November 2008 Financial Update
I usually combine this data with my net worth report, but I’ve decided to discuss it in a separate post. I was going to wait until the new year before doing it this way, but why wait. Here goes…
Net Income:$7,694
Total Expenses: $7,100
- Saved: $1,611
- Bills: $2,036
- Necessities: $470 (only $105 spent on gas this month!!)
- Non-necessities: $989
- Holiday – new category: $357 (within budget, only $143 left)
- Business: $1,637
Net Cash Flow: $594
I evaluated my income/expenses against the new financial strategy that I established in mid-October. Here is what I was supposed to do compared to what I actually did.
Income: Based on my strategy, income should round down to the next $10 or $7,690.
Savings: Based on my strategy, savings should be at least 25% of my net income. Which means, I should have saved $1,923 so I fell short by $312. However, with $594 in extra cash flow, I could have transferred $312 to savings at the end of the month, but I wasn’t thinking about finances while spending the holidays with my family. I’ll do it right now.
Bills: Based on my strategy, bills should never be more than 35% of my net income. My bills account for 27% of my net income so I’m good.
Business Expenses: no data in strategy.
Variable Expenses: Based on my strategy, combined variable expenses should not exceed $1,000. Shoot, my non-necessities category eat up that limit all by itself! LOL! If I include necessities and holiday expenses, it’s clear that I get a big ole’ “F” in this area.
This new way of managing my income and expenses is fairly new to me, so I need a little while to adjust. For now, the important thing is to remember what I said I was going to do and make note of how my actions compared. As a result, this exercise has helped me to understand where I’m doing well and where I need to improve. By recognizing “variable expenses” as my problem area, it tells me that I need to evaluate these expenses further and figure out where I can reasonably cut back. After the holidays are over, this is one area I’m going to focus on with a lot more vigor.
Do you track your expenses and evaluate them at the end of the month?
If no, why not?
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I absolutely track my budget on a monthly, sometimes weekly basis. It’s how I’m able to stay focused on my goals and make any necessary adjustments. It also allows me to see progress and stay encouraged, or see where I’m messing up and think about why it’s happening.
I just started. I never did it before because … well, I just didn’t. I’m starting to now because my pay cycle has changed to once a month which is going to force me to be less frivolous with my spending. I hope.
I’m slightly obsessed with tracking expenses and managing my budget. I do this pretty much once a week.
I do something similar to your new system. I have some categories that stay constant – saving 34% of income, spending 40% of income on fixed and variable expenditure. Next 20% goes towards paying down my debt and 6% goes into my parking ticket fund – essential if you live in London and have no parking. This works for me, for now.
Yes I do with http://www.mint.com, I’ve been doing this for a little over 4 months. I haven’t been as disciplined as I should be. The only thing I haven’t done is to track when I take Cash out, what I’m spending that on. So i need to track that. I may have to start carrying a small notebook with me to write things down.
No, I don’t really evaluate my expenses at the end of each month. I get paid every week, and I balance my check register that often. I don’t really have a lot of variable expenses. Everything goes to savings and bills. What little discretionary income I leave myself after savings and bills is expected to go towards incidentals, and it rarely exceeds 10% of my income. I know where my money goes, ’cause I’m looking at it once a week.
I don’t track my expenses. I think maybe its just laziness on my part. I have in the past with software and just got overwhelmed. I set aside amounts and when its gone, its gone. I’m a full-time student so I’m not bringing in much and I’m not really wondering where my money is going.
I used to track pretty obsessively, with extra notes in my scheduler to record what I spent that day. Now I just total up the daily spend per week, about once a month to make sure the spending is still low. My current obsession is lowering the monthly bills, and increasing cash flow so that I can save more regularly in addition to the large chunks I set aside quarterly. (The quarterly thing is weird.)
@SM, your savings are your assets, they really should not be classified as expenses, but that is an accountant talking, if you are comfortable with the way you classify your savings as expenses then by all means, do as you wish.
This isn’t a balance sheet or net worth calculation with assets and liabilities. I consider this a modified version of an income (or cash flow since the time horizon is shorter) statement. It is an evaluation of my income/revenue (money coming in) and expenses (money going out). Even in business, when money is invested in a new venture, it is tracked as an cash outlay. [-SM]
Yes ma’am, evaluating my expenses is a must. Based on my evaluation at the end of November, my living expenses are only 36% of my net income. You’re at 27%, that is so awesome!!
No, I don’t track my expenses on a monthly basis. The only thing I track is my personal (my money) savings rate. With how I have set things up,if it is where I expect it to be, then I know the other things are under control. This works for me now, but I have done the intense tracking in the past and it was useful at the time.
I track my expenses and income using a spreadsheet I’ve created over the last year or two. Out of all the programs out there, I find this works best for me.
you right, I think I was half asleep when I wrote my comment, it was 3 in the morning, I have a feeling I woke up from a nightmare involving my work and wrote this :-)
@SGM – I find that a spreadsheet works for me too. Mine is pretty simple but it stares me right in the face every time I open it. I track expenses daily right now. Obsessive but necessary.
I used to rigorously track everything against my budget. I would routinely go over in some budget categories and offset by going under in others, so now I dispense with the work of budgeting and just ensure positive overall cash flow.
However, I rigorously stick to my savings goal: save 50% of my net income each month in 401K, after-tax Roth, and liquid savings accounts. This amounts to a little less than saving a full paycheck each month, since 401K contributions come out of my gross income.