How do you budget?

[sanctareparata]

Any helpful tidbits here?

We’ve got a game plan drawn up - which money will go where, but don’t know how to make sure where it’s all going. We’re planning on having some envelopes set aside for some things - like groceries, clothing, fun stuff, etc…to put cash in every pay check, but what about other things? You can’t have envelopes of cash all over the house, of course. And what if you budget say, $300 for groceries a month and spend $300, then realize that you forgot stuff and have to go back and spend another $75?

What about the every so often expenses like pest control and trash service, etc? How do you set aside money for those? What about gas?

Any pointers out there? Thanks!

 

[housewife]

I know that very well. You budget $300 and end up needing more money because you need more things.

What we have tried doing is that we pay all our debts/bills/donations, etc… and then we set a budget to buy groceries. If we know we need $300 we actually put another $100 for “just in case”. We end up using up our just “in case” money anyway, but we feel good knowing that we payed everything for the month and then we bought (i.e, groceries) what we really really needed. Doing so, prevents overspending. If there is money left over we use it to have a little fun ourselves!

By the way, the envelope strategy really works! We have some people that we know that use that and it really works for them. I think you just need to be disciplined enough to ask yourself if whether or not you “need” something or some particular brand name foods. Alot of money can be saved by making the least expensive desicion.

God Bless!

 

[Truly_Beloved]

My DH uses software to track and categorize all of our purchases (instead of envelopes ). We have things divided like this:

Necessary Expenses - 50%
Savings/Retirement - 25%
Fun Money - 25%

Anything that isn’t absolutely necessary (like, for instance, yard service) is considered “Fun Money.” FM is also for things like car registration, random trips to the store for cleaning supplies, etc., since we aren’t able to budget for them on a monthly basis.

The mortgage, of course, along with water bill, electricity, gas, etc., are Necessary Expenses. We pretty much divided everything up based on whether we’d still have to pay for certain things if DH lost his job. Anything that we still had to pay for is an NE; the other stuff is considered FM.

We have specific designated amounts for groceries and gasoline. Since we have a fairly significant percentage allotted to FM, anything that might go over in our NE (like groceries), just gets pulled from the FM. We usually have a little bit of FM left over every month, anyway.

DH monitors everything online (our banking info can be directly downloaded into our computer’s financial software) on a daily basis. It’s a lot of work, but he loves doing it. Which is good, because I really can’t stand it.

Oh, and our ultimate Savings Goal is to have at least 6 months worth of extra income in case something awful happens. After that, we can start saving up for some big-ticket items (like furniture pieces, home decor, home improvement projects, etc.).

We have had to work toward this budgeting goal for a few years, and were only able to really get going with it after paying off a little credit card debt, paying off our cars, and (ironically) after I quit work to stay home. The more we made, the more we spent.

Now, I really have no idea how we’re going to reorganize everything once we have to buy a bigger car to accommodate 3 car seats if we’re blessed with another baby in a few years…

 

[1ke]

Any helpful tidbits here?

There are tons of budgeting websites and tips websites. Do a couple of googles and read through them to find ones that work for you.

We’ve got a game plan drawn up - which money will go where, but don’t know how to make sure where it’s all going. We’re planning on having some envelopes set aside for some things - like groceries, clothing, fun stuff, etc…to put cash in every pay check, but what about other things?

Make sure in addition to the envelopes that you are tracking your actual expenses and recording them against the planned budget. That’s the only way to make sure you are achieving your budget goals.

And what if you budget say, $300 for groceries a month and spend $300, then realize that you forgot stuff and have to go back and spend another $75?

That means you aren’t sticking to your budget. Either you didn’t budget the right amount in the first place and were actually spending more than $300/month on groceries or you overspent.

You either need to alter your budgeted amount or you need to revise your shopping list and meal plan to fit the $300 budget-- also you can go to websites with grocery buying/saving tips.

What about the every so often expenses like pest control and trash service, etc? How do you set aside money for those? What about gas?

Set up several savings accounts at your local bank/credit union and set up a direct deposit into the accounts for the monthly amount designated for periodic expenses. Then, take the money out when the expense comes due and pay it.

