A Customized Budget Is A Good Thing

Reading Time: 4 minutes    

Don’t get me wrong, I enjoy learning about budgeting techniques and tools that are out there and available. But rather than using them, I instead get ideas from them.  I already have a custom budget excel spreadsheet that I use and it has served me well. How do I define serving well? It has allowed me to stay within budget many times. And in cases where I have gone over, I am easily able to identify where and how that happened and can put a plan in place to avoid those overruns in the future.


Because You Track Revenue and Expenses More Than The Average Person


If you’re reading this, chances are you track your inflows and outflows a bit more than average; maybe twice a week, maybe once a week. I know someone and she checks her credit card balances EVERY DAY! Ok, that I think maybe a bit of overkill unless you own a business with a high volume of transactions or something. The point is that it creates awareness and gets your brain working harder to find ways to earn more and find ways to save more and find ways to budget better based on your habits. Chances are you’re doing better than the majority of people anyway as according to the National Foundation for Credit Counseling, “Sixty-one percent of U.S. adults, the highest percentage in six years, admit to not having a budget.”



Because You Earmark or Accrue Expenses


When I put up wallpaper earlier this year, it ended up costing me well under $300. It wasn’t an issue because I earmarked funds for this project. Part of the reason was that I wanted to do some sort of decoration on this wall, I just didn’t know what to do and how much it was going to cost. I ended up earmarking a couple hundred more than the actual cost (which was kind of nice – so we treated ourselves to a nice dinner for a job well done in terms of a great buy and great DIY installation).


A study has shown that “Earmarking works by acting as a budgeting mechanism, which has previously been shown to increase self-control.”


It’s important to practice will-power and ensure the self-control is maintained. Don’t earmark to change your worn out carpet in the bedroom and then decide to dip into the funds a little bit because the Macy’s One Day Sale is coming soon!



Because Some Expenses Really Are So Customized


Sometimes my bank may categorize an expense wrong. But I know exactly where to record it on my spreadsheet. Also, let’s say I’m at Walmart and my total is $87, BUT $45 is groceries and $42 are other things (blinds, picture frames, doormat). I don’t want to be that annoying customer that says “oh these are separate transactions please” – even though I have to admit that I’ve done that in the past. So BOA is categorizing the whole $87 transaction as grocery. But I know in my tracking it needs to be $42 Grocery line item and $45 in Shopping since it is more so related to that line item.


Another example I have is regarding credit cards. I use one for gas (for gas points), one for eating out, and one for big-ticket purchases (so I can earn more points). But when I pay these using my BOA account, the line item just says credit card. I have to use the drop down and actually identify it as Gas so I have a note for myself.


Additionally, the Transaction category field is usually populated with Credit Card Payments, unless I manually change that each time to something else. So instead I recorded $80.60 for gas (see below) for about a week and a half worth as my Gas expense is on average between $220-$250 per month.


custom simple money man


Travel Related Expenses


Last fall I had to travel for work which included driving about 500+ miles round trip to one of our facilities, staying for three nights at a hotel and incurred meals per diem. I paid for the gas and meals (not hotel bill) and got reimbursed later after completing my expense report.


When the reimbursement came thru, it’s not really income because I’m being reimbursed for my own funds expended for work-related travel. Therefore, I had to post it in my miscellaneous/other line as a credit with a comment box indicating it was a reimbursement for work travel. The expenses were incurred in the prior month, which the credit offset and more because we can claim the full per diem per work policy.


Also the mileage rate for gas is more than the actual cost to fill up my Honda Civic; SCORE! The point is this is not your typical budget item, and having a customized spreadsheet has worked well for me in order to properly track and understand these sort of one-off items.


If you’ve never budgeted before and have no idea where to start, I suggest using this table from Certified Financial Planner Mark Baird. It recommends how much you should be spending on each expense category based on your income. From my review based on my income and expenses it is pretty reasonable and in the process allows for a good savings rate.



So folks, what kinds of custom or quirky line items do you have on your budget? What part of your budgeting process is the most challenging?



I use Personal Capital because (1) it’s free, (2) it tracks all of my accounts and overall net worth, (3) my account balances automatically update, (4) it shows how my investments are diversified and allocated in various sectors, and (5) can use built-in tools like “Investment Checkup” to get….wait for it…free personalized advice!