Wednesday, March 14

How much do I really spend?

Recently I have noticed that I always seem to need more money. Even when I don't think I have spent much in a month, the bills disagree. And there always seems to be more month than money, where there never used to be.

Now, I should put some context on this by saying that I pay myself monthly out of my company, and the amount that I have in my head of $3,000 per month has not changed since 1999. I pay myself mostly in dividends so keeping the number low is important for tax reasons but I don't keep strict track of how much I have withdrawn in a year or what corporate expenses I have paid personally.

I know that costs have gone up since 1999, and back then I was a renter too, so I have renovations and maintenance costs to cover, but I'm not sure how much this is reasonable and how to budget or determine what my monthly cash flows should be. My monthly savings are still substantial due to rising income but I'm wary of the needs rising to match the income too much.

I'm tempted to go back on Quicken and start tracking things in detail again. It's time consuming but it sure keeps you honest about how much is going where how often. One reason that I am thinking about this now is that in my long range planning I will need to have some idea of the expenses that I have to cover. Right now I know that I feel like money is tight, but I don't quite know why. I feel like I need data to analyze my spending patterns but the time commitment has me pausing. I'm going to think this over before committing to it. Maybe I could do it for one month...

Today's billable hours: 4.5
Today's contracted hours: 1.5


Canadian Money said...

We have kept track of our family cashflow for a number of years using a simple system. I'm working on a post to describe the system. I may have the post ready for tomorrow. It doesn't take a lot of time per month. You may find it of interest.

Investoid said...

Depending on what you're spending stuff on, the following may work.

My family uses cash for a majority of our ad-hoc purchases. At the beginning of the month we allocate money for each type of purchase (groceries, entertainment, etc.) and place the cash into separate envelopes. As the month goes on, it becomes pretty obvious if a certain envelope is getting too small too quickly, and we can usually figure out what was the culprit pretty easily.

This avoids the minute details of tracking every purchase, but is still pretty effective. Plus, we don't need to worry about stuff that never changes, like phone bills, gym memberships, etc. since those are all direct withdrawls.

the money diva said...

CM - I will look for the post, thanks.

investoid - I'm not sure if the envelope approach will work until I know what my envelopes should be called and approximately how much to put in each. But I like the idea for ongoing after I get it figured out. And I agree that I need to do more direct withdrawals. Paying bills is still a pain for me.

I've never had an overspending problem before the last couple years and I kept blaming it on the houses since I've moved twice in the last 23 months. I feel that I need to do more analysis to see what is at work here....