 

[queen_anne78]

yep we do envelopes here, too.

If we go “over” for groceries…well. We can’t. We’ve made a deal that we do not use our debit card, only the cash in our envelopes. Checks are for paying the bills only (which are the same each month). I have found it’s easier to break the grocery money up by week, it’s easier to visualize what we need better. That and I have had to actually become responsible and plan meals each night and stick to it. And get creative at the end of the month

A lot of times, though, if we need more grocery money (that’s the hardest one to stick to, IMO) we pull it from our other envelopes…usually the “miscellaneous”(which is the only “fun” money we have…we have a very limited budget…just graduated college, got married, and had a baby in the span of…1.5 years=no money). DH can ride his bike to work now, but we still budget the same for gas money, so we end up with a lot extra in that envelope…any extra money from the month goes into a “Christmas” envelope, that way when Christmas arrives and it’s time to buy gifts we won’t be hit quite as hard.

 

[puzzleannie]

before you draw up the budget, track actual expenses obsessively for a couple of months, including the 2 bucks for coffee and a paper every morning and find out what you actually do spend.

then go back over last year’s papers and find out what you actually did spend per year on utilities and periodice expenses (insurance, car repairs, emergencies, medical, prescriptions, vacation, Christmas, pest control, etc.)

make your budget by weekly, monthly, periodic, and annual columns.

then break the totals of each column down by a pay period. If you get paid every 2 weeks, break the budget down into 2-week segments. then do the envelope thing. Lock the envelopes for periodic expenses someplace safe. When insurance time comes around, you should have enough for the premium.

If you don’t have a tracking system, get one. If you are disciplined enough to keep a check book register, do it, and include ATM withdrawals and debits, and their purpose.

If you have credit card debt you have bigger problems than the scope of this discussion, tackle that first.

The tracking system that has worked for us for 20 years is to purchase and pay bills exclusively by credit card or debit card (on-line whenever possible). We each have our own credit card, from a different company, and he has a business card. That way the credit card and bank statements show where every penny went, and sometimes even summarized by category. from your statements you can make a spreadsheet if necessary and in less than an hour a month have all the info you need.

If you have a plastic problem, don’t try this method, go to cash. for me an envelope of cash is a big temptation, but plastic is more disciplined. find what works for you.

 

[wisdom_3_5]

I developed my own spread sheet! I don’t use a written checkbook register anymore but record all checks/deposits on my spreadsheet.

It has a section for savings (school tuition, property taxes, medical expenses etc) so I know how much to move into savings. It has a projected balance for all those savings accounts.

There is a section for monthly expenses that don’t usually change (life insurance, garbage, cable etc.)

And a section on flexible monthly expenses (groceries, gas, electric, phone etc.)

So, I budget in one column and enter my actual expenses in the other. At the beginning of each month I budget the whole month. I usually have to make some adjustments depending on something coming up or, more like, something I forgot.

I would say I could e-mail a copy, but it might be hard for someone else to figure out, my husband has trouble even with me there explaining it .

You could try a personal accounting software, like quicken. I think it has a budget plan. It will also have pie charts to show you where your money is going. The only things is you have to record everything on the computer. Do it daily, don’t let it pile up.

 

[samizdat]

Could someone explain the ‘envelope system’–I’ve never heard of it and it sounds intriguing.

 

[kevinsgirl]

I track our expenses via a spreadsheet I drew up–nothing fancy, but everything we purchase is entered. We follow a relatively loose budget right now because I’m working. All the necessities (utilities, groceries, gas, donations, insurance) come out of DH’s salary. The savings and fun money come out of mine. So far we’ve saved a lot and grown pretty comfortable with living mainly on one salary.

 

[homewardangel]

I promised myself that I would try to budget the first of the year - yet again. I never know what other people do - its funny to talk about without hard feelings of someone not having as much money as others.

So I appreciate this thread, but I have several questions.

Necessary Expenses - 50%
Savings/Retirement - 25%
Fun Money - 25%

I’m assuming that these are after tax figures???

