We have the budget. Now let's analyze.
September 6, 2013 9:26 AM Subscribe
Last year, my SO posted this question
about making a budget for our family. Your answers were very helpful. August 31 was the last day of our first budget year, and we did pretty well. But we wondered what are good ratios or metrics to gauge just how well we did and where we need to improve.
posted by 5845(f)(1)(D) to work & money (4 answers total) 11 users marked this as a favorite
So, we made our budget with some input from you. The allowance thing was very worthwhile, and our discretionary spending is way down. We never got our act together with travel, which came from a sidepocket and wasn't really tracked. For the rest of our household expenses, with a few exceptions, we took the pre budget actual numbers (from the 12 months leading up to 9/12), reduced them by optimistic amounts, maybe 10 or 15 percent.
We did pretty well. We were over the targets, but the targets were just kinda made up. Our total outflows were about 4% over the total target, but the total target was 10 or 15% below the previous year, so let's just say we cut expenses by 10% I think we got better with expenses as we went along, so I think we'll continue to go down so more this year.
We were already good at saving, and we socked away a bunch more.
Now that we have this data, what should we do with it, and maybe what can we use to help keep us on target to save even more? For instance, I know there are some ratios about housing costs, rent/mortgage to income (or salary?) but I don't remember what they are. I'm also thinking of stock analysis, with all of its ratios: p/e, quick ratio, and so forth.
Right now we have charts with gross assets/liabilities/net assets and track each category versus the prior month and the start of the budget. We don't generally track something like household expenses versus total expenses, or budgeted items versus total outflows (since some things are not budgeted for). And we don't really keep a running track of where budget items are (like "as of November, we're 8% over target on groceries, but electricity is 2% under target"), but partly because some of the costs are pretty seasonal: gas in winter, electric in summer in particular. We don't have credit card debt, just some student loans, so interest versus income is not really relevant. Groceries versus gasoline? Square root of internet minus Netflix?
As mentioned last year (and I'm sure you can tell :) ) we love love love spreadsheets and planning and saving, so anything you can think of is great!!