Budget Surprises: What's Your Latte Factor?

It's surprising how small expenses add up when you buy them regularly. For example, I just logged into Spending Profile and noticed that my spending in the restaurants category was 3 TIMES what I had budgeted! I have to admit I know why. I buy my lunch at work. The prices are low; I can get good lunch for $4 to $6. This is much less than I would pay at a restaurant outiside the office. So I feel I'm getting a good deal, plus it plays to my laziness as I don't have to pack a lunch. But I buy lunch every day. It adds up. I've spent $120 on lunches this month already.

David Bach refers to this in his books as the "Latte factor". If you buy a coffee once or twice a day, it adds up to a small fortune over time. Different people have different Latte factors. The problem is, many people don't even know they have a Latte factor, since they have never analyzed their spending habits.

The first step in reducing or eliminating your Latte factor is identifying it. My Latte factor jumped out at me from the pie charts in Spending Profile. The Restaurants slice was simply too big.

What to do? $120 is more than the monthly amount I would like to be spending on restaurants. I know it will be more effort, but I have a feeling I'll be packing leftovers for lunch more often now!

Remebering to Budget

The hardest thing about budgeting is remembering to do it. I would like to add something in Spending Profile to help make this easier. I find the best way to remember to do something is to send myself an email about it. This works better than to do lists, which so often get written but never read. So far, I have two ideas:

1. Send members a reminder email with a message to log on and add their latest purchases. You would have the option of how often you wish to receive reminders, and you could turn them off if desired.

2. Send members a monthly statement showing their current financial situation in a few simple charts, plus a summary table. This serves as a reminder as well; if the charts are empty, there's some catching up to do!

I have already implemented option 2; the first statements were mailed out on November 1st. The code is ugly though, and I need to rewrite it before the next mailing. I have set up option 1 (reminders) in the database. Writing the script will be next.

Financial Goals

Hey, I just thought that it would be neat to somehow tie people's financial goals into their Spending Profile accounts.

Goals should be clearly visible at all times, to remind us of them and encourage us to save towards them.

How could goals be related to a client's data? Let me think. Well, currently, we have a budget tool. You set budget targets for each spending category, and compare them to your actual spending. To relate this to goals, we could calculate how much under or over your targets you are overall, and report that amount with a message. For example, "This month, you are $134.50 closer to buying a yacht.".

What about having a PAGE DEDICATED TO SAVING??! Hey, what about it? It could show your saving (or overspending) for each month. It could allow you to set a date for achieving each financial goal, and tell you how much you need to save each month to get there. Ooh! What do you think? Hey, and if you are overspending, it could tell you which of your categories you have the worst spending habits in. Hey, now that's a Spending Profile! :)

The Story of Spending Profile

WHERE DOES YOUR MONEY GO? What a difficult question to answer! At around this time last year, I certainly didn’t know where my money was going. In fact, I suddenly realized I had no idea how much I spent each month, let alone where I spent it.

This, I decided, was not acceptable. How could I plan for my future and plan my investments when I didn't even know what I could afford on a day-to-day basis?

This was the origin of SpendingProfile.com. Being a computer science graduate, I decided to create a website to track my finances exactly how I wanted to see them. It had to be fast, extremely easy to use, and it had to be online so that I could use it from anywhere, anytime.

With a lot of hard work, the site was finally ready, and I excitedly began to use it. The results surpassed even my expectations. I could suddenly see everything at a glance. I knew precisely how much money I spent each month, and I could see the breakdown of exactly where it went. This new knowledge brought a feeling of relief and confidence in my finances that I had never had before. The best thing was knowing that I would never again have to guess if I could afford something or not.

Soon, my family and friends were asking for accounts. They urged me to open up the site to the public so that others could also benefit from it. And that is what I have done. Now, a year later, the website is open to everyone. Anyone can visit www.SpendingProfile.com and begin building their spending profile.

I am currently looking for ways to promote the site and gain more visibility for it, both online and off. If you have suggestions, please contact me at lisa@spendingprofile.com. Here are some ideas to start off:

• Links from other websites
  
• Post on financial blogs and forums
  
• Ask to be reviewed by ... who? bloggers, journalists, other?
  
• Get published in newsletters (so far two financial advisors have included me in their newsletter)
  

New Budgeting Blog

This is my new blog which accompanies my website http://www.spendingprofile.com. It's a place to talk about all things related to money. How good... or bad! are your spending habits? Have you ever created a budget? Can you mangage credit cards, or do they mangage you? Talk about it here on my blog!