KEEPING UP WITH YOUR EXPENSES AND ENSURING YOU’RE ON TRACK TO MEET YOUR PROJECTED SPENDING
So you’ve developed your budget and it’s now been three months. How is your bank account looking? Is your spending on track, or are you way below—or, more problematic—way above budget?
Your budget is a fairly inert document. You make your estimates, you project them out, and you use those figures to guide your decisions in the following months. However, neither you nor any of the rest of us can see into the future. What happens if your projections were off? What happens if the cost of your rental car, or of a liter of petrol, or a kilo of lentils, surges unexpectedly? How do you get a grip on discrepancies between your projected spending, and your actual spending, before they balloon out of proportion?
Your budget is the baseline that informs how you build your expense report. In the sample documents we provide, we predicted the costs of a hypothetical food distribution program. Hopefully, when you developed your budget, you did a lot of research, and your predictions were well-informed. You had a good sense of the cost of the inputs you need, and what quantities of them you will need; the prevailing rate for car rentals where you work, the price of petrol, and the distance you will be driving day-to-day. Ideally, your expenses will tack fairly closely to the costs you had predicted to spend.
None of us are magicians and the cost of things has a tendency to change. It’s totally ok for your expense report to vary from your budget – especially when it comes to variable costs! However, your expense report allows you to look for anomalies. Are you spending way more than you expected to furnish your social center? Maybe it’s time to find a cheaper supplier. Are you spending less than you expected the ingredients for your food preparation program? Maybe you can afford higher quality ingredients. Your expense report is how your budget talks to you: it shows you where your predictions were off, and indicates to you where you can make adjustments to stay on budget.
Well… kind of. Consider three examples:
- You had budgeted 400€ per month on lodging for volunteers (250€ to cover rent, and 150€ for electricity and heating). In your first 3 months of programming (March-April-May), your electricity expenses hovered around 100€ per month… then in the summer, volunteers began using the air conditioning unit, and your bills blew up to 300€ per month, bringing your total expenses to 550€ per month, well above the budgeted 400€. What do you do? There might be other cost categories where you have underspent, from which you can draw money to cover these costs. If there isn’t, you’ll need to find a way to reduce your electricity costs: it might make sense to buy fans and use them to complement lower usage of AC. There’s yet one more option: you could take this variation into account in your initial budget projection by averaging seasonal variations across the whole year (see our budget guide for an explanation of what this means).
- You had budgeted 400€ per month to cover stipends of 100€ per month for 4 volunteers. However, one of the volunteers left after two months and was not replaced. You’re now saving 100€ per month on your personnel costs. This could be the extra money you need to cover your higher-than-usual electricity costs, or to make up for shortfalls in other categories. Keep in mind: your goal is to spend what you predicted in your budget, it’s better if you save money than if you overspend, but you’ll need to spend this money on your programming anyways!
- You had budgeted 400€ per month to cover expenses on petrol for transportation. However, your petrol costs vary wildly from month to month. When you consistently overspend or underspend, it’s usually fairly easy to know why: the budget item in question costs more, or less, than you predicted, OR you’re using more, or less, of it than you thought you would. If your variation is inconsistent, you need to look for other clues. Is there a correlation between the number of volunteers at hand and the cost of petrol? Maybe more volunteers = more rides from town to the warehouse, and vice versa. Are there tight rules around using the rental car? Maybe, on some months, volunteers or staff used the rental car for joyriding a whole bunch, and then the next month, as those individuals left, your petrol costs went back to normal. Or maybe the months where spent the most were the months where there was construction on the main road and you had to go a roundabout way to get in and out of town.
In each of these examples, a discrepancy between your expense report and the initial budget indicated a certain factor that has let to you spending either more or less than initially budgeted. In some cases, your variation can be very straightforward (as in our second example). In some cases, they are seasonal (electricity and heating expenses are usually higher in the summer and winter). In other cases, they are completely unpredictable (outside factors, such as road construction or sudden changes in prices).
In either event, your expense report is the tool that records this information and allows you to notice variation, catch trends, and account for discrepancies before they turn into problems.
Click here to download an annotated visual guide to preparing an expense report.
Please be aware that you are only able to VIEW the document. If you want to manipulate the data or adapt the spreadsheet, you will need to make a copy. You can so do by hitting ‘File,’ scrolling down to ‘Make a Copy,’ and then you’ll have your own version.