Poll: How do you budget?

[dirtbiker]

How do you do your household budget? If you use more than one budgeting method, which one is your primary budgeting tool?

I admit that I am lousy at sticking to a budget, but I'm good at saving, which sounds mutually exclusive. However, we do this by paying ourselves first. We automatically contribute to our 401Ks, IRAs, brokerage account, and vacation fund with every paycheck, and then we 'budget' by spending what's left. We've adjusted our 'budget' several times by increasing our contributions and then adjusting our spending accordingly. We've tried to do a formal budget several times, and have failed miserably. I've come to accept that this just isn't for us.

I'm just curious how people here budget. See poll.

 

[Jerry1]

When I was working and accumulating, I did what you did. I didn't spend what was left, but I made sure to pay myself first. Maxed out 401K's, took out 15 year mortgage and paid it off sooner, paid off any debt quickly and then saved and spent the rest without any formal budget. I was making good money and I knew we were living far below our means so I didn't really worry about a budget. We did however, record everything.

Now, as a retired person, I'm keeping better track. We set up a budget at the beginning of the year and we are paying attention to whether or not we're hitting our numbers. I don't think we'll do this for long, but it gives me some comfort to see that my plan for retirement spending is actually panning out as planned. I really just want to verify that my planning was reasonably accurate and then I'll relax or make necessary adjustments. I'd guess by year 5 of retirement, probably sooner, I will no longer budget in any formal way. Probably the exception to that will be large purchases like a car or major home repairs that can be planned. That will mostly be to make sure we're withdrawing our 401K/IRA money in the most tax efficient manner.

 

[Dtail]

I design a budget for the upcoming year sometime in December of the current year.
Currently keep track of all expenses. I actually like doing it and it assists in showing where the monies are being spent and where we can cut down if necessary.
I use 18 categories and a couple of them have sub categories.
This doesn't mean we don't spend and have fun, just because I am accounting for it.

 

[Rianne]

I have a hard time with "pay myself first." Not sure what that means.

I said "other" in the poll. Our monthly range for far this year is $3800 - $6621. I'm not including the new car we just bought. So, we spend @ $5200/month or $62,000/yr. I look at the big picture of the year. I don't have to panic if we go to $70K or $80K because we LBYM. Calculators say we can spend much more. We just don't spend frivolously. I guess one could call that a budget.
I used to obsessed with budgeting but have long given that up.

 

[HI Bill]

I have a hard time with "pay myself first." Not sure what that means.

Pay myself first means that you have a budget of what you expect to spend in a month. When the income comes in, you transfer as much as you can to your savings/investments, leaving just enough for anticipated expenses. At least, that's how it works for me. Then, at the next income event (paycheck), I either make up the shortfall, or bank what's left over. All of this, after maxing out the 401(k), catch-up, and spousal contributions. This makes savings the priority!

 

[NW-Bound]

No, no budgeting because we LBYM.

When working, we maxed out the 401k's, and still had money left-over in the banking account that I would transfer to a money market account or brokerage account every so often.

When I thought of retiring, I realized that I did not know that my "means" would be when there was no more earned income. Surfing the Web looking for an answer led me to the 4% Trinity study, FIRECalc, and this forum.

I also realized that I needed to know where my money went. I had been using MS Money for investment tracking, but never for expense tracking. When MS Money was discontinued, and I switched to Quicken, I decided to use it to download banking transactions as well as all investment transactions.

It is now painless to know how much money I have, how much I spent on something. The only thing I do now is to check Quicken's auto-classification of expenses to make sure it does the right thing. It may wrongly say a $100 spent at Costco is for fuel instead of grocery for example.

And knowing what we spent on what made me feel comfortable I could retire early.

I still have no budget, because we still LBYM. I still track expenses, but only after the fact, in order to know the status quo. It is the same as checking your blood pressure every so often to know you have not developed hypertension, or standing on the bathroom scale. Heck, we even check our own fasting blood sugar level once a month (88 for me at the last fingerprick).

 

[dirtbiker]

I have a hard time with "pay myself first." Not sure what that means.

I said "other" in the poll. Our monthly range for far this year is $3800 - $6621. I'm not including the new car we just bought. So, we spend @ $5200/month or $62,000/yr. I look at the big picture of the year. I don't have to panic if we go to $70K or $80K because we LBYM. Calculators say we can spend much more. We just don't spend frivolously. I guess one could call that a budget.
I used to obsessed with budgeting but have long given that up.

What I meant by "pay myself first" is that you transfer money to savings before doing any sort of spending, and then whatever is left over after contributing to saving is used for all of your expenses. This isn't to say that you can't pay yourself first and also have a strict budget, but I'm asking what your primary method of budgeting is.

