About a year ago, after reading Your Money or Your Life, I created my first budget. I dutifully added up our income and averaged regular expenses. Certain things like rent, utilities, gas, and insurance were easy to figure out. I had to estimate other expenses like clothing, dining out, cleaning help, gifts, etc. When all was said and done, our expenses tend to exceed our income on a regular basis.
In addition to irregular freelance income and unexpected expenses, another (major) problem was caused by estimated expenses that were basically numbers I grabbed out of the air. Even after one year, I haven’t been diligent enough to figure out our average costs for many fun categories. This is hard to do because we pay cash and we are not very aware of our budget. In other words, if we budget $100, we may spend $100 jointly and still exceed that amount due to separate activities.
If we look on track to exceed our Dining Out budget by mid-month, I may send a half-hearted email to my husband and note to myself that we must watch our budget or cut elsewhere this month. Only we seem to not do this or we get a bill that must be paid or another excuse… The reason I am calling this my/our fake budget is that I simply INCREASE our dining out budgeted amount to match our actual spending instead of making any hard attempts to rein this in.
I know this isn’t good because some months we’re on track or under budget and I’m very happy. Then we exceed our budget the next month and I freak out.
Budgeting is hard!