Author Topic: Anyone else do this with their budget? Lumping categories together.  (Read 11176 times)

robotclown

  • Stubble
  • **
  • Posts: 152
Since I spend a lot of time on various MMM-type websites, I see a ton of budgets.  And most of them have categories like entertainment, restaurants, groceries, household goods, etc.

I think it takes too much time, and I don't bother with it.  I lump everything that I don't get a bill for into one pile and just call it "discretionary," so my spending just has 5 line items: rent & utilities, car insurance, phone, gas, discretionary.  Am I oversimplifying things too much and missing potential savings, or making my life easier by not micromanaging the budget?

It also has the weird effect of making me feel poor at the beginning of the month, instead of the end, since it's X dollars divided by days left in the month, which inevitably goes up when I don't spend it.

sheepstache

  • Handlebar Stache
  • *****
  • Posts: 2424
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #1 on: June 15, 2014, 07:56:56 PM »
I think you should definitely track closely for at least a couple months.  As you suggest, closely tracking everything is what gives you the opportunity to really see where your money goes and therefore how you could save.  You might be surprised to find out how much you're spending on gas, restaurants, etc.  Even if you're happy with your overall discretionary spending, you might find it doesn't reflect your priorities in the specifics.
But yeah, after you have a better idea where your money's going, maybe lumping everything together is what works for you. 

As for making you feel poor at the beginning of the month, I would just be careful that it doesn't make you feel rich at the end of the month.  You don't want to blow money you wouldn't otherwise because you have the idea in mind that you have a ton left and the month's almost over.

MDM

  • Walrus Stache
  • *******
  • Posts: 9286
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #2 on: June 15, 2014, 08:06:45 PM »
Depends on whether or not you "need" to bother with it.

If you are happy with your rate of approach to (or success in sustaining - don't know where you are) FI, then you are correct in "making...life easier by not micromanaging the budget."

But if you want to improve, it is indeed easier to improve if you know what to work on and can make specific plans to do so.  "Reduce discretionary spending" is a nice platitude, but "eliminate $150/mo cable TV bill" is something specific you can do.  This is pretty much what sheepstache is also saying.

You didn't mention pre-tax savings (and maybe you are retired already so this wouldn't apply), but that's another thing you don't get a bill for that should be specifically addressed - in this case, increased to the maximum possible.

Good luck!

Ethernet

  • 5 O'Clock Shadow
  • *
  • Posts: 34
  • Age: 22
  • Location: Lawrence, KS
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #3 on: June 15, 2014, 08:31:36 PM »
I agree with the others, and I did the same thing. I micromanaged the hell out of my budgets when I first started out, but after awhile I realized that I was well off, and now my only budgets categories are for reoccurring bills. Everything else gets put into the, well, everything else category.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27665
  • Age: -999
  • Location: Traveling the World
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #4 on: June 15, 2014, 10:15:49 PM »
I have household/pet food/litter/groceries all lumped together because I buy them at the same location, so I don't want to bother splitting out that spending in Mint.  It's all just "groceries".

Housing lumps together mortgage, property taxes, insurance, and HOA.
Utilities lumps together Electricity, Water/Sewage, Garbage.
Auto lumps gas, car repairs, etc.

Some categories are more fine tuned than others.

Food I do a total but also break down into groceries, fast food, and restaurants (only cause Mint automatically does it for me, otherwise I wouldn't bother.. actually I wouldn't track at all if it wasn't automatic).

Here are my categories:
Housing
Utilities
Cell Phones
Food: (Groceries, Fast Food, Restaurants)
Student Loans
Entertainment
Travel
Auto
Shopping ("Stuff")
Other/Misc (Financial, Insurance, Health and Fitness, Pets, etc)
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Zikoris

  • Magnum Stache
  • ******
  • Posts: 3373
  • Age: 32
  • Location: Vancouver, BC
  • Vancouverstachian
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #5 on: June 15, 2014, 10:58:03 PM »
I like to be pretty specific. Here are my categories:

Home
- Rent
- Home Improvement (toilet seats, tools, lightbulbs, etc)
- Renter's insurance
- Moving expenses

Food
- Groceries
- Snacks
- Restaurants
- Maple butter
- Costco renewal

Shopping
- Electronics
- Clothes
- Shoes
- Hobbies (sewing, knitting)
- Furniture
- Sporting goods
- Kitchen stuff
- Books

Bills
- Cell phones
- Internet
- Government BS (renewing ID, etc)

Personal Care
- Hair cuts
- Toiletries
- Laundry

Transportation
- Public transit
- Bike stuff

Entertainment
- Concerts and shows
- Movies
- Ballroom dance

Other
- Pet stuff
- Gifts
- Tuition for classes (like sewing)
- Shipping costs
- Medical
- Massages not covered by insurance
- Donations

rpr

  • Guest
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #6 on: June 15, 2014, 11:13:37 PM »
Mine is somewhat similar to Arabelspy's categories. I have

Home -- includes mortgage, home insurance, taxes, utilities, maintenance

Auto -- includes gas

Groceries -- includes food, litter, household stuff, etc.

