So you’ve started tracking your budget, congratulations!  But now, you may be second-guessing a few of your category choices, or find yourself going over-budget each month. We’ve complied a few tips to help you get back on track.

Here are a few of our favorite “I’ve started budgeting, but now what?” budgeting tips:

• Budgeting software often has trouble correctly categorizing a few expenses, specifically towards the beginning of use.  Take a quick look at your transactions and identify and correct those that are mislabeled. If you are using Mint.com or an online version of Quicken, be sure to take advantage of their easy to read ‘trend’ or reporting sections.  You can see where you’ve spent money over specific categories in charts that allow you to drill down to the transaction level, helping to spot inaccuracies. If you are not using budgeting software, compiling data from your receipts and statements will be a good way to get started.  Remember, you are trying to identify where your spending money and look for ways to reduce spending, if necessary.
• Revisit the items you have budgeted.  Now that you have been tracking for a few months or longer, are your budgeted items realistic? Maybe some adjustments need to be made to common expenses like household utilities, food and dining, transportation costs (including gas and regular maintenance), and discretionary (misc. spending).
• It is common for your expenses to fluctuate over time and for some expenses to occur only during parts of the year.  Some items, like car insurance, homeowner association dues, and professional fees may be paid quarterly or semi-annually, so be sure to include those expenses in your budget now.
• If you are spending more than your budgeted amount on a regular basis, take some time to plan out ways to reduce your spending.  Little things like taking your lunch to work once or twice a week, making coffee at home, or planning errands around one trip can all add up over time.
• Have you had any lifestyle changes that should be reflected in your budget?  A home purchase, renovation or new child can increase (or decrease) spending and should be accounted for.  Adding new expenses to your budget while taking time to review your overall spending picture can help set you back on track.

For our current clients, we are available to help answer questions that you may have about Mint and Quicken.  We may also be able to assist you in starting the expense tracking process from the very start.  Please contact Heather Gudac at hgudac@financialsymmetry.com if you are interested.

Ready, Set, Go!

Many of our clients ask us, “is there a better way to track our budget?” Our answer is “Yes!”

We often suggest  Mint.com for it’s ease of use.  The online tool is free, very secure and relatively easy to learn. We find that it is helpful for those that have tracked a budget for years as well as those that are just getting started with budgeting.

Here are a few points to help you get started.

Why should I use Mint.com?

Mint.com is a free, online account aggregation tool that can help you plan, manage and stick to your budget. Setup is quick and easy—you can expect to have your accounts linked to Mint within a couple of minutes! Security is good, being at or above most institutional banking websites.

Mint never asks for your account numbers, name or other personal identification information. Money cannot be accessed, moved or transferred within Mint, and all data stored at Mint is backed by bank-level data security protections.

How many categories should I use and what are they?

Some common problems we see are trying to over-categorize and coding a large amount of regular expenses as one time occurrences.  Simplification should be emphasized when creating your budget and categorizing each transaction.  We recommend using the following categories in a combination that fits your household:

• Auto & Transport
• Bills & Utilities
• Food & Dining (Groceries, Restaurants, Coffee Shops)
• Gifts & Donations
• Travel (Vacations, large trips)
• Everything Else (Cash, Fun, Church/Charity Contributions)
• Food (Dining Out, Alcohol, Groceries)
• Debts (Mortgage, Equity Line, Car Payments, Credit Card or Student Loan Payments)
• Education (Books, Private School, College Tuition)
• Health & Fitness (Gym Membership, Doctor Visits, Prescriptions, Insurance)
• Home (Maintenance, Home Improvements, Furnishings)

From these basic categories, you can create future sub-categories, but it is important to keep the bigger picture in mind when monitoring your expenses. Keeping broad categories may also help speed up maintaining the data that Mint is able to aggregate between your accounts.

Should I be trying to hit the same number every month?

Comparing expenses on a monthly basis can be another source of frustration as there are many fluctuations that occur throughout the year (Holidays, Summer Vacation, etc.).  Therefore, it is important to measure your progress against a rolling year period.

For example:  If the month of May has just ended, you will want to measure June 1^st of last year to May 31^st of this year against the calendar year amount of your budget.  If the amount is more, then you know you are a little ahead of pace and you should scale back.  Performing this exercise monthly or quarterly can greatly improve your overall financial picture as it allows you to have greater control over your regular expenditures.

