Tuesday, January 8, 2008
Today's Tip: Be Thorough!
Does your budget have a "Miscellaneous Expenses" line item which is budgeted at between
$250-$500 a month? While it is good to budget that there may be purchases out of the
ordinary that pop up every month, inserting one "catch all" expense account might not be
the ideal way to monitor those costs.
Think about it: what is the purpose of budgeting? Not only is the purpose to track where
expenses are essential and which expenses are expendable.
To clarify a bit further, your budget probably includes items such as your mortgage
payment, car payment, student loan payment, and credit card payment. Your utility bill,
phone bill, and cable bill are also likely going to be on your budget. Other than the core
items, what else is on your budget? Have you included such items as your property taxes,
vehicle registration, and home insurance costs? If you are like most Americans and pay
these out of pocket once per year, this can be a significant alteration to your monthly
budget. If you are not budgeting these accordingly, these costs will fall into that
"miscellaneous expense" category, and that doesn't portray an accurate picture of your
personal financial situation.
If you dine out regularly, you should include a "dining out" expense account to your budget.
Track these expenses separately - this way, if you are looking to trim the fat of your
budget, you can quickly look to areas such as these to see where you can save money. If
you look at your budget and cannot see how you can save money on a monthly basis (it's
not like you can cut out your mortgage payment), your budget is probably too broad and
will not help you in your efforts to free up some discretionary spending. By elaborating
prior to the onset of the next month, you will be setting yourself up for success, and will be
on track to stick to your New Year's Resolution...as opposed to putting it off until next year.
Have you downloaded the free budget yet? Our free budget spreadsheet is updated for
2008 and features a monthly account tracker and budget form!
Does your budget have a "Miscellaneous Expenses" line item which is budgeted at between
$250-$500 a month? While it is good to budget that there may be purchases out of the
ordinary that pop up every month, inserting one "catch all" expense account might not be
the ideal way to monitor those costs.
Think about it: what is the purpose of budgeting? Not only is the purpose to track where
expenses are essential and which expenses are expendable.
To clarify a bit further, your budget probably includes items such as your mortgage
payment, car payment, student loan payment, and credit card payment. Your utility bill,
phone bill, and cable bill are also likely going to be on your budget. Other than the core
items, what else is on your budget? Have you included such items as your property taxes,
vehicle registration, and home insurance costs? If you are like most Americans and pay
these out of pocket once per year, this can be a significant alteration to your monthly
budget. If you are not budgeting these accordingly, these costs will fall into that
"miscellaneous expense" category, and that doesn't portray an accurate picture of your
personal financial situation.
If you dine out regularly, you should include a "dining out" expense account to your budget.
Track these expenses separately - this way, if you are looking to trim the fat of your
budget, you can quickly look to areas such as these to see where you can save money. If
you look at your budget and cannot see how you can save money on a monthly basis (it's
not like you can cut out your mortgage payment), your budget is probably too broad and
will not help you in your efforts to free up some discretionary spending. By elaborating
prior to the onset of the next month, you will be setting yourself up for success, and will be
on track to stick to your New Year's Resolution...as opposed to putting it off until next year.
Have you downloaded the free budget yet? Our free budget spreadsheet is updated for
2008 and features a monthly account tracker and budget form!
My Financial Profile - MyFinPro.com
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