I realise I made a horrible mistake in my monthly cash flow budgeting. I used monthly spending but I should have used annual. Reason? There are many items that are spent irregularly over a year but they can take up a big chunk of money. If you are not careful, they might reduce your cash reserves by quite a bit.

Here are some of the annual or irregular spending items that I have spent on year after year:

• Travel: Wife and I tend to travel at least twice a year. Each trip can range between SGD2500 to SGD4000. To conservative, I should budget around SGD8,000.

• Birthday and anniversary: I used to spend quite a bit on Wife’s birthday and our anniversary. I remembered my top spending was almost SGD7,000 where we went for a getaway at Kranji Farm and I bought her a diamond studded designer watch. Fortuntately, we have recognised that this is maddness and have tried to reduce our spending. Last year, I spent less than SGD2,000. I think this is about the right amount to buy a nice gift and to bring her out for dinner.

• Chinese New Year: This is the time of the year where we need to give red envelopes containing money to our elders as well as to the kids for good luck and propersity. Total spend here can be in the region of SGD500.

• Mother and Father’s Day and their birthdays: I will take my parents out for a nice dinner as well as to give them some money as presents. Total cost is around SGD500.

Totaling everything comes up to SGD11,000. If we spread this out over the entire year, the monthly expenditure is around SGD900. That is 900 dollars that I failed to budget for in my monthly spendings. That brings my total monthly spending from SGD6,065 per month to almost SGD7,000. Can you see why now that my previous budget was off?

Looking at this new budget, I think I am in serious financial trouble. If I don’t change my spending habit, I might never retire at all!

Time to flex those frugal muscle and cut more spendings!

I hope you have not made the mistake that I did for my budgeting.