Budgeting for the New Year

My husband and I are trying to cut expenses where ever we can so that we can save more money. Budgeting our monthly expenses is one way to see where we spend frivolously. I use two methods to do this. The first one is to list all of our expenses in an excel spreadsheet, this gives me a baseline of our monthly expenses, and where I can possibly save money. The second method I use is looking at QuickBooks reports. I use QuickBooks for my check register and for invoicing clients. The income to expenses bar graphs and summary help me visualize where the money is actually going. First, I revise our monthly expenses in excel:

We recently reduced our employee’s hours, so we are saving $1,535 a month, while my husband’s business is a bit slow. We are hoping to reduce our hosting bill by $60 a month as well, to reduce our business expenses.

Looking at the monthly budget, our rental house is costing us the most, followed by meals and personal items. I also noticed that I over-estimated our monthly phone bill, we are actually paying $45 less a month. We could save money if we took care of our lawn ourselves. However, my husband has become friends with our gardener and doesn’t want him to suffer financially by discontinuing his service. So, for now, we need to keep this expense in the budget.

Another alternative I see in this budget, is reducing our rent and living expenses. Recently, our landlord became worried when I paid him rent out of two different accounts. I mentioned to my husband that maybe he would be willing to take a couple of hundred dollars off the monthly rent during this difficult economic period. My husband is still thinking this option through. He thinks the landlord’s worry is mostly based on him wondering how much longer will continue paying him rent, and not so much out of the goodness of his heart. Perhaps he’s right.

My second method of figuring out our budget, is looking at my QuickBooks report and finding where the money goes. It mostly lines up with my excel budget:

Again, our housing expenses (rent and utilities) make up the majority of our expenses. Combined, the two items total 34.29% of our total budget. Business and personal expenses come in a close second. However, we should see the business expenses lowered over the coming months as well as working towards reiging in our personal expeditures. If we could knock $500 a month off our budget, that would be more money we could save.

One obvious math glitch is that if you divide the QuickBooks expenses over the last 8.5 months, you’ll see that we’ve actually been spending $7,258 a month. That’s almost $2,000 more than what I’ve budgeted. However, I think I’ve left off some expenses on my excel budget. For instance, I forgot to factor in our life insurance, which is about $45 a month. I also didn’t add in the $1,800 I am spending each semester for school. Yet, these two items still don’t reflect the difference. It seems that we’ve spent more than what I’ve budgeted.

To counter this and make sure we stick closely to the excel budget, my husband and I sat down and discussed each item and vowed to reduce the amount spent on our personal expenses, meals, and groceries.  I’ll follow up in a few months and see if I’ve gotten closer to my excel budget.