Long story short, we're spending more than I thought we were, with dining out and groceries constituting the majority of the "excess" spending.
Spouse and I have always been [-]anal-retentive[/-] very detailed in our budgeting & spending. If Quicken's cash balance didn't match what was in our wallets then we knew we'd lost some change in the sofa cushions.
But that gene didn't transfer to a new generation. I've had the budgeting conversation with our teen about a dozen times, each finishing with her firmly nodding her head, saying "Yep, I get it, Dad", [-]saluting, about-facing,[/-] and marching off smartly.
She has a great part-time job, yet she's still unsure how much she has available for her spending. She's still nervous about covering her charge card. From [-]the receipts left in the car[/-] our twitchy parental antennae, we think she eats out with her friends at $5-$10 a time 2-3x/week and maybe goes shopping too. She pretty much avoids bringing up finances around me because she doesn't want to have [-]an interrogation[/-] another discussion about it. Yet she built a great budget a few months ago. I've seen her banging away at the data entry and going over her reports.
Today ("allowance day") we had the conversation for about the millionth time. But this time, as she searched for her Quicken entries of the receipts she was sorting out, I learned that when she takes money out of the ATM she budgets it as "cash". Not "food" or "snacks" or even "entertainment"-- she applies those categories to charges that go on her credit card, but she wasn't applying those categories to her cash spending. Unsurprisingly, 100% of her ATM withdrawals was being spent on the budget category of "cash". Maybe 110%. At least 30% of her paychecks. When I fed back to her what she'd just explained to me, the lightbulb over her head went on like a phosphorus flare. It just never freakin' occurred to her to track her cash spending as precisely as she tracks her credit card or her checking account.
So now she's "tracking every dollar she spends", which meant something to her that was completely different from what I thought I was saying. Only this time we finally both have the same interpretation. And this time she really means it.
Yet another example of a perfectly clear conversation that everyone was positive they understood, yet had two completely different meanings.
recently finished Dave Ramsey's Total Money Makeover, and while I didn't agree with everything in the book, I thought the idea of a zero-based budget was valuable. Anything else I should be looking at with regard to creating a budget? Any particular tools or techniques you've found particularly helpful (or unhelpful)?
Thanks for any input!
Some categories lend themselves to zero-based review: mortgage, taekwondo lessons, utility bills, maybe gas. Others not so much: dining out, entertainment, home maintenance. We fill out the zero-based categories first but use historical data for the rest. By the middle of the year we'll have a feeling for how close we are to reality and can adjust.
We used to go over this every month. After 3-4 years of ER it slipped to quarterly, and now I just lay a report on her recliner a couple times a year for an optional discussion. I still do the budget projections every year, and occasionally I'll print out a graph of a category for the last 5-10 years. This is especially fun when we're talking about mortgages, not so much when we're talking about cable TV or sewer bills.
We still enter every dollar in Quicken. It's handy to know when we last bought a major appliance or piece of electronics, and it's not that much more effort to track everything.
It'll be very interesting to see how our budget shrinks when the teen flies.