 

[audreyh1]

Don’t have to worry about sticking to a budget anymore, but I still have one. Mostly used as a yardstick and for categorizing after the fact. I like to see where the money goes.

 

[Fermion]

I try to run a loose budget but the boat we bought blew so many holes in it that I let it sink (the budget not the boat) and now just gamble in the stock market and send my winnings to the marine store.

 

[CardsFan]

When I was working and accumulating, I did what you did. I didn't spend what was left, but I made sure to pay myself first. Maxed out 401K's, took out 15 year mortgage and paid it off sooner, paid off any debt quickly and then saved and spent the rest without any formal budget. I was making good money and I knew we were living far below our means so I didn't really worry about a budget. [-]We did however, record everything.[/-]

Now, as a retired person, I'm keeping better track. We set up a budget at the beginning of the year and we are paying attention to whether or not we're hitting our numbers. I don't think we'll do this for long, but it gives me some comfort to see that my plan for retirement spending is actually panning out as planned. I really just want to verify that my planning was reasonably accurate and then I'll relax or make necessary adjustments. I'd guess by year 5 of retirement, probably sooner, I will no longer budget in any formal way. Probably the exception to that will be large purchases like a car or major home repairs that can be planned. That will mostly be to make sure we're withdrawing our 401K/IRA money in the most tax efficient manner.

Pre-retirement, same as Jerry above (with one difference). Sounds like what OP is doing, for the most part. To me, pay your self first is the key. Make your retirement investments, then pay your bills, then what ever is left over is fair game for everything from investing to a great vacation (and don't over save to the point of NOT taking a few nice vacations)

 

[dirtbiker]

Pre-retirement, same as Jerry above (with one difference). Sounds like what OP is doing, for the most part. To me, pay your self first is the key. Make your retirement investments, then pay your bills, then what ever is left over is fair game for everything from investing to a great vacation (and don't over save to the point of NOT taking a few nice vacations)

The bolded part is what my wife and I jointly decided. For awhile, we were contributing a much larger portion of our income to investments, and we weren't as happy. We were missing out on vacations and other things that we enjoy doing. In the end, we backed off a bit (still contribute 30% of our gross earnings), and are enjoying life more. Whether we like it or not, we still have 20+ years of our working lives ahead of us before retirement, and based on our projections, the larger contributions would only allow us to retire a couple of years earlier. We decided that we'd rather work a couple years longer in exchange for living a better quality of life for the next 20 years. My wife and I both enjoy our careers though, so that went a long way in our decision-making. Maybe in 18 or so years, we'll regret this, who knows.

 

[scrabbler1]

If by the term "budgeting" you mean regulating spending, I don't keep a budget because I never exceed my income with spending. But if by "budgeting" you mean monitoring spending, then I do keep track of my spending. One particular way I monitor my spending is to make, at the start of the year, an approximate record of my cash inflows and outflows for the entire year, like a projected checkbook register. Because some of my expenses are lumpier in that they occur once or twice a year, I need to make sure I carry forward enough of my investment income surpluses from the previous months into the lumpier months and not invest them somewhere. As the year goes on, I change the guessed amounts to the actual ones.

 

[Sunset]

I voted Other.
I track my spending and most of DW's spending (she is not as keen on tracking as I am).
As long as my spending is lower than Fireclac and 4% rule etc I am not worried.

As we are both natural born cheapskates (frugal), the issue in retirement is to ensure we spend at least $10K per year on trips. I personally know some folks that would not have a problem doing that, and simply book a 100 day cruise at $1,000 per day pp cruise.
But we couldn't do that as it would be above our pay grade, which we know without the need of a budget.

 

[24601NoMore]

We track expenses very closely (pretty much every penny in or out) with Quicken.

Having done this for several years, we can forecast next year's recurring expenses with pretty good accuracy. It's the unexpected ones (house repairs, major medical, unexpected big purchases, etc) that throw a wrench into things..

I have a pretty detailed plan with expected income and expenses through age 95. That said, the old expression about a plan "never surviving first contact with the enemy" definitely applied this year as I took a $7K+ yearly income hit on one of our main dividend stocks slashing it's dividend by > 50%, another $50K+ hit on prior employer's stock (which I still have a good number of shares of) getting creamed (since back up a bit but still ~20% below my target sell price) and interest rates (which we rely on for dividend income) getting cut by 1+% across the board. Aside from that, it's all working just swell! So, still a big believer in budgets - but learning of the need to build a lot more flexibility into them than I originally anticipated.

 

[Lewis Clark]

We watch the monthly totals, but live well below our means and have never felt the budgeting effort was worth it for us.

