How do you implement budget / tracking

[easysurfer]

I use an old budgeting program that has categories and subcategories defined by me.
My focus is mostly current year and I really don't go back to previous years. Main goal of budget is to keep myself honest for the current year.

 

[Markola]

I guess my fantasy setup is two separate 'optional spending' accounts, one for each of us. It would be awesome if we could have set budgets so we know we don't go over a limit, but every now and again when we see we have the money in the account could enjoy guilt free treat-yo-self purchases. I loathe spending money now, and never want to treat myself, even more so because I feel like I need to make up for my wife's spending by trimming my own.

Why a fantasy? DW and I did this 12 years ago and it cut out 90% of money friction. We have a joint checking account that receives all household income and pays all household bills, all of which are on some form of autopay. We don’t have overdrafts because we’ve accumulated one month’s worth of expenses in it, which just sits there as a buffer. We agreed not to spend more than $200 for a household need or want without clearing it with the other one first.

She’s a spender and I’m a saver. We each have a checking account with a debit card and respective savings accounts. Biweekly, an equal amount of Blow It money flows into each automatically from our joint checking account. Equal and automatic is key. Neither of us is accountable to the other for spending from these personal accounts and we cover clothes, lunches and beers with friends, hobbies, etc. with our respective blow it money. We also know that when it’s gone, it’s gone until the next auto transfer.

If one of us wants to make a major solo purchase, like a mountain bike, we tap our personal savings or agree on a loan from the “family bank” (joint savings) and set up monthly auto payments from a blow it account until the bike or whatever, is paid back.

I asked my wife to just try this system for 3 months. It proved so fair, clear and easy that we now take it for granted.

I use YNAB to budget only the joint checking. We don’t budget the blow it accounts, as noted above. This year I added cash back credit cards that are paid back automatically in full each month but it has complicated YNAB enough that I am strongly considering going back to only debit cards. Good luck.

 

[Urchina]

OP, I'm reading your post as having 3 main issues:
1. You are anxious because you don't know where your money is going or if it's ok for you to spend on items at any given time;
2. You and your spouse do not have a shared financial vision;
3. You are seeking ideas on how to jointly manage money to meet your goals.

My suggestions:
1. Track spending (excel, quicken, personal capital, mint, ynab)
2. Spend real time to do the real work of developing a shared financial vision with your spouse. From your post it sounds like you have different spending styles; it's not clear if you've talked about and agree on major financial goals. If not, that's a priority conversation and should include specific manifestations of those goals (ie, what does 'helping the kids with higher education' really mean? You'll pay for 4+ years at an Ivy League, or the kid can borrow the car a couple of days a week so they can drive to the local community college?) Btw, be prepared to not get everything you want in the plan. My spouse and I go for a plan we can both live with and work towards, but it doesn't exactly match either of our ideals because we're very different from each other in our goals.
3. Based on your goals and needs as a couple, jointly implement a plan to get there.

If you've done all this and I've misread, great.

It sounds a bit like you've jumped to #3 without going through 1 & 2. If your spouse is anything like most people people and you show up with a neatly packaged set of goals & plan in hand without doing the work together, she *might* feel manipulated and/or resistant to the plan.

+ 47 on the separate discretionary accounts. So easy, so fair, and requires both folks to be responsible for their individual choices.

 

[mrWinter]

Thanks so much for all the helpful replies!

OP, I'm reading your post as having 3 main issues:
1. You are anxious because you don't know where your money is going or if it's ok for you to spend on items at any given time;
2. You and your spouse do not have a shared financial vision;
3. You are seeking ideas on how to jointly manage money to meet your goals.

My suggestions:
1. Track spending (excel, quicken, personal capital, mint, ynab)
2. Spend real time to do the real work of developing a shared financial vision with your spouse. From your post it sounds like you have different spending styles; it's not clear if you've talked about and agree on major financial goals. If not, that's a priority conversation and should include specific manifestations of those goals (ie, what does 'helping the kids with higher education' really mean? You'll pay for 4+ years at an Ivy League, or the kid can borrow the car a couple of days a week so they can drive to the local community college?) Btw, be prepared to not get everything you want in the plan. My spouse and I go for a plan we can both live with and work towards, but it doesn't exactly match either of our ideals because we're very different from each other in our goals.
3. Based on your goals and needs as a couple, jointly implement a plan to get there.

If you've done all this and I've misread, great.

It sounds a bit like you've jumped to #3 without going through 1 & 2. If your spouse is anything like most people people and you show up with a neatly packaged set of goals & plan in hand without doing the work together, she *might* feel manipulated and/or resistant to the plan.

+ 47 on the separate discretionary accounts. So easy, so fair, and requires both folks to be responsible for their individual choices.

Well put reply, thanks for the thought.



I have done #1, for the most part I know where the money goes, except for my wife's credit card which for the most part is a black box for me. She has shared here bank login so I can see where it goes if needed, but I don't usually bother. Because it's credit there is no real constraint there though.


Regarding #2, we have had the big picture talks and for the most part we really are on the same page. We both want to retire early. We both want to pay for most to all of the kids' college. We both would not mind driving Porches but don't think the cost is worth it. Neither of us want's a 7000 square foot house. So that's all awesome.



I think the dissonance I'm getting is that I just think about money more, and every time I spend I think opportunity cost, where my wife thinks more about the reward. She asks if we can afford to join the gym down the street and she is asking does the money exist to improve our lives. Meanwhile I'm immediately thinking tradeoffs. Yes the money exists, but should we be spending it on the gym or saving for a nicer next house, or saving for a bigger boat in 20 years? I think she doesn't immediately consider the tradeoff as much as me so it's easier to spend and she see's my response as the limiting factor, not the opportunity cost.