If you are interested in learning more about starting a Mint.com account, or have questions about your current Mint.com account (transaction coding, setting the right categories for your household, etc) feel free to contact Heather Gudac at hgudac@financialsymmetry.com or by phone, (919) 851-8200 ext. 205.

Photo Credit: ingridesign

When checking up on your budget, it is important to look over a specific amount of time for comparisons to actual expenses. Comparing expenses on a monthly basis can be a source of frustration as there are many fluctuations that occur throughout the year (holidays, vacation, etc.).

Photo Credit: Jeff Keen

Therefore, it is important to measure your progress against a rolling year period.  For example, if you have been using a budgeting tool for one year or longer, you would want to compare from February 1, 2009 to March 31, 2010.  If you are just getting started, looking at smaller increments of time, like three or six months, can also be helpful.

No matter what your time frame is, here are a few tips to help streamline and update your budget:

• Budgeting software often has trouble correctly categorizing a few expenses.  Take a quick look at your transactions and identify and correct those that are mislabeled. If you are using Mint.com, be sure to take advantage of their easy to read ‘trend’ section.  You can see where you’ve spent money over specific categories in charts that allow you to drill down to the transaction level, helping to spot inaccurate transactions. If you don’t use budgeting software, compiling data from your receipts and statements will be a good way to get you started.  Remember, you are trying to identify how to spend less than you earn.
• Revisit the items you have budgeted.  Now that you have been tracking for a few months or longer, are your budgeted items realistic? Maybe some adjustments need to be made to common expenses like household utilities, food and dining, transportation costs (including gas and regular maintenance), and discretionary (misc. spending).
• It is common for your expenses to fluctuate over time and for some expenses to occur only during parts of the year.  Some items, like car insurance, homeowner association dues, and professional fees may be paid quarterly or semi-annually, so be sure to include those expenses in your budget now.
• If you are spending more than your budgeted amount on a regular basis, take some time to plan out ways to reduce your spending.  Little things like taking your lunch to work once or twice a week, making coffee at home, or planning errands around one trip can all add up over time.
• Have you had any lifestyle changes that should be reflected in your budget?  A home purchase, renovation or new child can increase (or decrease) spending and should be accounted for.  Adding new expenses to your budget while taking time to review your overall spending picture can help set you back on track.

Looking for a way to better track your budget? Throughout the upcoming weeks, we will be bringing you personal reviews of some of the budgeting software available. Some will be free, online websites, while others will be computer software programs available for purchase or download.

Our first review comes from Heather Zaczek, our Operations Specialist, who has been using Mint.com for a little over a year.

What is Mint.com?

Mint.com is a free, online account aggregation tool that can help you plan, manage and stick to your budget. Setup is quick and easy—you can expect to have your accounts linked to Mint within a couple of minutes. Security is good, being at or above most institutional banking websites. Mint never asks for your account numbers, name or other personal identification information. Money cannot be accessed, moved or transferred within Mint, and all data stored at Mint is backed by bank-level data security protections.

How Do I Set Up an Account with Mint.com?

Setting up an account with Mint is simple. To get started, you will create a user ID, which is normally your email address, and create a password. Once logged in, adding accounts is simply. Your asset and debt accounts are aggregated by providing your institution’s user ID and password for the particular site and Mint does the rest. Mint has a search feature to find the correct login website for a particular institution, although some smaller, hometown banks and credit unions may not be available for connection yet. Once you have your accounts linked with Mint, simple, easy to read charts and graphs are available to create a budget and track spending. Budgets are set up monthly, and you are able to quickly view past months to estimate for the current month’s expenses. Your monthly budget appears on the homepage to show where your money has been spent so far, and how close (or away) you are from estimates through a color-coded bar graph.

What are Some Features of Mint.com?

Overall, the website is fairly easy to navigate, with tabs for transactions, spending trends, investments and ways to save on the homepage. For a better sense of security, Mint has established an alert system that you can customize for each linked account. These alert settings can increase your financial protection and awareness of suspicious activity within your accounts, a great feature that takes minutes to set up. Alerts can be created to notify you if large purchases are made, credit limits have been reached, or low balances exist within accounts.

Mint also tracks your interest rates, credit card reward programs and your credit payment habits to look for ways to save money. If your ABC card is costing you more money than say XYZ card, Mint will suggest switching your cards while estimating your savings on an annual basis. The great thing about Mint’s suggestions is that they are running in the background rather than popping up on your homepage. Saving strategies are located on a separate page and can include customized views for checking, savings and investment accounts.

