I feel like a fraud. This month marks my first anniversary here on Financial Highway, a site that upholds the virtues of handling your money responsibly. And what’s one of the key tenets of responsibly handling your money? Why, budgeting, of course. And, for the past year, I haven’t had a monthly budget – or any budget – in my household. Nothing. Nada. Zero.
Prior to 2012, I’d always been a fervent budgeter. Living on a budget was a way of life for my family and me. I kept track of my expenses, using a conglomeration of data from my credit card website, my online banking account, and even physical receipts. Each Friday night, when most people were out enjoying the end of the work week, I’d sit down in front of my computer, open my Excel spreadsheet, and log each penny we’d spent over the past seven days. I used our expenses from one month to set expenditure goals for the next. I looked for month-to-month and even year-to-year spending trends. I was on top of it.
Then, virtually overnight, I stopped. I went cold turkey on my spreadsheets, abandoning them as I watched my earnings increase. Now that my family was no longer living paycheck to paycheck – now that we finally had some breathing room on the financial front, I no longer felt compelled to actively budget.
And so we spent. And spent, and spent, and spent. Although we were able to make some extraordinary financial accomplishments in 2012 – fully funding my Roth, adding to all our other investments, paying off a car loan and the rest of my student loans, taking our daughter to Disney World, and setting aside $15,000 for a down payment for our next home – I’m perfectly aware that we also spent thousands of dollars unnecessarily, the result of failing to live on a budget.
So this is me finally getting us back on a budgeting course. Instead of living on a bare bones budget like we did in our paycheck to paycheck days, this is going to be a more mature budget that includes allocated “fun money” and more than a little wiggle room. I’m also eschewing Excel once and for all; it was too time-consuming and not nearly streamlined enough. Instead, I’ll be using Mint.com, a free website that tracks your spending and helps you set goals.
Over the next several weeks, I’m going to be talking a lot about making a budget here on Financial Highway. I’m going to bring you in to the budget-creation process for my family, the highs, the lows, and everything in between.
It may be a painful process. Learning to rein it in is going to be tough for my family, as we readjust to living on a budget after nearly a year of unbridled spending. But it’s a process we need to undertake. I hope you’ll come along.
Reader, do you currently have a budget? What do you find the most challenging aspects of making a budget?