I’m always so excited when we start a new month. I often do some shopping at this time as all my figures for the variable expenses are at $0. Not surprisingly, this can land me in trouble.
This month I’m changing that.
STEP 1: New Plan
I tend to know what sort of socializing I’ll be doing as well as the number of gift giving events that are happening before the first of the month. So at the end of July I sat down, wrote out my planned expenses and guessed the amount of each item.
STEP 2: Visit the budget
As you know I use Excel to budget, so I created a column beside my August and titled it Anticipated August. In the new column I plugged in the non-negotiable costs and estimates. Once those were in I went back and padded any categories I think I’ll have to spend more from. An example of this was groceries: I had guessed that I would have to spend from that line as I’m hosting a few events but my event guesses didn’t take into account all the monthly grocery expenses.
STEP 3: Assess the damage
Once all my best guesses were in I looked at the bottom to make sure I hadn’t exceeded my budget. I hadn’t! I have a bit of wiggle room for a few extras or overages.
If I had exceeded this I would have gone back to see where I could cut back.
STEP 4: Keep Checking
All this work will be for nothing if I don’t keep up with my budget and keep an eye on where my funds are going.
There are 2 hard parts here. The first is that this process meant realizing very early in the month that I don’t have a lot of money to spend on whatever I want. I have money to spend on my carefully planned life. This was bittersweet. It robbed me of the euphoria that comes with a new month but it also left me with the satisfaction of knowing that the life I want is in my budget.
The second is now that I’ve taken the difficult of assigning costs to my activities I have to stick fairly close to them. The wiggle room I have isn’t large which means that I need to spend responsibly and not say yes to many impromptu plans that cost.
The benefit is that I know this now, at the very beginning of the month, so I’m not going to say yes to things and find myself hitting the budget ceiling at the end of the month.
What are your tips to avoid the budget ceiling?