Lots of good comments and suggestions here, thanks all for the replies.

 

[tomc5179]

I'm looking for suggestions on how to implement sticking to a set budget.

As I type this I'm thinking, of course, if my wife isn't on board with the whole thing then it just isn't going to work, so what system can we use that is the easiest to get on board with?

You might be over-complicating this. Simplest thing I've found is I use an app called Expense IQ on my android phone from the Play store. Set your own / multiple accounts, spending categories, budgets, etc on the app and it will give you running totals of each and combined by any date range. Plus, if you really want to get detailed, it'll let you export a .csv spreadsheet that you can then filter and sort any way you want with Excel or whatever. As easy or detailed as you want. I find it easy peasy. Been using it for 4+ years.

 

[exnavynuke]

Problem 1 hasn't really manifested yet, but if our income does end up diminishing as I'm afraid it may soon do, then given our current spending we will have problem 1) spending more money than bringing in.

Problem 2) (already happening) is that I have little sense of whether or not I or we are okay to make any given purchase. I always need to save more, and spending hurts. I could relax and enjoy things more if I knew I could make a purchase and still stay on our financial plan. Can we get a sitter this weekend and go out for a nice ($150) meal for the two of us? Or do we need to go somewhere tasty but less fancy and drink beer instead of cocktails? Or do we need to wait and schedule that for next month? Can I buy some more boxers, or do I need to just keep tearing off ragged edges as they appear, slowly converting to loose pairs of briefs? Should I check with my wife to make sure she's returning the majority of that stitch fix box that just showed up (and piss her off in the process)? Or can I put my feet up while enjoying marital bliss knowing that it's all part of the plan and if that's what she values spending money on that's fine with me.

My budgeting process is pretty simple and I think it alleviates all of the issues you mention:

Step 0 - Determine income.
Step 1 - Allot for all recurring expenses/bills - subtract this from income.
Step 2 - Allot for desired savings/investments - subtract this from your running total
Step 3 - Eat - subtract this from the running total
Step 4 - See what's left over and recognize that you can spend none, some, or all of it if you choose and everything will be alright. Track what you do spend though.

As for tracking where money is going, I use Personal Capital so I can look back ever ~6 months and see where I was spending money and decide if I was happy I had spent the money on those things or if there were things I wish I'd done differently. If I wish I'd done things differently I try to adjust my choices moving forward as a result.

 

[Sunset]

.

We both want to retire early.
We both want to pay for most to all of the kids' college.
We both would not mind driving Porches ..
Neither of us want's a 7000 square foot house.

... saving for a nicer next house, or
saving for a bigger boat in 20 years?... .

Sounds like you as a couple need to talk a LOT.

It might help if you lowered your views/expectations a lot as well, I highlighted all the examples you gave and notice a trend here.
The trend is all these things are VERY expensive, so anything less than that could still be expensive and not realistic for many people.
Just be talking like this, you are setting yourself up for "oh gosh we can only afford 1 or 2 out of the 7 things, we are so deprived".

The good thing is you left out the private Caribbean island, the Lear Jet, and the French villa.

 

[JDARNELL]

Over the years I used quicken, my own spreadsheet, stopped budgeting for a while. Now I use Dave Ramseys free every dollar app. Simple easy without a lot of bells and whistles. Good for monthly budgeting.

 

[steelyman]

I’m one of the Quicken devotees for several reasons, one being the budgeting features. Although I’ve used Quicken since ‘95, I didn’t bother with the budgeting piece until after retirement but now find it really useful.

One thing it took a while for me to grasp is that the budgeting piece concerns only expenses/outgo, not income. That can be coupled with income through recurring transactions/reminders, which appear automatically in the monthly budgeting and projected balances view. Together they provide a reasonable overview of how you’re doing over various time frames.

 

[dd564]

I have tried budgeting, but it doesn't work great for me.

What I have found that helps is forced savings.

1. Make sure you are contributing to your 401k automatically
2. Setup a separate account that you automatically transfer $100 or so a month into for "emergency savings" or additional investment.
3. We made our home a major purchase so we HAVE to pay the mortgage payment.
4. We also got a rental property so paying off that mortgage was a requirement.

Get big pieces of your budget on automatic so the "spare" money by default becomes your budget.

Having separate accounts for yourself and spouse can avoid issues on spending.

My wife and I split ours. I pay mortgages and bills. She pays food, clothing, vacations with us doing a split on how the rental income comes in.

When you start to feel some "relief" in getting accustomed to your budget (few hundred bucks) adjust your automatic investing or purchase another asset that will gain in value rather than buying more crap.

End of month, take inventory of your networth.
Is is growing or shrinking.
If it's not growing, why?
Fix that problem and continue.

 

[Bir48die]

I have spreadsheets galore. They are beautiful with budgets, different economic scenarios. For the last couple of years while working I kept pretty good track of average spending on most things. Then came the budget segmented into two categories: overhead and discretionary. Tracked those and then did a bit of adjusting. Tracked by three different means: bank bill pay, credit card statements and Mint just to cross reference.

As I entered retirement I kept on top of this for about six months. With back checking I found that I was right on with all my numbers. The only major adjustment was really what I'd end up with in the "entertainment" department.

Now I don't even look at it anymore. I know what my monthly nut is and have a separate travel budget. I don't sweat over this anymore. I also know that in 18 month when I hit 65, the budget will increase greatly due to lower HI costs.

 

[dtbach]

Once upon a time I organized all spending down to the penny and tracked it daily. Basically worthless waste of time for me. So changed to what I made minus forced saving into 401K, IRA and savings. Then I just spent the rest on what I wanted/needed, etc and paid no attention. All worked out well.