The Dreaded B-word... Budget

I've been doing a little crash course in finances. I've been reading books and watching YouTube videos by Canada's financial guru - Gail Vaz Oxlade. Gail is to Canada what Suze Orman is to the United States.

I posted a blog a few weeks back on one of Gail's books, Money Rules. I gobbled up the book and am now working my way through another one of her books - It's Your Money.

One of the things that Gail stresses is that everyone (that means you... and me) needs to keep track of our money. We need to know where we're spending our hard-earned dollars.

I have to admit, I sort of went "Yeah right. I know where my money goes. I'm always under budget." I had done a rough budget based on my monthly disposable income, and I figured I was good. I am not one of those Money Morons.

Right.

I decided I wanted to participate in a financial challenge Gail had set up called My Money, My Choices. Easy peasy, I thought.

Not so fast! The first step was to do a spending analysis over the space of 6 months. Oh bugger. OK, fine... I decided I would go through all of my account and credit card statements from 2014 and track where I had spent my money. That would count, right?

It took a while... but I managed it. A beautiful Excel spreadsheet that detailed all of my discretionary spending in 2014 (joint household spending is a whole different critter, in another file/spreadsheet and much better organized).

So... there I sat... and was rather stunned by the numbers. Gulp. I seemed to be a... a... Money Moron!

I had overspent my disposable income by... get this... 150%. Uh-oh. Not only that... most of the excess came from a little category called Cash. I have watched enough "Til Debt Do Us Part" and "Princess" shows to be able to hear Gail's voice in my head... "We have NO idea where that cash went!" Nope... not a clue. I think some went to Starbucks, but the rest... not a friggin' clue!

Oh boy... I was in big trouble.

OK, OK... fine. I buckled down and for the last week or so, I've been working on coming up with a realistic budget.

I use two tools for this. An OpenSource accounting program called GnuCash. I created virtual sub-accounts to tuck away budgeted amounts. I keep track of what's in my various accounts. I keep track of how much I've spent in the various categories in a month. It's a rudimentary program (it doesn't link to your online accounts - you have to enter everything manually) but I like it.

I also have an Excel spreadsheet where I do the pretty colours (I like colours) and get a nice overview of my budgeted amounts and my monthly expenditures at a glance. I've got a few fancy calculations that let me know how I am doing in each category. Perfect.

As for "cash"... I am tracking that down to the last penny. Except we don't have pennies anymore, so I guess you could say I'm tracking that down to the last nickel! If I spend $1.95 cash on a Timmies coffee... that goes into GnuCash and eventually into my spreadsheet. If I spend $3.62 for a Starbucks hot chocolate (off my Starbucks Gold Card), I deduct that from my Gold Card balance in GnuCash and update my spreadsheet. I generally update my cash expenditures daily (otherwise I'll forget) and my credit card expenditures every three days.

Based on my 2014 numbers, I obviously had to rejig my original "rough budget". [Is there actually such a thing as a "Rough Budget" or is that an oxymoron?] I took a look at my 2014 averages and implemented some serious cuts in most of the categories (Starbucks and Books took big hits). So far it's going well.

Now, a confession. When I was a kid, I had a piggy bank - not a piggy... just a metal tin with a slot on top and a tiny padlock. Every week, I would empty everything out and count how much was in my piggy bank. I knew what I had in resources, down to the last penny (we had pennies back then). My Mom used to call me "King Midas in her Counting House".

I'm not sure what happened between then and now. Most likely, because I've always had more than enough disposable income, I never really felt a need to keep track of things. But now, being on a more restricted income, I need to track things more closely. Actually... Gail would say that everyone needs to do a spending analysis - whether you have tonnes of money coming in or not. I would agree...