Retirement budget: Do you budget clothes, gifts, etc?

[Shabby]

I am constantly revising my retirement budget as I am super close to pulling the trigger. I am wondering how you account for things like:

Toy/Fun Purchases
Gifts
Clothes
ATM/Other

Also, I assume I should have these:
Healthcare
Car Depreciation
Trips

Thanks,

 

[Meadbh]

I budgeted strictly for the first three years of ER, with categories for everything major. Now I understand my spending patterns and only budget for total spending.

Some of my categories were:

Property:
Mortgages
Property taxes
Insurance
Strata fees
Home maintenance/improvement

Personal:
Clothing
Grooming
Health
Gifts

Taxes

Travel

Automobile:
Car loan
Insurance
Repairs/maintenance
Gas
I did not have a category for car depreciation. I financed 100% of my current vehicle at 0.9% APR (now paid off) and am not actively saving money specifically for my next vehicle. My last car lasted 17 years. I reckon I will cross that bridge when I come to it.

I am too lazy to look up the other categories. My "other" category was seldom used because, after several drafts, my named categories covered just about everything.

Edited to add: I am not sure why one would have a category for "ATM". Withdrawing cash from an ATM does not mean you have spent it. Accrual accounting means recognizing expenses when they are incurred.

I normally keep less than $100 in cash and sometimes I just have coins. (However I see that BCG below may have up to $10,000 on hand at any time; surely that is unspent money which will be spent in the future).

My strategy was to use spending receipts. Since most of my spending was on my credit card, there were very few cash receipts to reconcile at the end of the month, usually small purchases like coffee at Tim Horton's, or the like.

 

[Blue Collar Guy]

Toys? Im 55 I dont buy toys anymore. Zero
Fun? I post on E.R its free
Clothes Less than when I was working, I used to buy the bride some article of clothing every 2 weeks when I got paid. ATM, I go to the bank whenever my stash falls to 5K,then I take out another 5 large.
Health care I budget 4k a year if we spend more I pay the bill Car depreciation no budget I have extra money in the bank for a new car every 10 years.
Trips we were never globe trotters when I was working. we wont start now.

 

[Gotadimple]

Budget for spending. So yes to all your categories, plus others you want to track.

Car depreciation is not an expense, it is an offset to the value of your car. The value of your car is part of your net worth, not your normal spending.

I check my car's value whenever I calculate my net worth. Use KBB or Edmonds to get an estimate of your car's value.

- Rita

 

[GravitySucks]

I used the FIdo RIP to do my planning budget. I like how easy it is to place ends on somethings or add in future expenses that will be coming. It also had fields like supporting family that was not clear on my spreadsheets.
So, I have a budget, but I don't follow it, it follows me. I change it to reflect my actual spending. If I run over on food one month I don't decide to eat only rice and beans for a week to catch up. If the electric is higher than budgeted I don't turn off the AC. It's always averaged out eventually.

 

[YVRRocketSurgery]

We're taking our current annual spend during our working lives as a base and then:

• Adjusting it for our travel goals based on the number of additional days we want to travel and how much our previous trips have cost (and reducing the spend we would have used at home) and
• Adding another $5-10k buffer for additional lifestyle inflation (toys, clothes, etc beyond what we're currently spending annually)

To account for replacing our car, we'll pull from the buffer or reduce from our travel spend for that year.

 

[easysurfer]

I put gifts in one category, clothes in another. For gifts, I use subcategories such as Christmas, birthdays and oh yeah ... for myself .

 

[Meadbh]

So, I have a budget, but I don't follow it, it follows me. I change it to reflect my actual spending. If I run over on food one month I don't decide to eat only rice and beans for a week to catch up. If the electric is higher than budgeted I don't turn off the AC. It's always averaged out eventually.

How I deal with seasonal variations and spikes in spending is to have a column that calculates cumulative spending for each category for the year to date, and another column that calculates the variance between cumulative spending and the annual budget for that category. Another option is a column that calculates percentage of budget spent so far. These calculations show the big picture.