Are There Drawbacks to Mint.com?

Since Mint.com is free, you can expect a few areas to be less than perfect. There is not a feature to download transactions from institutional websites directly to Mint, and transactions cannot be manually added. Cash transactions can be split into different categories if you have a linked ATM transaction, which enables you to track each cent spent from the cash withdrawal. Another drawback is associated with linking transactions between accounts. For instance, Mint has a little trouble sometimes tagging transfers between checking and credit card accounts, making it difficult to match payment transactions in relation to specific dates. Mint’s reports are simple and informative, without elaborate graphics. Time lines can also become an issue when comparing data over long periods of time; Mint’s standard time frames range only from the time you linked your accounts forward, so older transactions may not be reflected. This may work out as a benefit of Mint if you are just starting with a budget and are not too concerned with past expenses.

Are There Any Additional Features of Mint.com that Make Budgeting More Interesting?

There are a few neat features of Mint that can make budgeting a little more interesting. Mint compiles data from users’ spending patterns so that you can compare your spending habits to those in your location—either state or large city. Mint also has a regularly updated blog with easy to understand financial concepts in every day language. A few recent posts include “The Pros and Cons of Online Banks” and “15 Ways to Eat Out More Spend Less.” Most blog posts include “Mint’s TakeAway” to provide suggestions on how ideas presented effect spending. Overall, Mint.com is a great, easy to use, free budgeting tool, that beats will outperform spreadsheets most of the time.

If you have any questions about Mint.com, feel free to contact Heather at hzaczek@financialsymmetry.com or 919-851-8200 ext. 205.

If you haven’t noticed, budgeting is hip these days. This is thanks to the economic uncertainty caused by the stock market’s second worst bear market in the last 100 years. People’s fear of losing their jobs and significant losses in their investment accounts has shifted the importance of financial planning and knowing how to budget back into the spotlight. But there are still people resistant to both of these ideas.

Here are some common excuses, and why they can hurt your savings:

• Not Good With Numbers. It doesn’t take a mathematician to implement a budget. You just need an understanding of how much money is coming in and which directions it is flowing out. You could use an online tool or scribble down your monthly income minus your fixed bills every month to get an idea of what’s left for discretionary spending. When creating a budget worksheet, it’s important to consider 12 months of expenses in your budget, as there is often a lot of variance month to month. Using a year of spending targets also provides the framework to make corrections when you have a few months go over your budgeted amounts.
• Don’t Have Time To Budget. If you have 15 minutes every two weeks you can manage a budget. Most banks now allow you to download your spending data into budgeting software in a matter of minutes. If you can limit your spending to two accounts (checking and credit card) you will also cut down on time. Spend a few more minutes on categorization and you’ll be able to tell if you need to tighten up for the second half of the month or if you are on track with your targeted spending patterns. Conducting regular monthly reviews will go a long way in helping you to have a successful household budget.
• Buy Now. Save Later. Sound familiar? Spending now instead of later is a major roadblock to implementing a budget. This behavior will eat completely through any shell of a budget discipline you attempt to create. The danger with the “buy it now” mentality hangs on the standard of living concept. Most of us become comfortable with a certain level of spending and it’s a lot harder to lower that standard once established than it is to increase it. Don’t let bad spending habits dictate your budget decision-making.
• We Only Live Once. While this is a true statement, it amounts to a hill of beans when you actually need to access savings. As the latest economic crisis has clearly proven, a job loss can wreak financial havoc when you don’t have an emergency fund. Spending like there is no tomorrow will leave you ill-prepared if you find yourself unemployed. This is why it is imperative when setting up your spending categories to carefully consider how much will go towards your savings accounts. Setting up a monthly draft from your primary checking account is a good way to build your emergency fund while also providing a natural discipline for your spending.
• Spending Is More Fun! There is no doubt the instant gratification you get from purchasing an expensive meal out, a new big screen TV or a trip to Europe is very satisfying. But making those purchases within the parameters of a budget doesn’t drain all the fun. Budgeting tools simply help you to take control of your overspending habits. The power of budgeting comes from knowing where you stand and recognizing the next steps you should take to achieve your targets. When setting your targets, make sure you carve out the extraordinary and the semi-regular expenses that could ruin your motivation as well. Remember, delayed gratification is a budget’s best friend!