If you participate in a FlexSpending account for your medical expenses, do you think the “necessary expenses” could be dropped some? Those $$ are out of my check pretax and I have a debit card for those purchases (Its wonderful!! I strongly reccommend a Flex account)

Are you figuring a retirement plan that is contributed pretax to? I am trying to figure out how to reconcile my pretax contribution with the 10% that was suggested to me to put into my retirement.
Do I “count” my employers contributions? (if I put $25 in they match the full $25) If I count pretax and count my employer’s contribution then I am covering the suggested 10% - if not I am coming up short.

I have tried envelopes, with varying sucess. I do like the idea of just 3 broad categories, because then I could use my checking accounts - I already have 2 anyway. Plus I have a savings accounts. On line banking will make it very easy to transfer the money to different accounts once my check is deposited.

I’m almost done with this issue…but what has anyone worked with on dealing with child care? Child care is the #1 reason why my previous budgeting attemps failed. I have never seen any guidance on child care in a budget.

Any thoughts

Thanks

 

[OutinChgoburbs]

Could someone explain the ‘envelope system’–I’ve never heard of it and it sounds intriguing.

1.) Decide where the money goes, on paper or on a spreadsheet.
2.) When payday comes, put the money in envelopes labeled with their purpose, such as “groceries” or “car insurance”.
3.) When the money is gone from that envelope, the money is gone for that purpose.

 

[Convert_in_99]

USE CASH!

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If you have two hundred dollars in your purse (or in a fire proof safe at home) you will know that no matter how much you need that extra ten. Its NOT there.

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This has helped us tremendously. It’s amazing what you charge on a card for a dollar here, two fifty there. That seems small, but through the month (and year) it adds up significantly.

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**Again…use CASH! **

 

[mrsfrazier]

USE CASH!

I have to disagree; and with the envelope system also.

DH and I track all expenses and savings (current, past, and projected) on a complex spreadsheet system he made and maintains. (Luckily, because as a previous poster said, it is complex and a lot for me even when he explains it). We almost never use cash because we find that it disappears more quickly! That way, our money is in the bank the whole month making interest. We also have credit cards that earn us points, and since we pay them off every month but still make points, it is like free money. We then use the points towards student loan payments, which is the only one where the match points dollar for dollar.

The only problem with credit, IMO, is when more is spent than would have been spent otherwise. Where people get the time and energy for all the extra spending I have no idea…I have enough trouble finding time to go grocery shopping.

I think setting budget goals is an important part of budgeting. If you can set down how much you would like to save for the year in a spreadsheet, and break it down to monthly or weekly amounts, it seems more attainable and also inspires you to save more.

 

[homewardangel]

Where people get the time and energy for all the extra spending I have no idea…I have enough trouble finding time to go grocery shopping.

Its not that I have to find things to spend money on … the extra expenses find me! Too few dollars chasing too many expenses!

I have to disagree; and with the envelope system also.

I vote NO on the cash system too. I know its purely a personal preference but I have been there. I actually even went years with no credit cards, but there are benefits to credit that you really do need to consider. Tracking your spending is so much easier - besides my paycheck is automatically deposited and its so much easier to do bill payments through the bank. I love the debit card! I so wish I had a debit card during the winter mornings when I filled my car up with gas…I hated pulling the babies out of the warm car and I hated leaving them in the car!

 

[Sina]

Look for extra costs in services you don’t NEED.

1.) Cell phone ( I got rid of mine as I have a phone at work and home )

2.) Extended Cable… I only watch basic program on TV anyways.

3.) Low bandwith internet ( Don’t need high speed to download all kinds of stuff, just need e-mail and CAF!)

4.) No eating out for lunch at work. Always bring a lunch!

5.) Don’t shop at TJ MAxx and Winners(Canada) and all those discount shops because you always end up buying stuff you don’t even wear or like, but it was on sale.

6.) Got rid of long distance and am making the in-laws foot the bill on their end. It is cheaper in their part of the country to pay for it anyways.

We are trying to pay down our mortgage asap so most of our money goes to the mortgage. Leftover after bills and necessities goes into tax deductible investments ( RRSP’s in Canada ) 401K in US.

Oh, and we don’t have children… so I probably have NO clue how to budget and what is coming when we do!