Do you have a family financial budget?

[David1961]

Do you have a personal or family financial budget? If so, how strict is it?

Personally, I naturally live below my means, and I have never felt like I wanted or needed a budget. In some ways, I think I'd spend more if I had a budget. If I decide to buy something, I buy it, but only after I'm sure it is something I really want and will use.

 

[W2R]

Do you have a personal or family financial budget? If so, how strict is it?

Personally, I naturally live below my means, and I have never felt like I wanted or needed a budget. In some ways, I think I'd spend more if I had a budget. If I decide to buy something, I buy it, but only after I'm sure it is something I really want and will use.

Sure, though nobody is making me stick to it but me. So, I interpret it as loosely or as strictly as I want to. Here's how that works for me:

I keep track of my regular monthly payments, and check every day to make sure I'm within my budget on any payments that have come through. If my electric/gas bill is higher than I have budgeted, then I would probably tweak the thermostat, for example. Every once in a while I look at these regular payments and think about what I might be able to eliminate or reduce. I believe that regular payments are what most easily ruins LBYM attempts. They are insidious and can really nail you.

I have a certain target amount for other spending each month; you might regard it as an informal "allowance", I suppose. I keep track of how I'm doing on a daily basis when I examine my online checking account. If I spend more than my budget permits during one month, then I tighten the belt in the following months until I'm back on my projected savings level. On the other hand, if I spend too little and don't feel especially deprived, then I usually just adjust my projected savings level upwards.

 

[Sandy]

I have a set monthly target of spending for the family, but each month varies quite a bit. For example, in the spring when I have to pay for upcoming summer camps for kids, the budget is slammed. But what I have found is that other months are much lower than the average (late fall months). So on average, we stay within the target, but I don't sweat the month to month variations as long as I know the the spending is still "planned".

 

[yakers]

No!

No! We do not have a budget! Wife hates budgets

We do have a spending plan

 

[Kronk]

Nope.

Track expenses, yes. Try to eliminate unneeded expenses, yes. I look at my 12-month rolling average to see where expenses are creeping upwards, but not interested in creating a preset spending limit.

Sometimes monthly expenses are $1800, sometimes $6500. Life happens, that's just the way it goes.

 

[Moemg]

How do people who have monthly budgets handle extras such as vacations ?
I track my spending and live below my means so no formal budget .

 

[Lusitan]

We used to track - not budget - all of our monthly expenses, and found that the process of doing so naturally helped us "budget" our money and keep spending under control. We have fallen out of that habit over the past year, as the birth of our first child kept us busy with other things. But I still track overall monthly expenses and have found that on average we're still within our normal range.

 

[FinanceDude]

How do people who have monthly budgets handle extras such as vacations ?
I track my spending and live below my means so no formal budget .

I have a "vacation budget" line item in the budget. We budget $2500 a year for that, to cover not only the "big car trip", but smaller stuff like water park weekends and stuff.........

 

[REWahoo]

How do people who have monthly budgets handle extras such as vacations ?

I don't consider a vacation an extra. It's just another item I budget for on a monthly basis, although some months we obviously spend nothing in that category. I pay little attention to anything but the annual number. Same for other items that aren't predictable monthly spends, such as auto repairs and home maintenance.

 

[donheff]

No real budget. We have a list of estimated expenses. Then add a liberal vacation allotment and a big miscellaneous allotment. That constitutes our yearly spending plan. If we underspend the excess will go into a "mad money" account to be tapped when we get a wild hair up our a** or in bad times.

 

[Maurice]

I started tracking expenses this year for the first time ever. I'm specifically trying not to limit my spending more than I normally would - I want a 'base case' to look at, then I'll analyze it to see (1) what I can/should cut down and (2) what would likely go down or up in retirement.

By the way - its kind of scary. This year my cheapest month was $12,500 and my most expensive one was $16,500 - and thats NOT including one off home improvement expenses that would never be repeated (e.g. bought some expensive art this year) but it does include home repair stuff that could repeat (e.g. fixed AC, replaced dishwasher).

Right now it looks like my expenses are running on average 14k per month, or 168k per year.

Ridiculous, I know.

 

[Kronk]

Maurice, I think a lot of us would love to see a categorical breakdown of that spending. Not to critique your spending, but just to see what a $168k budget looks like.

 

[REWahoo]

Maurice, I think a lot of us would love to see a categorical breakdown of that spending. Not to critique your spending, but just to see what a $168k budget looks like.

Financial voyeurism...

