We are all human, and we make mistakes. It always feels better to own up to our mistakes, so here goes…

August was a big mistake for me, it was so bad, it will forever be known as the ‘August of disaster’ (or AoD for short). I overspent by almost $2,000 (in one month!) on normal day-to-day spending. Spending just spiralled with absolutely nothing to show for it!

Unfortunately, I’m not naturally frugal – this is very much a work in progress. I have good intentions but seem to occasionally get side-tracked, especially when distracted or unfocused.

We’ve all been there and even those blessed with frugality built in have wobbly months. If you are one of those people who occasionally screws up, then this post will hopefully help you learn from the my mistakes. Lets take a deeper dive…

What went wrong?

Before looking at how things went wrong in the AoD, its first useful to set out how the I approach spending in a normal month:

• My budget first accounts for anything which is debited from my current account (rent, utility bills and taxes).
• Everything else is charged directly to a credit card (which is ALWAYS paid off in full) to maximise the travel rewards which the card offers. By doing this, the month-to-month variable becomes how much is spent on the credit card (as everything thing else is fixed).

The AoD involved lots of expensive meals out (ok, and a few dates), drinks (which are VERY expensive in Singapore) and spending on clothes and expensive niceties. This is generally all fine if is within budget, but in August the budget was blown out of the water.

What really went wrong was a failure to have in a tracking system in place to ensure spending stays on course with the budget. For people who are not naturally frugal (aka me), having such a system in place, alerting when spending has reached a certain limit, is crucial so that it’s clear when the spending brakes need to be out on.

Back to basics

Ok, having dissected the AoD, what are the lessons learned and what are the practical steps which we all can follow to ensure it never happens again?

1. Plan Ahead: Make a realistic budget and include all committed spending. Your budget should include provision for anything which requires more than normal spending in that month – e.g. a special birthday or a particularly fancy meal out with friends. Its key to estimate how much these extraordinary events will likely cost and then amend your day-to-day spending accordingly.
2. Track: Track spending vs the budget through the month at a specified time and day. For example, spend 5 minutes each Sunday night to see how much you’ve spent so far this month, and check whether this matches were you should be. Set-up alerts on your card to inform you when spending reaches each incremental 25% of your budget (roughly each week’s worth of spend) – this is a big help and automates much of the process (assuming you also spend on cards and not cash).
3. Adjust: At each check point during the month, if things aren’t on track, adjust, rein things in and continue. By spotting issues early, you can adjust spending and social commitments for the remaining time in the month to stay on course.
4. Don’t be afraid to say no: If accepting an invitation for a social event is going to take you massively off course, it’s ok to say no. Real friends are not going to be offended you don’t go to every expensive meal and drinks party. Offer alternatives, cook at home, be creative instead.

The failures which caused the AoD were two fold, a total failure to: (1) say no (and spending on too many lavish events – one free flow brunch cost $300); and (2) track spending against the budget. Waaaaaah!

Having more intentionality in spending and implementing the tracking system are the key lessons learned going forwards. The AoD is a one off, and won’t happen again.

The silver lining is that, the markets moved favourably in August and the gains by far outstripped the overspend, but that level of overspend is a categorical DISASTER and cannot be repeated….Sorry mum.

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