13 money resolutions for 2013: #12 make a plan!

13 money resolutions for 2013: #12 make a plan!

This post is part of a 13 money resolutions for 2013 series. You can check the first post for an updated list of the following ones.

Already 12 money resolutions that we explored together, and I still haven’t said the B word. So I’ll say it. Please spreadsheet enthusiasts don’t throw stones at me. I hate budgets. There, it’s out. I feel lighter now that I confessed. There is just something about keeping track of every little expense that annoys me greatly.

BUT I track my money. I know where it goes, roughly. I am like those annoying slim models who claim they can eat what they want and not get fat. They lie. They just know when it is time to stop. If they have burgers and fries, the next day they will have soup and steamed vegetables. I am the same with money. I know when I spend a bit too much and I rectify. If you don’t, you need to start tracking your money.

Make a budget

I can lay down the basics here, but since I don’t really practice what I preach, I think you’ll be in better hands with other bloggers for a budget makeover.

In order to start a budget, you have to put in one column everything you spend and on the other one everything you earn.

Earnings are pretty easy, there is

  • Salary
  • Dividends
  • Bonuses
  • Extra income
  • Gifts received…

Expenses are a bit more complicated since there are monthly expenses and other yearly and quarterly ones that you need to reduce to a monthly amount. You have to include

  • Rent or mortgage
  • Utilities
  • Food
  • Car (payment, insurance, gas, repairs)
  • Loans and debt payments
  • Clothing
  • Eating out
  • Health
  • Hygiene
  • Subscriptions
  • Gym
  • Education
  • Phone, internet plans
  • Donations
  • Taxes
  • Entertainment
  • Holidays and travel
  • Yearly or periodic expenses (house insurance, Christmas…)
  • Unexpected expenses (car breaks down, you get sick…)
  • etc…

Everything you spend. Hopefully when you deduce expenses from earnings there is some money left. If not, it is time to make some cuts.

Track your goals

I have installed a great tool on this site called Planwise. You can track your financial goals and see how long it will take you to save for a downpayment, pay off debt… And what impact will a change in your finances have on your goals. Say you get a raise, or have a new addition to the family, you can see how much quicker or longer your goals will take to achieve. Pretty neat!

This is a way to stay motivated, and keep a constant eye on your goals. Planwise will also tell you how much money you will have if you save a certain amount for a certain time, and how lowering that monthly payment can impact your final nest egg.

In short, by tracking your goals closely, there is a great chance that you will achieve them quicker.

Track your net worth

This I do pretty well. I have a file where I track my net worth every month. I write down all my assets

  • Properties
  • (I don’t put car or my motorcycle but some people do)
  • Investments
  • Cash accounts
  • Retirement accounts
  • Savings accounts
  • Money people owe me for a work that I have already done.

And then all liabilities

  • Balance of mortgage
  • balance of loans
  • credit card balances
  • other people I may owe money to (namely, bank of mum, but the current balance is $0).

and determine my net worth. It is quite complicated since I have assets in different countries, and currencies fluctuate but I am mainly interested in one thing: see this amount raise every month, or have a very good excuse for it.

When I bought my motorcycle for example, my cash account melted and since the bike is not part of my net worth, it was normal to have money missing. A dip in the stock market or house prices can also affect your net worth negatively.

 Define your plan

You certainly have a plan in life, be it retire with millions in the bank or put five kids through college, or anything else. Cut your plan in short, medium and long term goals, to make sure you take all the right steps towards it.

When I wanted to retire early, I made a plan to save aggressively and live lean for the next few years. The original plan was to retire at age 40. No plan is set in stone, so after a few years, I realized that I didn’t need as much as I thought and passive income was kicking in, so I could retire at 29.

Your life plan deserves a yearly or quarterly review. Are you on track? What worked well and what didn’t? Do you still want to achieve that goal? What would you rather have?

 Tracking those aspects of your financial life help you stay on target and progress quickly towards your goals.

What else are you tracking?

A 30 something French girl embarking on a journey towards Financial Independence. I blog about money, travel, simple and deliberate living, freedom and choices. You can find me on Twitter, Google+, or Reach Financial Independence's Facebook Page

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  1. I can’t say that I love budgets, but I do love what they enable me to do when it comes to managing my finances.
    I agree that tracking your spending is probably more important than a budget, but the two go hand in hand in my opinion.
    Glen @ Monster Piggy Bank recently posted..Financial Plans to Make Before MarriageMy Profile

    • They sure do. I don’t track a $.15 loaf of bread and $.25 lb of tomatoes though. I track that I withdrew $100 and a week later the money was gone. If that is the usual, perfect. If $100 usually last a month, I look back on what happened.

