Author Topic: Plugging the budget leaks.  (Read 6283 times)

socaso

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Plugging the budget leaks.
« on: May 21, 2014, 11:32:15 AM »
I don't intend this to be a case study which is why I'm including none of my budget information but every month when I go over the receipts I get so frustrated because I just can't figure out where some of the money is going. I wondered if anyone out there had any clever ideas for finding those pesky budget leaks?

matchewed

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Re: Plugging the budget leaks.
« Reply #1 on: May 21, 2014, 11:33:56 AM »
Use Mint?

Increase the frequency of your review until you narrow down the gap.

AccidentalMiser

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Re: Plugging the budget leaks.
« Reply #2 on: May 21, 2014, 11:35:42 AM »
Are you using Mint or YNAB to keep track of your spending?

Going through receipts at the end of the month is akin to performing a financial autopsy.  It may help you figure out where you messed up, but it doesn't help prevent the "crime" in the first place.

Sounds like you need to develop healthy money habits that head off the wasteful spending before it starts.

face-punched

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Re: Plugging the budget leaks.
« Reply #3 on: May 21, 2014, 11:37:34 AM »
I would say that the best place to start is by asking if the only method you are using to track your budget is with receipts. As matchewed mentioned, mint is a decent place to start, since it links all of your accounts to one place, however it will/can only track what is spent via debit/credit/atm withdrawal. If you are spending cash frequently, something like YNAB might be a better fit. Mint is what I would recommend to get started, since it has much less input, but my wife and I are going to give YNAB a try since we want to progress in our responsibility in day to day tracking of spending.

socaso

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Re: Plugging the budget leaks.
« Reply #4 on: May 21, 2014, 12:01:17 PM »
Use Mint?

Increase the frequency of your review until you narrow down the gap.
I do use Mint and it has been helpful but one issue we have is that we pay a lot of expenses in cash that we collect from tips so putting those expenses in Mint is an extra chore that I don't often get around to.

matchewed

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Re: Plugging the budget leaks.
« Reply #5 on: May 21, 2014, 12:05:00 PM »
Use Mint?

Increase the frequency of your review until you narrow down the gap.
I do use Mint and it has been helpful but one issue we have is that we pay a lot of expenses in cash that we collect from tips so putting those expenses in Mint is an extra chore that I don't often get around to.

...

I don't intend this to be a case study which is why I'm including none of my budget information but every month when I go over the receipts I get so frustrated because I just can't figure out where some of the money is going. I wondered if anyone out there had any clever ideas for finding those pesky budget leaks?

... um, I don't mean this to sound mean but get around to it then or stop paying with cash and put that money in your bank?

face-punched

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Re: Plugging the budget leaks.
« Reply #6 on: May 21, 2014, 12:06:44 PM »
Use Mint?

Increase the frequency of your review until you narrow down the gap.
I do use Mint and it has been helpful but one issue we have is that we pay a lot of expenses in cash that we collect from tips so putting those expenses in Mint is an extra chore that I don't often get around to.

I used to be a server/waiter, so I can sympathize. I would suggest depositing the money in the bank instead of keeping it as cash so it can be tracked. When you keep it as cash, not only is it harder to track spending, there is also the (though somewhat unlikely) possibility that you physically lose it. I know it sounds unlikely, but I bet everyone here has at least once found a $5 or $20 bill in a pocket you forgot about.

cochranjd

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Re: Plugging the budget leaks.
« Reply #7 on: May 21, 2014, 12:13:42 PM »
Your problem is a lack of information on your spending.  Your lack of information is because you make/spend a lot in cash.  To get the level of information you want, you're best bet is to get out of the habit of spending cash. 

I use YNAB and every morning, I go through and update each account by logging into the bank's site. 

Create budget categories that are specific enough to be meaningful, but broad enough to be manageable (i.e. not so specific that you are unable to accurately estimate each category each month).

