Revisiting the Budget

I have been re-reading this book recently, just a chapter at a time. Some of the detail is not applicable as things like car buying in the USA are a bit different to the UK but the chapter I was really interested in was the budget one.

The last time I made a budget was July 2015 and prices have changed quite a bit, some things are down, like petrol prices and some things are up like car insurance and water rates so I thought it would be a good idea to re-visit the budget and update it.

We have a lot of different categories in the budget, 37 in total, which might seem a lot to some people, but I found that if I don't split it up that way then some things get forgotten and I also have a tendency to borrow from one category to make the expenses in another not look quite so large, yes, I'm thinking of last year's book spend !

One thing that the Economides do which I haven't done yet is that for annual expenses they put aside a monthly amount on paper to make sure that they have that amount saved up when the annual expense rolls round. I have been relying on the fact that as long as we are spending below our means and have the calculated amount to put away in savings then everything must be alright, even if I am exceeding  the budget in some categories. The folly of this was shown by last month's 700+ pounds car repair bill. We did have the money but it meant that we didn't hit our 50% savings target that month and just paying the expense because we have the money also does not show us when things are becoming so expensive that maybe it is time to cut our losses ( we have been wondering about this with the big car).

So from now onwards I'm going to add some sheets to the Excel expense account and track monthly amounts in each category. Traditionally this has been done using cash in envelopes but then you quickly end up with rather a lot of cash in the house and other members of the family might need a little cash loan which they don't tell you about ! So I'm off to add the sheets and let you know how we get on later in the year !

How do you budget ?