DH and I are at an impasse around finances. I’ll spare y’all the details, but we are both committing to getting a handle on where exactly our money goes. Do you:
Write down what you spend as you spend it, tallying the total at the end of the week/month/quarter? In other words, tracking your spending on the back end.
Set a true budget – say, $500/month for groceries – and then when you hit that $500 you are done with that category for the duration?
Just go along spending and knowing/hoping that you aren’t overspending?
Something else.
If there is a specific product you use, please detail. Thanks in advance!
We use Quicken. We’ve set a budget from the first year we were living together with categories for just about everything. Every month we gather the bills and credit card statements and make sure each dollar is account for in the right category. In the early years, we sat down and reviewed the budget every month. If we were off somewhere, we’d cut back the next month. After 30 + years, we’re really good at budgeting and we just review at year end to make sure we didn’t break the bank somewhere. We also use those numbers to set the budget for the following year.
We use YNAB (You Need A Budget). You budget your dollars and give them their jobs before spending. But it is flexible enough to look at your patterns and make changes. Way more flexible and easy to use than an old spreadsheet was. It costs money, but we save way more due to better control and awareness of our money and spending
I’ll admit. I can’t budget. My goal. Spend less than I make.
While it’s not formalized, I’m helping a young girl at work who is barely saving.
So I asked her - what do you have that you don’t need ? She now does Starbucks 2-3 days a week vs 2x every day.
She eats out less and now at a meal puts half into a to go the minute she gets her meal so she’ll have the next day.
You can always shop car and homeowners insurance.
So I’m a failure at budgeting but you can look at every action you take and decide - do I need this as often, do I need this same brand, or how will my life change with this purchase.
We do not budget, but we track what we spend. I write down credit card balances each month, and other things I pay with cash or check. I use a notebook and excel.
For most of my life I didn’t do this, but I started when I wanted to make sure I could afford to retire.
We do #1. I used to do a strict budget, and we were careful to keep spending within that budget. After 40 years of marriage, we are in sync on spending priorities. We have certain monthly/annual costs that we know are going to happen, so we know our baseline spending. We know how much we generally spend on food and gas. We spend on other things as the need arises, and we keep tabs on how this is affecting our bank account. If we spend a bit more on something unexpected, we’ll just intuitively cut back on upcoming discretionary spending. For example, we had a car repair that was an unexpected cost - we will think twice before spending on unnecessary things for a couple months. We’re pretty lucky at this time in our lives, no longer worrying about not having enough money, which makes it easier.
It works great for saving money. We have categories for car repair, roof repair etc. We add each transaction as we spend, to the appropriate category, and then reconcile several times a week with our bank. We link the accounts and it makes life so easy.
I now have my college kids doing it.
I would say a little bit of all of these. We don’t track super closely, but we put almost everything on our one credit card that gets us travel points so we can log in and look at our spending there. We have our household utilities, etc, set up on it too. We also do not carry debt. We pay the card off every month and don’t have any car payments. We do have less than $10K left on our mortgage. And we are paying for college for one kid right now.
We pay ourselves first - savings. We know how much we take home monthly. At the beginning of each year, we determine our monthly savings goals. That money comes out of paychecks before anything else.
We save in our 401(k)s, our IRA, the HSA, the 529, and the “all other savings goals” buckets. After we put all the monies ear marked for savings into savings (its automated at this point) - we then pay out necessary bills (mortgage, utilities, phone, etc). While some of those vary a bit, they are pretty stable. After putting savings away and paying our fixed bills - we know any remaining money can be spent as needed/wanted.
The discretionary money that is left we take out in cash to know what and where we are spending. Easier to figure out where money is going when you have to hand it over for those discretionary costs. We found it harder to know what/how much we were spending when we used credit cards. At the end of the month, we were always surprised by the how large the credit card bill was…and when we’d review the bill - each individual item was reasonable - it was just too easy to lose track of how many individually reasonable purchases we’d made. Especially with two people charging. Cash made it clear. We’ve never kept a balance on our credit cards, we pay them off monthly but we found we were spending more than we wanted when we primarily used the credit cards for purchases.
As we got better with having a handle on our spending, we got more comfortable with using credit cards with intention. It is rare for either of us to now be surprised by a credit card bill, but the time spent on cash definitely helped us have a better handle on our credit card use.