 

[FinanceDude]

I started tracking expenses this year for the first time ever. I'm specifically trying not to limit my spending more than I normally would - I want a 'base case' to look at, then I'll analyze it to see (1) what I can/should cut down and (2) what would likely go down or up in retirement.

By the way - its kind of scary. This year my cheapest month was $12,500 and my most expensive one was $16,500 - and thats NOT including one off home improvement expenses that would never be repeated (e.g. bought some expensive art this year) but it does include home repair stuff that could repeat (e.g. fixed AC, replaced dishwasher).

Right now it looks like my expenses are running on average 14k per month, or 168k per year.

Ridiculous, I know.

Only ridiculous if you CAN'T AFFORD IT...but it seems to me you are doing just fine........

 

[Caoineag]

I have a budget because I am a spender and need to know where my limits are. At one point we were spending $1200 per month on groceries and eating out, we are down to $400 now. A budget let me pay off over $14k of debt last year and will let me do the same this year plus save the down payment for a house. People who don't tend to push their limits probably don't need one but people like me who would naturally spend what they make probably do.

 

[Maurice]

Maurice, I think a lot of us would love to see a categorical breakdown of that spending. Not to critique your spending, but just to see what a $168k budget looks like.

Ok - I'll bear my dirtly laundry for all to see. Keep in mind this isn't a budget - its YTD actuals through October.

At my 'top level' categorization, I have the following:

(I'm rounding at category level so forgive me when they don't add up to 14k)

Housing $5,040
Utilities and Comm. $545
Cash - $2,985 (explanation below)
Medical/Dental/Pharmacy $275
Food and Drink: $590
Entertainment $1,325
Travel - $1,420
Consumer Goods and Svcs $1,170
Gifts - $215
Misc: - $390


Some detail (again forgive the rounding):

Housing - 5,040
4k of that 5k is mortgage (I've always rounded up to the nearest grand, I think the actual pmt due is ~ 3500).
$590 is condo fees. This pays water, heat, some building maintenance.
$175 is insurance (homeowners + a policy for an expensive piano)
$275 is repair - this has been an expensive year - new compressor for AC and new dishwasher

Utilities and Comm:
210 gas&elec
75 - home phone
75 - internet
185 - cell phones

Cash: 2,985THis is a bogus category and an obvious flaw in my system. I don't track where my cash goes. This is just money from the atm. Most is probably food and drink or entertainment, lots also in transportation (i can spend 6-700/mo on taxis)


Medical/Dental/Pharmacy $275
Optical 125
Medical and Dental 60
Pharmacy - 90 (much of this is health&beauty stuff, things most people would buy in a grocery store)

Food and Drink: $590
Grocery: $370 (we spend much more than this - but it goes out as cash)
Wine and Liquor: $220

Entertainment $1,325
Restaurant/Bar: 720
Gym: 120
Piano lessons: 170
Newspapers and Mag: 135
'other' 180


Travel - $1,420
We also are very liberal with our travel budget. We did 10 days in India in the spring. I went to Miami for a bachelor party. My wife and I spent a weekend in Mexico in June (I had to go for work anyway). We did a weekend in Milan in July. There was a weekend trip to Chicago for a wedding in September. The wife joined me in London for a week in October (I was there anyway for work). Two weeks ago I did a short Vegas trip with some old buddies. This weekend we're making a quick trip to Boston - we'll be gone a little less than 48 hours, it'll cost probably a thousand bucks all in. Over xmas/new years we're going back to Mexico - searching for ER locales.

And this was a light travel year for us.

Consumer Goods and Svcs (retail) $1,170
Electronics: 90
Books and Music: 200
Household and Kitchen: 50
Clothing: 625
Office/Art suplies: 140
Computer non-HW 15
Hair/other svcs 50


Gifts - $215
No further breakdown here

Misc: - $390
Public Transport - 100
Charities 270
other - 20



Wow. Thank god for internet anonymity!


Anyway, I'm fortunate enough to be in a position where they above lifestyle qualifies as living significantly below my means (LSBYM?). My annual net savings amount is more than my annual taxes which is more than my annual expenses - a good LBYM definition I would say.

 

[Moemg]

No real budget. We have a list of estimated expenses. Then add a liberal vacation allotment and a big miscellaneous allotment. That constitutes our yearly spending plan. If we underspend the excess will go into a "mad money" account to be tapped when we get a wild hair up our a** or in bad times.

That sounds like my method !

