Poll: How do you budget?

[calmloki]

I have obligations too. Funding my future retirement is my number one obligation. So I address my number one obligation first too. Then I pay bills. Then discretionary items come last. I'd rather miss a bill payment than to miss a retirement payment.

And there we differ. I can twist my head around to see that an obligation or promise to myself is more important than an obligation or promise to another, but it just doesn't work for me. Sounds like we are at different points in our lives though - my retirement is funded+ at this point, you are making sure your retirement gets funded.

 

[karen1972]

I guess I loosely budget. I use a ton of categories and set a budget in December for the next year as goals. The total number is really what matters as long as we don't go too far over and we will adjust and delay some things to next year. Savings are already set on auto-pilot so we just make the rest fit.

 

[dirtbiker]

And there we differ. I can twist my head around to see that an obligation or promise to myself is more important than an obligation or promise to another, but it just doesn't work for me. Sounds like we are at different points in our lives though - my retirement is funded+ at this point, you are making sure your retirement gets funded.

And I should add that I don't miss bill payments. I meet all of my obligations.

 

[Lewis Clark]

The poll results surprised me, as I assumed that nearly no one would have chosen the 'no budget' option here. However, I forget that a large majority of people here are already retired, and that probably sways the results this way quite a bit. I wish I would have worded the poll to say how did you budget when still working.

We tried budgeting in our first year or two of married life. I found the process frustrating because I never knew how much to budget in many categories and especially for lumpy expenses. It just seemed so random and futile.

Then I had a realization. If we live far enough below our means then a budget isn't needed.

Since our savings rate was usually at least 40% of our combined gross income we decided the effort to budget was not worth it for us while we were working.

My wife has been retired for several years and I am now semi-retired. We're able to keep the same lifestyle and still live below our means (even if I stopped working completely). So we decided we didn't need to start budgeting. While we don't budget by category we do keep a close eye on our total expenses.

 

[daylatedollarshort]

We have a basic budget for the year. I don't really track non-discretionary expenses much. If vet bills are $1K instead of $400 or car repairs $1.5K instead of $800 then they are what they are. If it happens enough I up the annual budget.

I do track my discretionary spending pretty close. I try to play beat the budget each month. I save the extra for another month or use it for fun or hobby items. Like this month I have most of our November and December entertainment planned out pretty frugally between our various annual passes, Facebook specials, library passes and Goldstar tickets, so I can use the rest of the entertainment budget for extra Christmas gifts or dining out when our family comes to visit for the holidays.

 

[sakowitzm]

Answer to the original question: No. But kinda; sorta.
I spend what I want to spend. I have a general sense of what I will spend for the year, and then I track all of my expenses. If I saw that anticipated actual expenses were going to exceed my general sense, then I would/might adjust my spending. But no, I don't limit my spending in any given area to a set amount. In most years I end up underspending here and overspending there, and it mostly balances out.

 

[denstl]

Used Excel to itemize all our spending expectations before I retired in order to come up with a budger. Now use Mint to track everything we spend. Mist does a good job with budget reporting (especially since Mint is free). Luckily I over estimated what I thought we would spend so usually come in well under budget (don't tell my wife that though

 

[almost there]

Other..... 6 years using free "Personal Capital" makes it easy. Spells everything out. Easy to see and track. Makes it simple. Everyone here should be using it.

 

[Kimo]

Quicken

I have been using Quicken since the first month it was released. It was so easy to determine what I would need to retire. I had 15 - 20 years of income and expenses in every category that I needed to have a spot for every dollar I spent as well as made.

 

[Spaceman]

For last five years I have been using the goodbudget app to capture all expenses. it automatically sync data among family members. I track 30 categories of spending in excel which I input monthly amounts.

Have been tracking expenses and income by month for 27 years. In 4 of 27 years net worth decreased due to investment loss only, not going off budget. Investment value and net worth are calculated daily just for the fun of it.

 

[albundyz]

I think this depends on how comfortable you are with your nest egg. If you have plenty of money, budgeting is less important. Also, some people don't have the time to budget and some people just don't like budgeting. I have the time, and I rather enjoy working with a budget. Our nest egg is just enough to cover our expenses, so we budget closely. I use an Excel spreadsheet and I know where all the money goes. I have 6 monthly categories (food, gas, utils +more) and 6 non-monthly categories (insurance, taxes + more) and a couple emergency categories ( health, house, car ).

 

[sn2792]

https://www.youneedabudget.com/

You can try it out for free, IIRC.

This is what I use. I withdraw money every 6 months from IRAs and put it in an online savings account. Once a month, I transfer my monthly allotment to checking account. I use YNAB to budget all the bills and categories using my Soc Sec. check, pension and IRA money. I keep flex money in the budget for unexpected things that might come up.

 

[Morricol61]

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.

This is much the same system as we use.

