New Financial Plan

I recently updated my “budget” sheet for 2007.  Yeah, I do budgeting a bit backwards.  Normal budgeting is a good idea if you need to know where your money will go ahead of time, if you want to limit certain spending over a fixed time period, or if you want to distribute money in a specific way over different categories.  Some people don’t like the idea of budget and feel better calling it a spending plan.  Names and descriptions aren’t that important to me.  I like to keep things simple and understand what I am doing and why.  I do not want to trick myself or anyone else by using gimmicks or cutesy names.

My “budget” sheet is part of a combination document tracking most of our finances.  The budget piece is broken down into spending categories that are totaled monthly.  Some expenses such as loan payments, utility bills, and food expenses are pretty consistent.  Other categories fluctuate throughout the year.  Other things tracked in the document are where money was spent, how things were paid, and what the end of month balances are.  The spending is broken down into types of stores, for example home & hardware is a category.  The payment methods tracks things like credit card use, bank use, ATM withdrawals, automatic payments, and checks.  The end of month balances are set up as a net worth type calculation so that all assets and liabilities are recorded each month to give an idea of our situation and progress.

When I started putting my finance tracking document together it was a lot more detailed in the budgeting section.  The problem was that with our attitude and discipline there wasn’t much value in doing the forward budgeting.  We were already watching our spending and making progress.  It was taking up too much time for the tiny bit of guidance it might be giving us.  In the beginning I was going in every week to update numbers and track our progress.  It started slipping to every other week, and then to the end of each month, but there was no drop off in our success even though I was putting less into it.  Next I began consolidating categories to make it simpler to add things up each month.

What I take out of what I do is understanding our spending.  We know what we bring in and what we spend.  Normally it doesn’t change much, so my quick checks are enough.  If something unexpected came up we go back to understand what happened and adjust to compensate for it if needed.

Do you think I’m missing something the way I do it?