For example, let's suppose I have property taxes and car insurance to pay in June (which I do). These categories will read zero, with a positive variance for January to May. Once paid in June, 100% of the budget will have been spent, the variance will be neutral and expenses will be zero from July to December. Upcoming expenses can be anticipated by entering them in future months, as well.

 

[Meadbh]

I put gifts in one category, clothes in another. For gifts, I use subcategories such as Christmas, birthdays and oh yeah ... for myself .

If you gift yourself a new shirt, do you call it a gift, or clothing?

 

[scrabbler1]

I used the FIdo RIP to do my planning budget. I like how easy it is to place ends on somethings or add in future expenses that will be coming. It also had fields like supporting family that was not clear on my spreadsheets.
So, I have a budget, but I don't follow it, it follows me. I change it to reflect my actual spending. If I run over on food one month I don't decide to eat only rice and beans for a week to catch up. If the electric is higher than budgeted I don't turn off the AC. It's always averaged out eventually.

This describes my situation, too. I have a decent sized cushion, or surplus, built into my annual budget so that I don't have to really alter anything. The worst thing which happens is that the surplus shrinks. Not even my 12-day hospital stay 2 years ago wrecked it, all it did was eliminate my surplus for 6 months. My ongoing medical expenses (thankfully, not huge) are now part of my budget baseline.

As a Fidelity client, I used their RIP program for my long-term ER planning. I had my own spreadsheet to aid me in my shorter-term planning. I used some of the features in the Fido program to tweak my spreadsheet to improve my planning, though.

 

[LRDave]

I don't budget to that detail in my few remaining working months and will not in retirement. Don't hate me.

 

[aja8888]

I gave up trying to budget most spending. Heck, if our electric bill goes up a bit, I have to pay it anyway. Same for insurances, groceries, etc. I just look at total spending per year and see if I should worry about anything or getting quotes for new variable cost items (like cable TV/internet, cell phones, etc).

This year I jumped all over Comcast and got my monthly bill reduced to a level it was two years ago. We also cut out some monthly "gifting of funds" to our granddaughter once she graduated college (that was a tough one as DW is a softie).

 

[Gumby]

How I deal with seasonal variations and spikes in spending is to have a column that calculates cumulative spending for each category for the year to date, and another column that calculates the variance between cumulative spending and the annual budget for that category. Another option is a column that calculates percentage of budget spent so far. These calculations show the big picture.

For example, let's suppose I have property taxes and car insurance to pay in a June (which I do). These categories will read zero, with a positive variance for January to May. Once paid in June, 100% of the budget will have been spent, the variance will be neutral and expenses will be zero from July to December. Upcoming expenses can be anticipated by entering them in future months, as well.

Exactly the way my spreadsheet works.

 

[RetireAge50]

I used to do a lot of detail but now I only have 2 tasks:
1. Monitor transactions to make sure they are legit
2. Transfer money as needed to cover expected expenses over the next 30 days or so.

 

[Blue Collar Guy]

If I run over on food one month I don't decide to eat only rice and beans for a week to catch up. If the electric is higher than budgeted I don't turn off the AC.

Hahahahahah +1

 

[rodi]

I use quicken to track spending - and take my spending from previous years to come up with an overall budget for the new year... I compare the categories to previous years spending so I can see if I need to make adjustments in either spending, or the budget. When making the overall budget for the new year I factor in specific expenses for that year... eg: is our travel domestic (less vacation money) or international (more vacation money)? Any large home improvements planned? Are we going to replace a car?

I do have spending categories for clothing - but it is for a family of four... This category started to creep up when DS suddenly developed awareness of fashion... then I introduced him to goodwill and it dropped down again. LOL.