 

[Getting short]

I've tried to keep a budget, just to 'confirm' where the money goes, but never see it through. Instead I estimate yearly inputs and expenses for various categories based on the previous year and accounting for inflation and major changes. I too have a large miscellaneous allotment which is the part I'd like to get a better handle on now that I'm moving into FIRE.

 

[Animorph]

We keep a "strict" budget using Quicken in sort of a custom "envelope" method. We've been doing it for about 25 years now. The whole idea of keeping a budget is to spend as much as possible (!!!), without getting into a cash crunch when you suddenly need to cover a big expense. We have been able to save for cars and pay cash when we buy them, for example.

With a comfortable budget in place that accounts for retirement savings and large "unexpected" expenses, we can spend the rest guilt free.

We also split the budget money between DW, myself the kids, and common expenses. So DW and I have our own money and don't have to ask permission to buy some expensive toy for ourselves.

Now actually, my DW and I end up saving most of that spare cash, so maybe that careful budgeting is somewhat wasted. We're going to have that problem with trying to turn saving in pre-retirement to spending in post retirement. I may have to buy a Ferrari just before I go into the nursing home just to make sure it's all spent. And DW has saved more than me! So we don't have a big problem with budget disipline. In the early days if there was a problem it was usually fixed with a simple reallocation between goals or dedicating raises to the problem area. DW and I were in agreement on balancing current and future spending, so we didn't have any big problems.

I'd be pretty nervous without a budget.

Dan

 

[Ronstar]

No budget here yet, but use Quicken to track expenses in order to prepare future budget when I fully ER.

 

[TickTock]

Anyway, I'm fortunate enough to be in a position where they above lifestyle qualifies as living significantly below my means (LSBYM?). My annual net savings amount is more than my annual taxes which is more than my annual expenses - a good LBYM definition I would say.

Okay, I admit I was choking on your list until that last sentence - if you're saving more than 1/3 of your gross income, you're doing fine!

 

[TickTock]

DW and I never had a budget as such. We both make good money, and managed to stay in starving college student mode for several years after we graduated, so we always saved. When we got serious about retirement in 2002, I started tracking our savings. Looking at our tax return and how much we saved, I broke money into three categories: (1) Taxes, (2) Savings, and (3) Living. I developed a 'baseline' of how much we would accumulate given savings (increasing over time) and long-term expected average return for an 80/20 portfolio, and track actual savings, return, and portfolio total against that.

Now I have started tracking expenses (recently finished reading YMOYL) to see where the money goes, where we may want to decrease (and increase!) spending, and how spending might change in retirement.

 

[Siv]

No budget here but I'm quite frugal, husband is well....ok. He only buys good quality such as Armani suits and alike. I wonder how it would be if I track my spending daily but it's just too much work. I did try back 4-5 years ago afterwards, I set an amount of how much I should be spending monthly. However, found out I could never stick to it although some months are higher/lower than another.

Now we have an almost 5months baby. I used to spend $500 only up to 2 years ago now it's probably $800. I mean how low could it go, right?

No housing expense(picked up by the office), mortgage(all paid off), car payment...it's only clothing-some, groceries, a little bit of transportation. I tend to leave out insurance, travel, entertainment and we don't have specific budget for those. When we do travel, it's not a budget buster because we use mileage, hotel rewards. Once we went to Japan for 4 days, lived in Roppongi Hills and spent alltogether $500 mainly for food and sub fare. Husband thinks I'm "super saver"

Well, maybe what I said doesn't really make sense.

 

[kcowan]

We never did a budget until ER. Then we did an extensive exercise. In the process we indentified a number of areas where we could cut back without any adverse impact (multiple credit cards with annual fees, for example). The real value of the process was setting up the monthly tracking of actuals. Now I exclude special items and do a full year forecast (e.g. 4x 1Q YTD) then add back in the special items.

We adopted home swapping when we saw the costs of travel. We bought a condo in PV when we saw the rental trends. We stopped buying new cars. We got rid of much insurance. We switched to paygo cell phones. We started shopping at Costco and the dollar store. We use craisglist and ebay. We sell off stuff we are not using (and give it away if it does not sell).

Again we are getting our value from the actions to change spending patterns rather than to try to adhere to a budget.

 

[Alan]

Don't budget as such. I track expenses each month and look for areas we can save, but we don't have a family budget. When our income was a lot lower we used to save for luxuries like replacement cars and vacations. We never borrowed for anything, ever, except a mortgage. Even immediately after college when we had the biggest temptation. to borrow (2 earners on decent salaries but we made ourselves wait for the things we wanted).