  2. I track expenses and coupons, that’s about it : ) We “kind of” have a budget set up but mainly just look back at each month and see if/where we went wrong. Coupons we use quite a bit since they are big here and it’s fairly easy to save at least a few hundred over the course of a year (if not thousands). Net worth is something I am considering adding this year.
    DC @ Young Adult Money recently posted..Why Twitter Follower Count is PointlessMy Profile

  3. What, everyone does not love to budget?! 😉 I love your last section Pauline…Define Your Plan. I think a huge part of whatever you do in regards to budgeting comes down to that. Without a plan you’ll be aimless and set yourself up for potential failure. That plan can help put meat on the bones of what you want.
    John S @ Frugal Rules recently posted..Taking the Plunge: Budgeting and the EntrepreneurMy Profile

    • I would say the vast majority around here loves to budget, it is definitely not the norm! Having a goal can be a form of passive budgeting, which is better than nothing!

  4. Pauline, I love that you keep a regular eye on your entire financial picture: assests, liabilities, net worth, etc. A great way to keep your financial goals in view and at the forefront of your mind, especially when making spending decisions. Great post!
    Laurie recently posted..Motivation: Learning From OthersMy Profile

  5. The Happy Homeowner says:

    I’ll admit that I do love to budget/set my budget each month. I think it’s along the lines of what Glen said–the freedom I feel by being in control of my finances motivates me to make challenging goals and to work my tail off to achieve them!
    The Happy Homeowner recently posted..Personal Finance and Lance Armstrong: What You Can Learn from Lance’s Fall from GraceMy Profile

    • it sure is really motivating. there has to be a budget I could tolerate, like a rough one per area, I am just not detail oriented to write things down in 54 categories.

  6. I think when I was working full time and making a decent income I was more like you where I had a general idea where things were going…I was saving for retirement regularly, contributing to my 401k, yadda yadda. But now that I’m a freelancer and have a very limited income, a budget has saved my life. I doubt I could be so disciplined though where I could track every single cent coming and going. I think I’d go crazy.
    Budget & the Beach recently posted..Dream TechnologyMy Profile

    • Right? I like the envelope system for that. You put $50 in for groceries, if it is gone, that’s it. But you don’t care about writing down every penny spent.

  7. Jennifer Lynn @ Broke-Ass Mommy says:

    I despise budgets. Yes, it’s my dirty little secret as well. All I care about is that a certain percentage has been funneled into savings, and that all of the bills are paid. After that, buy your gourmet $10 peanuts, M., if that is what you want! Just be sure to include some tasty beer in that purchase for me. 😉

    By the way, maintaining a lifestyle compatible with comfortably retiring at 29 is beyond amazing. It really doesn’t take much, does it? Ironically I have been happiest at my brokest because a) minimalist living and b) experiences and new adventures were what truly felt enriching, not just an account balance or stuff.
    Jennifer Lynn @ Broke-Ass Mommy recently posted..Time to establish financial and savings goals for 2013.My Profile

    • Phew, at last I have a no budget buddy, come here give me a virtual hug! I have certainly learned how to stretch a dollar to retire early but it really doesn’t take much in a low cost area, like the Midwest or a cheap country like Guatemala, you can get a home for $80K and live well on $1,500 as a family. Mister Money Mustache recently put his family costs for a year in Colorado at about $20K. Including travel!

  8. I actually love my new budget that Jacob made for me. We have to tweak it monthly it seems, but it has made life so much easier. Just having that plan in place is a wonderful motivator. I actually made some spreadsheets this weekend with our rental property income vs expenses and net worth. I am turning into an ever bigger nerd, but it’s great.
    Kim@Eyesonthedollar recently posted..Benefits of a Crappy JobMy Profile

  9. I try to stick to a budget as close as possible and see where I can cut expenses. But I think we all just do what works best for us :)
    Mackenzie recently posted..So, I Knew This Girl…My Profile

  10. When I was an advisor we’d diligently track milestones. It’s so much easier to track the path to the next milestone than it is to look up the whole, huge mountain of a goal.
    AverageJoe recently posted..College Planning Strategy: A Creative (and Effective) OptionMy Profile

  11. John@MoneyPrinciple says:

    Budgets are a useful exercice to get a grip – finding out that those daily coffees or tea cakes arent only bad for the waistline – but budgets are for guidance only IMHO.

    Once the habit has been changed, they become less useful.

    Otherwise we would still be stuck with our old coffee machine and failing TV….:-)
    John@MoneyPrinciple recently posted..Credit Scores – Knowledge Is PowerMy Profile

    • Ha! It certainly can help spot areas where you can cut more, but if you are happy with the pace you are going, then you deserve that extra splurge money.