I feel comfortable knowing we are tracking close to our budget as we move through the year. I am fine tweaking as we go, perhaps one category is under spent, that is fine, it will off set over expenditure in another category.

Next year's budget will be updated to reflect this year's expenses. Some things become more expensive over time, or new expenditures are incurred that we've never needed before, but so long as we stay close to the total at the end of the year, I am satisfied.

 

[Murph]

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.

I have a detailed spreadsheet that helps me plan my income and outgo. While I'm very good at paying the bills (we have had zero debt for many years now), I am a little looser on discretionary spending. Consequently, I don't save nearly as much as I should. But we enjoy eating out, shopping, having a little fun, traveling a little, etc.

 

[NoMoreJob]

When working we never budgeted. As with others who have posted above we lived well beneath our means and saved a large percentage of our income so budgeting wasn't worthwhile or necessary. However, after retiring early we worked out a budget that would keep us within a conservative withdrawal rate and revisit and revise it every 2-3 years. We put that amount into our MM account at the beginning of the year and always have a bit left over at the end of the year. Our next phase of retirement will be when we begin taking RMDs and Social Security at 70. The budget will increase at that point and so will taxes as the sources of income change.

 

[Dtail]

This is much the same system as we use.

I feel comfortable knowing we are tracking close to our budget as we move through the year. I am fine tweaking as we go, perhaps one category is under spent, that is fine, it will off set over expenditure in another category.

Next year's budget will be updated to reflect this year's expenses. Some things become more expensive over time, or new expenditures are incurred that we've never needed before, but so long as we stay close to the total at the end of the year, I am satisfied.

Exactly.

 

[pjigar]

We use a combination of "Pay myself first" and "Loosely defined" approach. We first max out all the tax advantaged contributions. The rest goes to the bank. We have a target monthly spending amount. Monthly expanse can hover around the target due to lumpy expenses like insurance premium, travel, education, charity, etc. but overall the average should track towards annual goal. If the trajectory deviates away from annual goal then we take corrective measures mid-year i.e. watch expenses and cut them where we can. We watch the monthly spending number almost weekly.

 

[blueskyk]

We budget (Mvelopes) and track all transactions. This doesn’t seem onerous to us for two reasons 1) DH and I use the app on our phones and it helps us negotiate and stay on the same page and 2) we have to stay under the ACA subsidy income limit or risk paying about $20K if we go over

It’s not very fancy software but it works for us.

 

[Car-Guy]

No budgeting. However, I do track my "investable" NW on a monthly basis and as long as it stays the same (or close) I don't worry about it and continue to blow that dough.

 

[steveark]

If you are a frugal high earner budgets are kind of a waste of time. And if you are retired but still earning more than you spend you also don't need them.

 

[sanfanciscotreat]

Same here. Retired almost ten years. Look at what I have spent per month and especially per year. Compare to net worth and worksheets. Spending about half of what I can including two weeks in AK, four weeks in FL and various other travel/luxury expenses.
Percentage of spending vs net worth keeps going down despite my efforts. Suppose I am not wired to spend $1000 per night or $5000 per week at an island resort. Oh, well, continuing to enjoy life while we have good health!!

 

[Finance Dave]

Loosely defined. We are both very conscientious about our spending...so we do our budget "retroactively". We lay out spending in rough categories, then after the year ends I spend a day totaling it all up (we charge the vast majority on our credit card and pay off in full monthly, and at end of year we get a booklet from VISA detailing the spending). We then sit down to see if we stayed within our limits.

I find it very comforting that we are both to the point where we never overspend...we always come in close to or just above our budget. For us the difficult things are the large infrequent purchases such as a car, furnace, etc.

We don't "pay ourselves first" because we are FIREd lol.

Although some here would not call me FIREd because I still *ork a bit when I want to...extra money for sports cars, craft beer, and vacations lol. Currently having a new crate engine installed in my musclecar ($11k) that was paid for by money I made in 2018 *orking about 1 day per week.

 

[nancyfrank232]

I keep an itemized list of monthly expenses but it’s never been terribly useful for budgeting. It’s more for our accountant to do our taxes

 

[Dtail]

If you are a frugal high earner budgets are kind of a waste of time. And if you are retired but still earning more than you spend you also don't need them.

How is one retired and earning more than they spend, unless they are still effectively working, or do you mean from passive income?
If the passive income is from investments, then on a total return concept, one is still spending the portfolio.
If from pensions and Social Security only, yeah then agree.

 

[nancyfrank232]

Percentage of spending vs net worth keeps going down despite my efforts. Suppose I am not wired to spend $1000 per night or $5000 per week at an island resort. Oh, well, continuing to enjoy life while we have good health!!

This is always the case. As my parents told me, “Don’t worry about that. You can’t take it with you so if you don’t spend it, someone else will!” [emoji23]