We are fortunate to not need to budget per se. But for more than a decade I’ve been tracking monthly money “outflow”. Originally it was done so we could tell potential financial planners how much after-tax income we’d need in retirement.
Each month when I am done balancing the checkbook (yea - I’m old school), I do some quick subtotals. In a spreadsheet (which was originally a paper tally), we list monthly subtotals for:
AUTOPAYs
CHECKs
CASH withdrawals
VISA payment (the biggie - we study category totals each January on Chase annual report)
It’s an easy peasy chore, about 10 minutes per month. (It’s a little more of a pain since in Excel because I have to ask hubby to enter the figures on his big spreadsheet where we track a lot of financial stuff.)
Note: I omitted college payments back when the kids were still in school. Also omitted a 2013 new car purchase that would have severely skewed that year’s average (but we do have other ways to plan for future car purchases). In a comment column on the spreadsheet we make notes about vacations and any unusual expenses that month.
I spend responsibly, rather than have fixed rules that I must spend $500 on groceries or $x in category y. Instead my spending varies depending on the specific conditions that may vary over time. For example, I haven’t been spending much on gas recently This will likely change next month, with it being more comfortable temperature for hiking trips with my dog. I plan to renew my home insurance next month. It will be more than I’ve ever spent before on home insurance, yet I am confident that it is the best possible price for my desired coverage.
I do use Mint, which provides some general information about how much I am spending on different categories of expenses, and how my spending has changed over time.
I also monitor my balance of short-term (money market, t-bill, …) and increase my weekly investment amount, if the short-term reservoir is gradually increasing over a period of several months, to beyond desired level. I have never decreased weekly investment amount, only increased.
We have tracked our spending patterns for years. This also means accounting for larger purchases like college costs for our kids, car replacements, etc. Our financial planner said this is very very helpful when he works with clients. So…if you don’t do something…you might want to consider it.
My S likes Mint app as well. I’ve tried budgets and just find them confusing to humbug. I just try to spend less than I have.
When I was in college and law school, I wrote down each and every expense on a file card, one per week and totaled it up. Having to write the expense was a pain and forced me to really carefully consider whether I wanted the item.
Once I was done with school, I just tried to remain frugal and always started with contributing max to retirement acct (paying self first). Built an emergency acct and tried to never dip into it. H and I each had $100 in cash/month and once it was gone, cut back on spending.
We always paid off CCs every month, so no late fees, etc. When H got raises, we tried not to adjust spending and just saved it as long as possible.
We don’t budget, but we record. I have a one page paper spreadsheet with all the main outgoing expenses and balances on our Roth, HSA, Ira and bank accounts. On the first of the month I check all those balances and record our net worth (not including real estate) I also log credit card, utility, cell phone, internet, car insurance etc. bill payments, and also note big purchases or payments for travel, home repair etc. it is useful to see the outgoing expenses and how our net worth increases or decreases with stock market and spending changes. We don’t use this to restrain or limit our spending, as we are naturally pretty frugal. It is more just to serve as financial checkup.
I’ve been tracking expenses for over 35 years, so I know what we spend each year - but never kept a monthly budget, since expenses varied significantly each month. Early the following year (usually closer to tax time), we discussed if and where things could be adjusted going forward. We always kept an emergency fund, and always “paid ourselves first” with a savings fund . We’re both also very frugal, so saving was not an issue.
Originally, I kept track by hand. Once computers were common, I established my own Excel chart (before budget programs were common). So I still use my own version. Typically I log expenses a few times each year from the charge card and bank statements. We rarely use cash, but I know how much cash I withdraw from ATM’s and keep a note on any larger cash expenses.
Sounds tedious? Not really. Sometimes it is just thoughtless data entry, but great mindless ‘therapy’. It also gives an excellent understanding of our expenses for financial planning, and perfect for tax prep.
We don’t budget but we are mindful of spending. We pay off our credit card in full, pay cash for cars and our mortgage is almost paid off. We put most things on the same credit card and it does categorize spending for us.
My friend after going through a divorce had a drop in income. She spent 6 months writing down in a small notebook everything she spent even if it was just a few dollars. It gave her a picture of where her money was going and ways she could cut back.