  12. I don’t really budget either because my income is so irregular. I project cash flow and keep a hawk eye on my bank balances instead.
    Edward Antrobus recently posted..Do You Have What It Takes to Be a Paper Boy?My Profile

  13. Up until a year ago I didn’t have a budget either but it has helped us a lot. And even once we have our debt paid off it will be important, because we will have a clear picture of our expenses as well as how much we have left over for other areas. I never had that before. We just winged it.
    Tackling Our Debt recently posted..Fun, Easy Ways to Teach Your Children About Money – InterviewMy Profile

  14. It’s no secret we love to budget. It’s much easier to look back at the path we make when we can see where we’ve been to plan where we want to go. We also track net worth and like you the fluctuations in exchange rates can throw it off each month but we want to know the numbers. I can safely say that without a budget we wouldn’t be where we are today. It’s a lifestyle for us.
    Canadian Budget Binder recently posted..Why Has My House Not Sold?My Profile

    • It certainly helps stay on track! Maybe I move from the grocery challenge to full budgeting, who knows?

      • Maybe once you start to see it all add up it might interest you, who knows. When I started budgeting I didn’t look forward to it but since seeing the money we were blowing it really opened our eyes. Now it’s a challenge to stick to the budget. It doesn’t always happen but at least there is a guide for us, especially in the grocery game where we noticed the biggest fluctuation. The savings in 2012 for grocery was awesome compared to what we spent the year before. :-)
        Canadian Budget Binder recently posted..The Pros and Cons of Homeschooling In Canada Part 2 of 2My Profile

  15. I use an almost ridiculous amount of Excel files. I track all my spending and make proposed budgets for each year. I also track my investments and my dividends.

    The one thing I’m bad at is tracking net worth. It’s very hard for me to get excited about seeing how much is in my 401(k), since I’m planning on becoming financially independent long before I’ll even be able to access it.
    My Financial Independence Journey recently posted..Achieving a 10% yield on cost in 10 yearsMy Profile

    • Really? I thought spreadsheet enthusiasts were covering all topics for the sake of making graphs :) Just kidding, I hear you about the value of retirement accounts but tracking cash, how much you have invested, value of real estate… is an important part of tracking your goals

  16. It’s okay if you don’t like budgets. You can say it! I’ve actually heard of other strategies people use to track their money where they are just looking at how much cash they have on hand rather than the actual in and out. That way it focuses on results rather than obsessing over the details of how to get there.
    My Money Design recently posted..What is Financial Freedom – The Easy to Follow ExplanationMy Profile

    • That is kind of how i manage things. Everything goes out at the beginning of the month, bills, savings… then I am left with the rest. If I am already happy with the savings amount I don’t care too much about where the rest of the money goes.

  17. Retirement at 29, love it! I have a general budget for the month and as long as I’m not over I don’t really track where everything goes. If one month I buy $100 in gifts but cut it out of the grocery budget that doesn’t matter to me as long as I’m under budget for the month. Otherwise I feel too restricted and I don’t like that (feels too much like dieting).
    KK @ Student Debt Survivor recently posted..Personal Finance is Personal-Butt OutMy Profile

  18. This post seems so easy and obvious but it’s not for most people. I can honestly say I am the only one of ANYONE I know that has an actual budget.

    I belong to an online group of women who’s babies were born the same month (a few hundred women) and I cannot believe the crap they discuss,most recently first birthday parties and who budgets/who doesn’t I would say 90% of the people who answered (maybe 75ppl) said ”I will pay anything and everything I have to and not care about the dollar amount”…one of the women who constantly complains the phone company cuts her phone from back payments….
    Catherine recently posted..Weekly Reads 25.01.13My Profile

    • incredible! plus a 1 year old won’t remember his birthday party… I get it, you love your kid, you want a nice party but if you have to choose between a cake and heating your house, that is crazy.

  19. For expenses that come in quaterly,yearly etc I use an envelope budgeting system. It’s not too difficult to take the expense, divide it by the number of months you have to accumulate for it and then in a minthly basis, set that much aside in the “envelope” for that expense. It works pretty well for me. I use the same system for utilities which can be “lumpy” interms of how much your utility bill will be on a monthly basis. -J-
    Jose recently posted..Creating a Budget – How to BudgetMy Profile

    • sounds like a well organized plan. my utility company bills me the same amount monthly and then once or twice a year they adjust my payment. easier to budget.

  20. Hi Pauline,
    These 12 money resolutions are good. For one, it is important to monitor our objectives, net worth, our money and make a budget. It is easy to accomplish objectives that have been tracked down.


  1. […] You are free to go back to your old habits, knowing that there isn’t anything better. But how about trying a little? […]

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