This thread is for discussion the "Reverse Budget" process that I've followed for the better part of 7 months now. This isn't about your real budget or your savings plan or anything but analyzing your spending from last month's statements -- including your ATM card if it's there.
The process is "simple" but a bit time consuming, but I find that sitting down one afternoon and doing it goes faster every month that I do it.
The "Reverse Budget" process goes like this:
- Log in to every spending account -- credit cards, lines of credit, ATM/debit cards, Paypal/Google Wallet, etc. This include accounts you think are inactive.
- Make sure you have no amount due that surprises you. I do my monthly "Reverse Budget" on a day before all my next statements cut so I can make sure no secret charges came across some old inactive card!
- Go to the statements section and load up the last statement (October in this case). PRINT IT OUT. ON PAPER. This process doesn't work on digital screens, and no your tablet also won't work.
- Go over every line of spending -- EACH AND EVERY ONE. Grab your highlighter pen and highlight every spend item you don't recognize, or better yet, highlight every item you really didn't need that badly. My favorite thing I hear from folks who follow this process monthly is that they go crazy when they have to highlight something they bought excitedly but haven't used and may not even know where they put it. That last part is common with Amazon purchases!
- Grab your calculator (you can use an app on your phone or tablet here) and add up every highlighted line. Including the ones you don't recognize or the items you bought in a rush and can't track down.
- Stable all your statements together for the month with a blank sheet of paper as a cover sheet, and in a colorful permament marker, write down the total you overspent on the cover sheet along with the date and month.
For me, my April 2017 overspend was close to $830 -- ouch. In October this past month, my unnecessary spend was $360. Still not bad, but still means I bought things outside of my budget. Even though I'm strong on income, I still need to hold myself responsible for swiping that card or clicking "BUY" on that website, and the "Reverse Budget" process is part of that.
I file away my stapled reports in the same file folder so I can flip through them and see that things are getting better (or worse). This is also a useful method for remembering to call Comcast or AT&T to ask for a rate reduction, since if you do call you can note that on the cover sheet so you can easily see when the last time you called for a rate reduction is!
