The Miser’s 3 Things:

  1. If you have a monthly budget and track your spending, it’s easy to audit your year-end results by using Excel or online apps.
  2. See where your monthly expenses were significantly different from your initial budget. Above? Below? Why?
  3. Once you know how you did, adjust and then set your budget in each spending category for the new year.

Now that Christmas is over (hopefully you succeeded in sticking to your holiday shopping budgets), it’s time for another of my favorite annual traditions: the year-end budget review.

Before you pop the champagne, sparkling grape juice or your drink of choice to celebrate the start of the new year, it’s time to take stock of how you did and find areas to adjust or focus on.

excel budget

If you keep a monthly budget using online apps, or with an Excel spreadsheet like me, you can do this fairly quickly.

Back in January, I entered budget estimates into Excel for 18 different spending categories shown to the left — everything from rent and utilities to eating out and entertainment, plus medical expenses and the cost of running my website.

Each month, I track and enter my expenses to see how each category and the monthly total stacks up against my start-of-year estimates. (I also do this for my income.)

Now that it’s the end of the year, it’s time to see how you did.

Get your monthly averages

Excel allows you to quickly do a sum of each category for all 12 months. Doing this lets me know I spent $839 on gas this year, for example.

That’s not a very meaningful a number, so it’s time for the next step: divide it by 12 to get your monthly average. For gas, this was $69.92.

Finally, subtract this monthly average from your initial budget estimate for each category. For gas, my estimate was $75 a month, meaning I came in $5.08 under budget.

(If you’re over budget in any category, Excel allows you to turn those numbers red so you can easily see the difference.)

Once you’ve got all of those monthly averages, you can add them to create your overall monthly spending average. Then, compare it to your overall monthly budget set in January.

The red ink

My spreadsheet shows I’ll beat my total spending from the previous year. But unfortunately, I’ll be $61 per month over my initial budget for the past year. So where did I go wrong?

I had three categories where I went over budget by double digits each month: $17 a month over in rent, $20.42 a month over in gifts, and $138 a month over in my catch-all category, which includes medical expenses.

I managed to wipe out a mid-year rent increase by ditching cable and going with a cheaper alternative, meaning my TV budget ended up $21.25 a month less than I had estimated. I also saved significantly on my electric bill ($15.50 a month under estimate), work-related expenses ($16.92 a month less) and travel ($28.50 a month less).

In fact, I would’ve been under budget overall if it hadn’t been for that catch-all category, which this year included $500 in unplanned medical expenses, a new $300 TV when my old one broke suddenly, and about $600 for new golf clubs and shoes — I’d planned to make the golf purchases but neglected to put them into my budget estimates. I was too optimistic about this catch-all category at the start of 2017, budgeting only $25 a month for it.

But, there’s good news

I mentioned earlier how I also track my paychecks, cash back on credit cards, plus any side income I’ve made (basically, anything except for investment income).

Despite slightly overspending, my spreadsheet shows I solidly made more money each month than I spent. This allowed me to contribute 14 percent of my income to my retirement fund (plus my company’s 4 percent match) and save/invest an almost identical amount toward my short-term and intermediate goals, including a down payment on a house within the next 10 years.

We’re not done yet

While we’ve got all this budget stuff rolling around in our heads, we ought to start thinking about next year!

Go through each spending category. Are there 2017 estimates that you need to increase for 2018? Are there any where you can cut back? How about entirely new categories that you need to add? Categories you can eliminate? (I was excited to do this a few years back when I paid off my car loan and no longer had that expense.)

I’ve decided to break out my catch-all category into two separate categories: one for medical expenses ($50 a month) and one for miscellaneous expenses.

That change — plus the aforementioned rent increase — means my monthly budget estimate for 2018 is higher than the 2017 estimate was, despite the money-saving tricks I’ve detailed on this blog.

But it’s also a more realistic estimate than the one I was working with this year, which means a better chance of meeting my goal.

(Top photo credit