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Each month I complete a review of the previous month's spending. How did the numbers look?
When it comes to personal finance, I believe tracking is step 1. It is much much harder to improve spending when you do not have a firm grasp on where your money is going. There are many different ways to set up your tracking, from online sources such as Mint and Personal Capital, to the tried-and-true paper or spreadsheet versions that rely on manual entries.
I have been a Mint user for nearly ten years, and I highly recommend the site for tracking spending and creating budgets. I also use a spreadsheet that has been in a constant state of development and revision since I began my working years. The value of the spreadsheet is that I can project earnings and spending far into the future, allowing me a glimpse of when I can hit financial independence. It also allows me the chance to do a few wacky calculations on my spending, such as how much each category costs as a percentage of my gross pay. So how did July fare? Let's look the table below.
Budget Review: July
There are a few interesting takeaways from July's spending breakdown.
Despite the large expenses vs. gross income this month, there was a lot of good news to report. We separated our escrow from our mortgage, giving us better cash flow month-to-month (with the caveat that we now need to pay for our property taxes at the end of the year and home insurance mid-year). Switching auto/home insurance providers saves us around $500 per year, and my W2 was changed based on our two bundles of joy due in November. This drops our effective tax rate to 15% this month. Overall, we should be in a much better position month-to-month, and I look forward to August's review to see how things pan out!