Monday, January 6, 2014

Reflections on budgeting: What I learned to live without

So it's over.  My one-year stick-to-the-budget plan.  Did it work?  I believe so.  Was it difficult?  Actually, no.  While each of these categories could make a post of their own, I wanted to share with you a summary of the year I spent oh-so consciously spending my money, and provide you a new (and improved!) 2014 budget.

Where I spent less:
- food (2013: $5,000; 2012: $5,800)
- grooming (2013: $1,200; 2012: $2,800)
- clothes (2013: $900; 2012: $3,100)
- alcohol and entertainment (2013: $1,100; 2012: $2,500)

I managed to save $5,800 in these categories alone, more than double the value of my vacation to Israel and Turkey.  Not coincidentally, these were also the areas where I had the least trouble not spending.  What do they have in common?  With the exception of food, all of these purchases are luxuries; purchasing them is a choice.

To be honest, I would have told you a year ago that I "had" to get a new pair of jeans.  I "had" to get my haircut every six weeks and I "had" to get a manicure when my nails looked tattered.  But in 2013, something amazing happened, and through this budget I learned that what I thought were needs were truly wants.  So I found my old jacket would do, waited longer for my haircuts, and did my own nails.

Where I spent more:
- transportation (2013: $2,700; 2012: $1,600)

Considering I spent half of 2012 living in New York, it's no surprise that I increased my spending by driving around Houston in 2013.  But ugh, this hammers home that I need to get a grip on how much I pay for parking.

The habits I cultivated:
- I looked at my credit card statement every week (but more often daily) and manually tracked my expenses. There was nothing that hit home harder than having to manually type in "$120" to record a fancy dinner, or see that all my Starbucks lattes added up to $40 for a month.  This was by far the most useful habit I cultivated this year.
- I stretched everything out.  I used hotel shampoos until they were done.  I checked my pantry before I went grocery shopping.  I didn't buy anything if I already had it.
- I limited my exposure to wants.  I love shopping.  Love it.  But I knew I couldn't do much of it in 2013, so I removed the temptation.  I didn't buy magazines, I didn't peruse the internet out of boredom, and I didn't find myself walking into Ann Taylor just to see what they had.
- I didn't buy Groupons.  I've almost never seen a Groupon for something I would have already bought.  None for me this year.
- I stuck to my list, especially at Target.  I'm a sucker for Target, or really any store where I find myself realizing that I "need" something that's not on my list.  This year, if it wasn't on the list, it wasn't going in the cart.

The obstacles I didn't (quite) overcome:
- Vacations.  The spending on these was soooo hard to predict.  While I tried my best to adjust mid-year, and while I used points wherever I could, I went over my budget in this area.  I don't have a solution yet (except take less of them!) but I'll be even more conscious of this going into 2014.
- Restaurant eating.  I spent 2013 having an internal battle over whether or not to eat out.  I only had $400 a month to spend on food -- plenty if all my meals came from the grocery store, but far from enough if I was going to eat out the way I did.  Restaurants are hard to avoid for me mostly because of the social aspect: I like hanging out with my friends, and I like trying new food.  Ultimately, I had to up the budget a bit for 2014.

...And what we've all been waiting for, the 2014 budget.  I've already started using it and think the new formatting is easier to follow than last year's!  You can also find this on my latest Rich Life post.

I'm hoping 2014 will be just as successful in the budgeting arena as 2013 was.  Here's to the new start!

Click here for my 2014 budgeting template! (Make sure to download as an Excel file.)

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