my transaction classifications and the budget categories to be as specific as my spreadsheet is. (I originally thought doing broad categories in Mint would be helpful, but no, it needs to match my spreadsheets!)
I love using both a spreadsheet and Mint- Mint will add up all my transactions quickly so I don’t have to do the math, but I can still have a spreadsheet with individual pages to track my grocery spending and seasonal category spending like Christmas gifts and special trips.
I still have a lot to learn about budgeting, and this project is by no means finished. I have so much fine tuning and plenty of research to do to make this work month after month, but you’ll be hearing more about my adventures in budgeting soon.
-How to use the envelope system to budget your cash each month.
-Identifying key factors that sabotage your budget.
-More on my personal budgeting strategies (if you find that interesting enough to read!)
Please send me your budgeting questions in the comment section! What do you hate about budgeting? What is your biggest struggle in setting up or keeping a budget? If you choose not to budget, why not?
…yes, and as embarrassing as this is to share this with you, I’m glad I did. Even the frugal-est of us fall off the wagon, but we can all get back up!
Hi! I’ve been reading your blog for only a few weeks now (trying to motivate myself to run!), but I really want to suggest YNAB (You Need a Budget), if you or your readers haven’t already heard about it. (Sorry, I know you asked for questions and not for suggestions, but I can’t see someone talk about budgeting without referring them to YNAB! And I’m not affiliated, just a happy customer who’s already converted her mother and her boyfriend!)
It’s both a program and a method (four rules), and both revolutionized my way of managing money. I think it addresses many of the issues you’re talking about in this post: flexible income and expenses, undestimated categories… I’ve been using it for about a year now, and I’d never go back to the spreadsheet I was using before!
Honestly I think the method is worth a look even without buying the program. They have a great blog and a great forum. And OK I’ll stop now. 😉
Looking forward to reading more about budgeting — yeah that’s a nerdy sentence… 😉
Thanks for the idea Alynsie! I’ll look into it- my budget is a work in progress!
I’m horrible when it comes to tracking our expenses. I have a buffer in each budget category, but I’m sure if I tracked our purchases then I would be able to find some leaks.
Totally, budgeting is never a perfect art- but sometimes it’s a moving target. Good for you though for tracking!
Another budgeting tool that I’ve found helpful is EEBA (www.eebacanhelp.com). It’s an envelope budgeting system, so you “fill” envelopes for different categories at the beginning of the month and record purchases as the month goes on, deducting money from the allotted about in the envelope.
This system may not be everyone’s favorite, but I’ve found that having a set amount that I can spend per month in certain categories (clothes, restaurants especially) really helps me. Personally, I do better subtracting money I spend from the envelope than adding it up as in Mint.
Whatever tool you use, having a budget is really a lifesaver. I’ve been able to save so much extra money just by tracking my spending! 🙂
Awesome, thank you!
I feel ya with all that red. My husband and I have had a few expensive months (moving, buying a puppy, vacations). Now we need to buckle and stop spending money so frivolously. It’s hard, but I think we can do it.
Yes, it’s like cutting out sugar in a diet… painful but it gets easier once you get used to it!
Hi I have recently started reading your blog, I love ur ideas.
I call myself a frugal beginner so its nice to find ideas from others
I’m bad at budgets too. I’m bad at creating them and sticking to them. My excuse for the past two years has also been grad school and my income is always in flux. I need more consistent income so that I can do a better job at sticking to a budget.
I am in desperate need of a good budget! I have very little money and need to be able to see where every penny is going. It’s a difficult thing to get the hang of but I know I’ll get there! 🙂
Mint literally saved my life. It took me out of a big financial crisis. Sometimes you just have to literally see where your money goes to improve your spending.