Sunday, January 02, 2011

Budget Tricks & Trip Ups

I'm not a big one for New Year's Resolutions. I make resolutions constantly. New College Semester Resolutions. New Exercise Routine Resolutions. New socks resolution. It doesn't really take much. And, I rarely stick to them.
This year, on New Year's Eve, I visited the library and got some books on budgeting. I hoped one of them would hold the secret that I am searching for. It's not the secret of how to plan a budget. That, I get. It's how to stick to the budget.
I've asked this question probably three times in the past week and my husband answers me the same way, as if I haven't heard or comprehended what he is explaining to me.
"You look at what you spent the past year and you include those expenses into your budget."
Yeah, I can plan a budget like nobody's business. Give me the state budget and let me slash it. Give me the federal budget. I'll balance it on paper in half a day. It's the actual implementation that trips me up.
Lest you think I'm in this alone, I should point out that although I plan the budget and pay the bills each month, my husband balances the checkbook. Again, on paper, we should both know about all the money coming in and going out.
We keep our expenses on Quicken, so when I click on "Plan Budget" then name it Budget 2011: Wham. The suggested budget plan appears. It suggests things like $200 per month on eating out and $154 a month on travel. Well, obviously, we can cut those down.
It also includes clever things like "Business Expense $48" and "Business Expenses $54." Apparently, I have two categories that I need to add together.
Going through and weeding out expenses like "Gifts" versus "Gifts Given" is no problem. As a matter of fact, once whittling down the categories and some of the miscellaneous expenses, I end up with more money than I had planned to save.
That's on paper though.
Here's the tricky part. I pay car insurance every six months. So my budget suggests I save $89 per month for car insurance. How do I save that though? Do I have a separate savings account for each bi-yearly bill? At the end of each month I should be saving for life and car insurance, along with the water bill and recreation expenses, like swim team and basketball shoes. Quicken averaged out my monthly utilities, but right now I'm in the expensive season for gas and electrics. You can see how it all starts to get muddled together.
I did figure out a few things about budgeting though.
Budgeting is easier right after a gift-giving event, like Christmas or a birthday, because I am restocked on all of my expensive creams and lotions. My budget should definitely stick until I need to buy more.
A budget should also be easier to stick to if I underestimate my income, so every month or twice a month when those pay checks come in, I have a little bonus (to spend on those Aveda creams and lotions when they run out).


Sheila Terry said...

one easy way to put aside each month for the bills that you only need to pay every 6 months or so is to write out a check for that months contribution. Then keep all the checks in an envelope. The money is still in your checkbook but it's been assigned to that bill. An even better way would be to deduct it from the register as if you've written a check, then just make a note on the envelope that you put aside the money (not actually wasting a check on it.)

I put aside my first 20% into savings, oh my that was a lot more than I considered. Good thing I've given up buying new stuff for 2011, with 20% going into savings that may have to include food also.

Sheila Terry said...

Oh I forgot another idea, why don't you call the gas and elec companies and switch to the monthly budget option, then you pay the same each month, much easier to budget that way. For some reason my gas is set up on a budget but not my elec, maybe I should call them too.

Michelle said...

have you tried a "set aside" account for the non-monthly expenses in combination with an "emergency account"? Using these accounts with quicken's calendar works well for me and is what I use in my consumers math class.
BTW - I know that my students "get" finances when they start to groan and complain about their budgets. ;)

Paulita said...

Sheila and Michelle, Thanks for the great tips. I'm trying to get rid of check usage, so maybe I'll just subtract it from my account or try the "set aside" account on Quicken if I can find it. I knew someone would know how to do this. Michelle, Can't wait to hear about your trip to France. Want to guest blog?

Michelle said...

Sorry I wasn't clear in my explanation Paulita. Quicken doesn't have a set aside account feature. What you can do is open a separate account where you deposit the monthly budgeted amount for insurance, taxes, etc. When you need to pay the bill, transfer the amount to your checking account.
Hope this makes more sense.

Thanks for the offer to guest blog. I'll have to pass, I'm finding I have commitment issues and just promised my business blog I would give it another France will be stories shared with wine, camembert, and 2000 photos via Alyse.
I thought of you often while in Paris, had a wonderful time, AND lost 4 pounds!! Booyaaah!

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