 

[W2R]

I am constantly revising my retirement budget as I am super close to pulling the trigger. I am wondering how you account for things like:

Toy/Fun Purchases
Gifts
Clothes
ATM/Other

Also, I assume I should have these:
Healthcare
Car Depreciation
Trips

Thanks,

I don't exactly budget, but I keep very close track of what I spend and then if I feel like my spending is exorbitant I try to cut back and to wait before buying discretionary stuff. I keep a running projection of how much my annual expenses will end up being and compare with prior years. Recently I wanted (but did not actually need) a Dyson vacuum cleaner and my projected spending was $2300 less than last year, so I bought it.

My major spending categories are:

Miscellaneous
Video games
Food
Car
House
Utilities
Fitness
Clothes
Medical
Income tax

Some of these have sub-categories, like Food which has subcategories for groceries and restaurants.


Video gaming is my most expensive hobby.

Clothes has its own category and includes shoes.

Toy/Fun stuff, gifts, and ATM are in Miscellaneous although I keep track of what I spend that ATM money on. For example, a haircut would be from ATM money but I specify that when I record spending that money on it.

Health care expenses, insurance, Medicare, prescriptions, dental, and so on, are under Medical.

I don't track car depreciation since I don't spend all that FIRECalc says I can spend. If/when I need a new car, I'll just buy it out of that excess.

As for trips, we don't like to travel although now and then we have to for hurricane evacuations and so on. When we did that in 2012, I tracked the expenses as always and put anything that didn't "fit" under Miscellaneous; I also kept a running tally of how much the evacuation cost out of curiosity.

 

[Blue Collar Guy]

I dont use spreadsheets, I really only see what we spent at the end of the year, maybe some snowy day in January Ill look over the check book and see what we spent total for the year. Its just an exercise, like it really matters I spent a few bucks more than I thought I was going to. OMG I spent 1.237908% more than I thought on auto maintenance, bottom line the kid inherits less

 

[Shabby]

Car depreciation is not an expense, it is an offset to the value of your car. The value of your car is part of your net worth, not your normal spending.

I only buy cars for cash and they don't last forever. So budgeting cost of car/life expectancy seemed normal. Ex) $40k/8 Years is 5k a year.

 

[Scuba]

We're taking our current annual spend during our working lives as a base and then:

• Adjusting it for our travel goals based on the number of additional days we want to travel and how much our previous trips have cost (and reducing the spend we would have used at home) and
  
• Adding another $5-10k buffer for additional lifestyle inflation (toys, clothes, etc beyond what we're currently spending annually)
  

To account for replacing our car, we'll pull from the buffer or reduce from our travel spend for that year.

+1

 

[easysurfer]

If you gift yourself a new shirt, do you call it a gift, or clothing?

I save my gift $ for a real gift like electronic toys.

A shirt is something I get when the old one wear out .

Of course, someone else may consider a shirt a gift and electronics as something that wears out. The beauty of budget categories....in the eye of the budgeter.

 

[Independent]

We tracked our actual spending for many years before retirement.

Our "budget" was to continue our historic spending, with a few adjustments for predictable changes (e.g. health insurance premiums).

Sure, we had toys, clothes, etc. in both history and projected.

 

[gerntz]

If you LBYM, you are by default budgeting.

 

[RobbieB]

I agree, that's what I've done!

Never kept a budget and never tracked expenses other than look at the monthly bank statement to see that my ending balance was larger than my starting balance.

Never balanced a checkbook either and never bounced a check.

Best of all, I'm retired -

 

[W2R]

If you LBYM, you are by default budgeting.

But suppose I have budgeted $300/month for food, and $300/month for entertainment.

Then, suppose it is the last day of the month, and I want to spend $20 on a steak and lobster to grill at home for dinner but I have already spent $295 on food that month, although I have spent only $100 on entertainment.

The LBYM person would spend some of that entertainment money on the steak and lobster dinner, and still be LBYM because the total spending is less than what he can afford. But this would violate the budget because more than $300 was spent on food that month. So to stick with the budget, it's hamburger for dinner instead of steak and lobster.