I tweaked the budget three times this month and ended up with the same budget I had in the past.
I thought there were a few changes I needed to make, based on a few recurring expenses. So why did I end up with the original budget after the tweaks?
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Budgets help us keep track of spending and income over time. I use Mint to track my budget in a digital form, along with using an excel spreadsheet for daily tracking.
In one version of the tweak I included a category for finances. This would take care of saving for retirement and other goals, along with transfers for credit card purchases. Mint tends to want to to classify the credit card payments as cash outflows…however the outflow has already happened with the bill pay or the purchase. I needed to find a way to take care of these items without double counting them as shopping purchases for example. So I ended up classifying them as regular transfers and removing the finances category. I can check my progress towards saving by looking at the increase in the saving account and not the actual cash flow.
I realized after I tweaked the budget that it would just become too complicated. Therefore, I ended up with the following categories being tracked:
I separated Shopping and Food because I like to know how much I spend on food compared to non-food items. So I included the Miscellaneous category because there are things that do not fit neatly into certain categories but I still want to track them.
These are the categories I am comfortable with and the ones I actually need. Although I tweaked the budget three times this month, I think I landed on the best set up to move forward.