At the end of the day, if you get out of a cash-based system and start tracking each transaction, there is no way to go over budget and not know why.

swick

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Re: Plugging the budget leaks.
« Reply #8 on: May 21, 2014, 03:25:56 PM »
I would definitely be tracking that cash. I know in Canada at least, you have to report it as "other earned income" especially if anyone else at your place of business does report their income...if they check a business out, they will often flag for audit  employees if some employees file and some don't.

It is much easier to spend cash, and harder to budget if you don't know what is coming in and out. Lots of my friends view their tips as "extra" money that doesn't count and are easily blowing thousands of dollars a month without realizing it because they don't know what they bring in or what they spend it on.

catccc

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Re: Plugging the budget leaks.
« Reply #9 on: May 21, 2014, 03:42:41 PM »
Like others have said, get in the habit of depositing all your cash.  Or, you can probably find a really basic app to track cash spend, perhaps if it is really simple you'll be more likely to enter transactions (as opposed to sitting at a computer with mint.  I guess they probably have an app, but I don't know what it is like.)  Unless you have other budgeting needs, I wouldn't pay for YNAB just to track cash.

Eric

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Re: Plugging the budget leaks.
« Reply #10 on: May 21, 2014, 04:03:48 PM »
I use cash often.  I also update my spending tracking daily (as needed).  No need to wait until the end of the month.  Then it becomes a chore.  Updating spent money the same day takes like 2.4 seconds.

galliver

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Re: Plugging the budget leaks.
« Reply #11 on: May 21, 2014, 04:19:18 PM »
Do you always take/stash your receipts? Does everything you spend money on provide them? Do you have a central repository for receipts so they don't end up running around everywhere?

I think tracking money is always an "after the fact" sort of thing, separate from the budgeting one does in advance. Unlike Eric (^) I hate doing "3 minute per day" type tasks, I'd rather sit for an hour and go through it once a week/month. Although I mostly spend on a card, I've been keeping my grocery and shopping receipts so that at the end of the year I'm not like "when did I buy  $3k of stuff" or "why am I spending so much on food!" I don't do it for other expenses because certain vendors are pretty self-explanatory ("netflix," "zipcar," "Sushi place," etc)

From the standpoint of budgeting, if you prefer to use cash (and some people find it "feels" more like spending money than cards do; there have been discussions of this and why it is on this site before), anyway, if you prefer cash, you could try an envelope method? Give yourself a certain amount for a certain category per month or per week, in an envelope (or file folder) and ONLY spend that money on that thing. Works for some people, but like all systems, only if you don't cheat! :)

agent_clone

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Re: Plugging the budget leaks.
« Reply #12 on: May 22, 2014, 05:32:06 AM »
Like others have said, get in the habit of depositing all your cash.  Or, you can probably find a really basic app to track cash spend, perhaps if it is really simple you'll be more likely to enter transactions (as opposed to sitting at a computer with mint.  I guess they probably have an app, but I don't know what it is like.)  Unless you have other budgeting needs, I wouldn't pay for YNAB just to track cash.

For a basic app you could try TrackMySpend. https://www.moneysmart.gov.au/tools-and-resources/calculators-and-tools/mobile-apps/trackmyspend .  You manually enter what you spend in it.

nikki

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Re: Plugging the budget leaks.
« Reply #13 on: May 22, 2014, 05:40:39 AM »
I use cash often.  I also update my spending tracking daily (as needed).  No need to wait until the end of the month.  Then it becomes a chore.  Updating spent money the same day takes like 2.4 seconds.

This.

I record expenses as soon as I get home. If I'm out of town or won't be able to access my Excel spreadsheet, I jot down all of my expenses on the same piece of paper. Then it's all there on one sheet of paper to record as soon as I can.

Ottawa

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Re: Plugging the budget leaks.
« Reply #14 on: May 22, 2014, 06:14:48 AM »
I use cash often.  I also update my spending tracking daily (as needed).  No need to wait until the end of the month.  Then it becomes a chore.  Updating spent money the same day takes like 2.4 seconds.

