Challenges building financial statements

[Radiance]

If you have been following my saga, you know I am tracking-challenged.
I am doing great on real time tracking for a week now via xpenser dot com.

I was advised to look back to 12 months of statements. But I got separated in October so I started there instead.

After I downloaded 6 months of bank statements I realized two small details:

1) I also need my credit card statements since I sometimes pay for gas and groceries with them, fortunatelly it is only 2 credit cards, but what a pain.
We are talking about 1 bank account, two credit cards, 6 months, 18 statements! oh, well, it will be done

Thankfully Amex can be downloaded to excel, all banks and institutions should allow that!

2) Superstores. It seems I go to Super Walmart and Super Target a lot, soooo, what was that?

Groceries?
Clothing?
Medicines?
Home decor (and thereforre superflous?)

Who knows! I am forced to put those purchases under household items, but that will come up pretty high.....
So, still unable to determine exactly how much I spend on groceries. At least from past.

Currently I separate my purchases by item, so at the end of the month, my traking will be accurate, I even put notes to the side if needed.

Have any of you run into that dilemma?

[kork13]

Yes. When I run into that, and I'm not totally sure where costs truly lie, I simply combine them. That probably makes no sense, so an example...

Let's pretend that I know I spent $200 at Wal-Mart from my CC statement... But I buy my groceries, medicine, and home items there. Well, I would lump "Groceries, medicine, and home items" into a single category. So now do that with ALL of your grocery, Rx, and houseware expenes for all 6 months. So now instead of 3 separate categories, you have 1. It's less useful, but at least allows for comparison. If this super-category averaged $400 in the past, and you want to allocate $200 to grocery, $50 on Rx, and $100 on housewares, then you know you need to trim down something between those 3 areas.

Just remember to separate them out from now on. You can't fix the past, but you can affect the future. When you get home from shopping, tabulate your expenses. Or, throw all your receipts in a jar and do it all at the end of the month. Building a budget takes time, just be patient and attentive with it.

(P.S. If you're comfortable manipulating excel, it's VERY useful for tracking all of this. I prefer it over Qicken, Money, or any other software bundle out there.)

[zetta]

In my budget, I have Target as a line item. (I don't shop at Wal-mart as much, but when I do, it also gets catagorized as Target.) It seems to work to set a budget for my spending at Target. I know not to spend more than $X at that store, and can prioritize groceries or housewares or whatever while I'm shopping there. As long as I don't exceed $X, I'm staying within my budget.

[Runaway Finances]

I don't believe it is important to know where you are spending all your "discretionary" (ie. away from home) purchases. What is important is to determine HOW MUCH YOU CAN AFFORD TO SPEND on these items. The purpose for going back 12 (or 6) months is to find out what your FIXED expenses are. Then you subtract your fixed expenses from your income and the remainder is what you can spend on the discretionary (away from home) purchases. I would go nuts if I focused on every dime I spent everywhere. I just want to know that I have not spent more than my budgeted amount. The easiest way I know to do that is to simply take the same amount of cash every Friday and that is what I buy all my discretionary expenese with. That includes generally everything that you are putting on credit cards, most likely. If you want to reduce spending, stop using credit cards and even debit cards. It is amazing how much easier it is to pull out plastic than paper. Try it and see what happens.

[disneysteve]

I don't believe it is important to know where you are spending all your "discretionary" (ie. away from home) purchases. What is important is to determine HOW MUCH YOU CAN AFFORD TO SPEND on these items.

I think that's a very good point. Most people don't know what their monthly expenses actually are. That's how they end up overspending. They don't know how much they actually have available to spend.

I also think it is far more useful to start keeping a spending log now going forward than it is to try and look back and figure out what you've spent previously. As you've discovered, looking back is impossible. You will see what you spent where but you won't see what it got spent on. Sure, you spent $100 at WalMart, but what did you buy? Start keeping a log and after a month, break down the log into categories. So that WalMart bill might be $30 for groceries, $15 for a DVD, $5 for a pack of batteries, $25 for clothing and $25 for cosmetics. Those things would all fit into different categories.

[Runaway Finances]

The looking back is not hard. It is actually very easy to do, but can be shocking to look at the results. Focus on the "fixed expenses" though. The discretionary spending (expenses away from the house) are the ones that are tough because there are usually too many of them. Think about your fixed expenses. Typically these will only be 10 to 20 items per month for most people. I've done it just going foward and it always takes me six months or more to figure out all the exact expenses to come up with an effective spending plan.