How to set and maintain a budget

Just remember....credits by the window, debits by he door.
 
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Not necessarily. Our retirement budget is clearly lower than pre retirement, but we knew that going in.
In pre retirement with a Wall St career, there were many extravagant expenses which is not necessary or desired now. One simple example was our monthly food budget was $3,000.
I think our goal is more typical: to spend as much as safely possible over a 30-year retirement, likely spending more in earlier years than later years. I have no idea whether that is more, less or the same as in pre-retirement.
 
From what you said, it sounds like you spent money on whatever you wanted pre-retirement within your high income, and you say you now have a small budget. That seems kind of backwards to me. I had a budget pre-retirement, and I still do, in retirement. My budget was smaller when I was wo*king, as I wanted to save more money in order to achieve early retirement. Now that I am retired, I spend a whole lot more than before I retired.

What made you think this was a good time to retire? You say your budget is smaller now. What made you think that was okay? Obviously, if your budget is smaller, you will have less money for discretionary things.

I think it would be good to review your budget and see how realistic it really is. Maybe you are pulling the trigger too soon if you cannot live within your means.

I have some money put aside for emergencies. The amount is big enough to buy a car, get a new roof, get new appliances, etc, etc. I also add leftover money each year into it, and that's how it gets replenished.
 
We don't budget. Never did. We are just natural born frugals. ;)

I do track spending after being on this site, as I didn't actually know how much I spent on Groceries or other things. Now I know.

I plan for lumpy expenses by having some source of cash available to pay it.

Right after retirement, I did spend $33K in cash buying a new vehicle a little unplanned, and did feel short of $$$ for a few months, but we didn't need to stop eating.
 
I have a spending ceiling. Thus I track my spending but necessarily budget. If I go over my spending ceiling (which I haven't done so far), I would draw it from my reserve/emergency/retirement funds.
 
If you have a budget, how do you stick to it? What changes do you make when hit with unexpected expenses? What's the worst expense you had to pay for and how did you recover?
I'm retired going on 3 years with DW still working the next year or 2. We don't really budget, we continue to run paycheck to paycheck. We get 3, Her work, my pension and SS. We always try to put 1/4 to 1/3 away into savings just to have a fallback. Over the last few years we have been spending heavily on rebuilding our retirement house, and using 0% interest store cards or CC offers. Latest big purchase was about $7500, put $4K on 0% Discover card and the rest from savings even though we had the money available.
The other thing is you say its for a rental.... So I would look at it as an investment, not an expense.... I know its still money....
 
It's a common mistake for those new to budgeting. You should plan for some surprises, most of the big ones are entirely predictable - you just don't know exactly when they will hit. "Recovering" is largely avoidable.

Your budget has to include 'lumpy expenses' - those infrequent but often large ticket items that WILL happen to everyone. Replacing cars, replacing your roof/HVAC/applicances/consumer electronics, remodeling/updating (unless you're going to let your home become hopelessly out of date, replacing furniture/mattresses - those kinds of expenses. Cars don't last forever, and they won't get cheaper. Homes (primary, secondary, rentals) require maintenance, some very big ticket items like roof replacement, painting, HVAC/appliances, etc. Consumer electronics don't last forever, smartphones, laptops, tablets, etc. If you own boats or planes...

We have used budgets for many years, before and after retiring. For reference, in the past 5 years our total spending has averaged $104K per year without taxes, of that $29K was lumpy expenses (a car, new house expenses primarily). If we had budgeted for $75K, what daily living costs us, we would have been totally unprepared for those sporadic big ticket items. Not saying that exact ratio holds true for everyone, but everyone needs to budget for 'lumpy expenses' IME. And they are not insignificant.
 
We have our regular monthly budget that includes some lumpy expenses that will occur over the yr. We have also have a pile of money ( 500k) allocated to large repairs , cars, international travel outside USA. Plus an discretionary accts for both of us for WTF cash that we can use for what ever
 
I never have had a written budget. Since I was about 30, If the money wasn't in the bank, I didn't spend it, except for the purchase of a car, house, or the once in a while 0% financing options. If you are living below your means, a budget is just an exercise. But I suppose it could be a tool to get to some desired outcome.
 
Never had a budget per sae but numbers are my friend. Years of remembering numbers, doing margins in my head on the fly, etc.

So, we may not budget but I am very aware of what are expenses are, and what they have been vis a vis our income and our cash flows. We have always lived below our income and have always avoided consumer debt on the the assumption that I could not afford to pay interest on a depreciable asset.
 
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