 

[CardsFan]

The bolded part is what my wife and I jointly decided. For awhile, we were contributing a much larger portion of our income to investments, and we weren't as happy. We were missing out on vacations and other things that we enjoy doing. In the end, we backed off a bit (still contribute 30% of our gross earnings), and are enjoying life more. Whether we like it or not, we still have 20+ years of our working lives ahead of us before retirement, and based on our projections, the larger contributions would only allow us to retire a couple of years earlier. We decided that we'd rather work a couple years longer in exchange for living a better quality of life for the next 20 years. My wife and I both enjoy our careers though, so that went a long way in our decision-making. Maybe in 18 or so years, we'll regret this, who knows.

Odds are, you will NOT regret it. You need to enjoy life, not just save for retirement. You CAN do both. When DS was about 14 (1995 or so) we took a 3 week vacation to Europe. I had been there on business, so I had a few folks that could help. Paris, Brussels, Austria, Germany and Italy (in the home his grandfather was born in).

He is now 37, and we still talk about this trip. Memories are forever.

 

[Oz investor]

no real budget but i have always been frugal ( by modern day's standards , but still might horrify the Amish )

the current health situation only makes living within my means easier ,( as long as the government picks up the heavy end of the health care costs .)

i don't really have a bucket list currently , if the health returns ( so far unlikely ) maybe i will think about a bucket list

worrying about a potential economic meltdown or inflation break out will keep me conservative on my finances

 

[FANOFJESUS]

I don't have a budget but am very frugal. I do watch the bills totals at the end of the month.

 

[Miarocks]

We track expenses very closely (pretty much every penny in or out) with Quicken.

Having done this for several years, we can forecast next year's recurring expenses with pretty good accuracy. It's the unexpected ones (house repairs, major medical, unexpected big purchases, etc) that throw a wrench into things..

I have a pretty detailed plan with expected income and expenses through age 95. That said, the old expression about a plan "never surviving first contact with the enemy" definitely applied this year as I took a $7K+ yearly income hit on one of our main dividend stocks slashing it's dividend by > 50%, another $50K+ hit on prior employer's stock (which I still have a good number of shares of) getting creamed (since back up a bit but still ~20% below my target sell price) and interest rates (which we rely on for dividend income) getting cut by 1+% across the board. Aside from that, it's all working just swell! So, still a big believer in budgets - but learning of the need to build a lot more flexibility into them than I originally anticipated.

Yes, even those ‘unexpected’ expenses can be tricky... until you learn to EXPECT them and PLAN for them. The car brakes will wear out, appliances will go kaput, even surprise medical costs will pop up. It’s just a matter of WHAT and WHEN. We maintain a separate checking account for these ‘surprises’ and funnel a significant amount of our income into it each month. Out of this account comes car repairs, yearly insurance premiums, medical costs (other than premiums), timeshare maintenance fees (always a joy to pay those in December), home repairs, property taxes... many other things. By planning and anticipating that these things will happen eventually, it doesn’t tend to be nearly as upsetting or disconcerting when they do. It’s like EXPECTING THE MILK TO SPILL rather than fretting so much when it does.

I’m a dinosaur, am perfectly computer literate, but I prefer to do our budget with paper and pencil in an old-school budget book. There’s Something about the physicality and flexibility of this method, it’s good for the aging brain to deal with the math (I do use a calculator, lol)... I look at it every few days and it keeps things in check to see the spending matching up with our goals. Big believer in paying ourselves first, also... plus we tithe 10% of income to our local church, with some additional giving beyond that. It’s always good for the spirit to acknowledge our many blessings and to share that with others.

 

[CyclingInvestor]

As a compulsive underspender I never had a budget or tracked my spending, I just usually had plenty left over for savings. I have tracked my investments closely.

 

[Ronstar]

No budget, but I keep track of expenses and generally try to keep expenses in line with previous year. Always LBYM during working years while maxing out 401k. Didnt really “pay myself first” during working years, but paid off house mortgage, bought a condo, and invested proceeds from $ I had left over after expenses.

 

[RobbieB]

Budgets?

We don't need no stinkin' budgets -

 

[Vacation4us]

No budget, not now, not ever. I voted pay myself first since the 401k and extra $$ towards the house always came first. I say I have an internal clock that knows what I can spend and what I can’t. No CC debt since my 20’s.

I came from half frugal half big spender parents. Interestingly enough dad the big spender also was a saver. Mom literally drys paper towels to use them again.

I can honestly say I have never felt poor in my life but I definitely make,save,and spend more now than I did in my youth. Lifestyle creep but frugal roots so still LBYM on autopilot.

 

[rk911]

budget more or less based on previous 3-yrs spending. we have a positive cash flow each month because we live well beneath our means so no real need for a hard and fast budget.

 

[Doribe]

I generally check monthly to make sure I am in the overall ballpark with spending. We LBYM so we need to spend a little more. I just have to watch that we don't get too crazy with the spending.