Budgeting

One of the biggest changes for me in moving from a PC to a Mac (other than the absurd amount of affection I now feel for my laptop) is the change in how I’m doing my budgeting. Since I got my Gateway in December 2002, I’ve been using Microsoft Money. It came pre-installed, and I was pretty happy with it. It’s easy to import data from my credit card companies, and there’s a lot of ways to manipulate the data and see what’s happening with your spending. But, no more Money for me.

I didn’t really want to buy a new piece of software — something about buying software for budgeting seems incongruous. And I didn’t want to set myself up on Mint.com. While I pay all my bills online and use the online access associated with all of my accounts, something about having everything aggregated into a single place online gives me pause. This is despite the fact that Mint doesn’t store your account numbers or logon credentials. Irrational, I know. So that left me with the spreadsheet option. But I knew I would drive myself batty making absurdly complicated and idiosyncratic spreadsheets. (I have them now, and am using them in addition to Money. It is absurdly complicated and I frequently forget what I’ve already done.)

So, I started searching around to see if I could find anything useful for spreadsheet-based personal budgeting. I went straight to Consumerist and took a look at the financial management sites & blogs they were pointing to. That very quickly got me to The Simple Dollar. I spent some time digging around in the archives and hit upon Pear Budget. They’re doing an online version which I assume is similar to Mint, but they started out as a spreadsheet. An amazing, wonderful spreadsheet that exploits what seems to be every nook and cranny of Calc (aka Excel). I spent a few hours getting started yesterday, slowly but surely transcribing the data from this year into Pear Budget. So far, it’s fantastic. Here’s a description of what you get, and some thoughts:

To start with, Pear Budget only tracks your budget — it’s not built to track your accounts, transaction by transaction. For me, this is a good thing, and you’ll see why in a moment. The spreadsheet (really a workbook) has a setup page, an analysis page, and a page for each month. On the setup page you define your spending categories and their monthly budgets. You come up with your budget categories, and sort them into three types: regular/fixed – those that never change month-to-month; variable – those that change a little bit but hover right around the same amount; and irregular – those that come up just a few times a year but you still need to plan for.  The nice thing here is that you’re not forced to shoehorn your own way of thinking about your budget into a pre-defined set of categories. They provide a few to get you started, but you can fill in whatever you need. They do limit you to 10 of each, which at first I thought would be constraining, but after a while I realized that I really don’t need to be tracking my budget categories in quite so fine a way that I was in Money, which has sub-categories.

This will also make it easier for me to track where my cash is going — in Money, if I withdrew cash in late May but spent some of it in June, it all got figured into the budget for May, since that’s when the transaction happened. I would almost always try to break out where I spent my cash, and use the memo field to enter details about where I spent it and when. That’s making it possible for me to recreate my spending in this category in Pear Budget.

The monthly tabs are filled in using the data you enter on the setup tab. The monthly page is dominated by a calendar (rows) where you can fill in your spending in each of your variable categories (columns), day by day. For each of your variable categories, you see your spending to date that month, the amount you’ve budgeted, and what’s left. Underneath this monthly view you can enter your fixed expenses as you pay them, and your irregular expenses as they come up. Neither of these is broken down into a calendar. There’s a mini-analysis under that. Next to your variable expenses is a column to include your income for the month, on whichever days it comes in. Oddly, this doesn’t seem to remember what you had left (or overspent) the month before — you start out in the red every month. (It does automatically subtract your fixed and irregular expenses, so that is a helpful trick to keep your spending in line if you aren’t good about putting aside the money you’re supposed to put aside.)

The analysis tab does the heavy lifting, pulling in data from everywhere else in the workbook. For your variable expenses, you can track your spending month by month. Again, for each category and each month, you see your actual spending, budget and the difference between the two. (When you’re over budget, it’s in red — that makes it easy to zero in on months and categories in which you’re consistently over budget.) For each category, there’s also a summary of what you spent, budgeted and the difference — in total, and then in average. This is helpful in categories where you spend every month, but the spending differs. You can look at the monthly average and compare that to how much you’re budgeting per month, and see if the low- and high-spending months average out correctly in that category. (One nice touch? The average is based on the number of months for which you’ve input data. At this point I have a little bit in every month, so it’s basing my averages on 8 months, not 12.) The analysis for your fixed and irregular expenses just shows you what you spent and what’s left out of what you budgeted.

You might think that going back and including the prior eight months’ worth of data is a bit obsessive. To you I say, yes, I am a bit obsessive. (I think you’d agree that it’s better that I channel that into things like this, which don’t affect anyone around me.) But it’s been extremely helpful in terms of thinking about the categories I need to include, how the categories I’ve been using in Money will fit into the Pear Budget categories, where they should go within Pear Budget, etc. I’ve already revised the way I have Pear Budget set up a couple of times, which is kind of a pain when you’ve already entered data all over the place. But I’d rather get that all out of the way now than be constantly doing it over the next few months.

Ultimately, going back and filling all this in will help me end up with a clearer picture of my finances for the year so far — that will enable me to adjust my budgets and spending so that they reflect what I’m actually spending in categories where it’s hard to cut back (like groceries — I’m over ramen) and so I can adjust other categories in light of some new savings goals.

I’m very happy with Pear Budget so far, and I can already tell that this is going to (mentally) simplify one aspect of how I track my spending. Keeping my budgeting completely separate from tracking transactions to my credit cards will help me think more clearly about what’s going on in my financial life. This was all tumbled together in Money, which was sometimes confusing.

Now I just have to figure out how I want to set up tracking my account transactions and savings goals. That should be a pretty easy set of spreadsheets to develop.

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