Yup, update transactions every night on my own spreadsheet.  I use mint.com to extract the transactions.  Takes roughly 2.5 seconds (hey, I'm obviously slower than Eric).  Also, it keeps your spending fresh in memory...rather than it being some vague thing in the past by the end of month.  This helps to keep the pain of spending money fresh...which reinforces critiquing all purchases.

Thegoblinchief

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Re: Plugging the budget leaks.
« Reply #15 on: May 22, 2014, 07:21:17 AM »
I always get receipts, even for cash. Once you have the habit, writing it down on a sheet of paper in the fridge takes no time at all. I find this a lot faster than sitting at the computer to record (I only record the monthly totals in Excel for averaging).

Another budget leak would be how you save for intermittent expenses, like car repairs and whatnot. Non-monthly bills can also be a hiccup until you remember which quarter they fall in.

Mint Chip

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Re: Plugging the budget leaks.
« Reply #16 on: May 22, 2014, 07:25:27 AM »
Our "leaks" dried up as soon as we became proactive with tracking our spending, instead of reactive. For each pay period, we decide - before we spend a dime - how we are going to spend the money, and then we stick to that plan. It is our road map for the month. We no longer wonder where our money went, because we tell it exactly where to go.

Keeping track of your spending after the fact serves to give you an idea of where your money went, but the key to plugging the leaks is to plan in advance where your money goes each month.

YNAB has been a great help for us in this regard.

Good luck!


AlexUK

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Re: Plugging the budget leaks.
« Reply #17 on: May 22, 2014, 07:28:34 AM »
As many others have said, writing it down after every expensive helps massively.

I currently have a Google Doc which I've been working on over the last few months that has a sheet for each month, it totals up all income and expenditure categories (with notes next to each expense as to what it is). Everything that goes in or out is recorded pretty much straight away (especially if it's cash). I have a 'cash' part in the budget, but if I take cash out for a certain reason or expense it goes into it's own part of the budget (for example, I take 10 to get a sandwich, that 3.50 goes into 'Work Food' and the 6.50 left over goes into 'Cash'). That will then be deducted from 'Cash' if I put it into something else and redistributed to the correct category - or it'll go into the change pot for redepositing later on.

At the end of the month I make some graphs having a look at where the money is going and if one category seems to be way over budget I can flick back through the list and see exactly what I've overspent on.

It does take a bit of extra work, but it'd definitely worth it - although this month hasn't been great it has helped me cut down massively in other areas. It can also be updated at work/on my phone if I'm out and about.

Pixelshot

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Re: Plugging the budget leaks.
« Reply #18 on: May 22, 2014, 07:59:03 AM »
A couple of simple tricks that have helped me and my wife:

1 - we use ONE credit card for ALL purchases possible (We use the AMEX Blue Cash Preferred - same account, two cards) and immediately set up the account to pay the full statement balance each month (using the OUT account - see #2) - the main advantage is that I see how big the payment is each month (a sad number in my case, but improving). That way I can start to throttle down those "variable" expenses. NOTE that because of the way my rent and student loans are handled, they can only be paid straight from the bank account (see #2), which conveniently keeps them out of the "variable" costs that are on the credit card. Meaning that the credit card expenses is where I should focus my energy since I can't do much about rent and student loans.

2 - we have an "IN" and an "OUT" checking account. All of our monthly income goes to the IN ("Accounts Receivable") account. The only time money leaves the IN account is when I manually transfer the month's needs at the beginning of the month to the OUT account ("Accounts Payable"). I use only that account to pay the credit card bill and any other recurring payments that can't go on the credit card (rent, some utilities, student loan payment). I also leave a $1k buffer in the OUT account. Any left over at the end of the month, in both the IN and OUT accounts, are transferred to savings. This is a painful reminder of how much money I spend month to month - an added incentive to keep it down, and a place to see progress.

We vary rarely use cash for anything. Too hard and inconvenient to track - and too easy to spend.