Dining -- restaurants, fast food etc.

Pets -- vet bills, food.

Misc -- entertainment, shopping, completely discretionary

Irregular -- includes insurances

Everything else goes into savings. Travel comes out of here as needed.

stripey

  • Pencil Stache
  • ****
  • Posts: 772
  • Age: 119
  • Location: Australia
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #7 on: June 16, 2014, 12:24:03 AM »
I agree with the others, and I did the same thing. I micromanaged the hell out of my budgets when I first started out, but after awhile I realized that I was well off, and now my only budgets categories are for reoccurring bills. Everything else gets put into the, well, everything else category.

Interestingly, I did the opposite! I only 'macro-managed' my budget for a while, then spent about six months micro-managing certain line items, particularly the one I label 'reciepts' which probably aligns with OP's 'discretionary' account (anything I would likely pay for in person by cash or card and get handed a reciept!). I've now gone back to only macromanaging for the moment.

That having said, I tend to focus on post-tax savings % rather than expenditure as it seems to work well enough for me in the medium term. I know that is not conventional MMM 'dogma' though. I am a bit of a minimalist and am environmentally conscious (or at least I think so), and I've been out of the habit of buying 'stuff' for the sake of it for quite a while now. Each to his (or her) own.

Burgis81

  • 5 O'Clock Shadow
  • *
  • Posts: 13
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #8 on: June 16, 2014, 02:04:51 AM »
Hi!

when thinking about private budgets, I'd say that the sequence of it is the most important, not the level of detail…

check out:
http://www.getrichslowly.org/blog/2009/10/19/pay-yourself-first/

I have four main categories (then some items under each category) for my monthly budget:

1. incomes
minus:
2. savings and investment
3. donations
4. bills

whatever is left over is free to spend guilt free :) usually not a lot because it feels better to maximize #2. I also work on the items in the #4 bills category to lower them a la MMM, e.g phone bill, hairdresser, etc.
« Last Edit: June 16, 2014, 02:11:55 AM by Burgis81 »

marty998

  • Walrus Stache
  • *******
  • Posts: 6253
  • Location: Sydney, Oz
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #9 on: June 16, 2014, 04:55:40 AM »
When most of your "budget" is general savings, I think it ceases to be a budget in the conventional sense.

Rural

  • Magnum Stache
  • ******
  • Posts: 4832
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #10 on: June 16, 2014, 06:24:58 AM »
I tracked obsessively for one year to get good data (that was 2007, I think), but otherwise I haven't bothered much. I need to know what we're spending and if it's getting out of hand, but it hasn't yet. So my spreadsheet has all the fixed expenses as specific line items; that's easy. Then there's a line item for "credit card" because all discretionary spending goes on a shared rewards card. The only real adjustment I make is to subtract out reimbursable work expenses. The system lets me monitor overall spending at a glance; if it goes up independent of a major planned purchase (of building supplies generally), then we adjust.


But that's not a budget to me. That's tracking spending, and it doesn't reflect one full salary which we never see because it goes straight to retirement accounts. A budget predicts, and we don't do a very formal one, though the occasional back-pf-the napkin run-through happens. Spending tracking, even our very minimal version, is reflective, not predictive.

happy

  • Magnum Stache
  • ******
  • Posts: 4854
  • Location: NSW Australia
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #11 on: June 16, 2014, 06:54:41 AM »
Might depend whether you're a lumper or a splitter. I'm like Rural I track intensively intermittently. This year I'm trying to track pretty hard, because I really want to take it up a notch.

I started with fewer categories and ended up with more. "Misc" wasn't helpful because I couldn't really see what was in there and whether it was necessary. Being a flabby mustachian I found up to $10 a month on parking, that I could lose. I was only drinking 3 cups of coffee a week, one a day at work @$1.50 a go i.e. $4.50 a week. Not exactly a starbucks habit, but hey thats about $200 a year. Another couple of "Miscs" and bam there's $500 a year off the budget. So for the time being there is NO Misc. Until there's actually not much to put in misc if I had a misc. Again lumping all the utilities together created a huge sum of several thousand a year. Staggering it was. Hey how did I spend that much?…back to splitting to see what was the problem and what could be shaved.



MsSindy

  • Pencil Stache
  • ****
  • Posts: 535
  • Age: 52
  • Location: Philly Burbs
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #12 on: June 16, 2014, 07:20:41 AM »
Might depend whether you're a lumper or a splitter. I'm like Rural I track intensively intermittently. This year I'm trying to track pretty hard, because I really want to take it up a notch.

I started with fewer categories and ended up with more. "Misc" wasn't helpful because I couldn't really see what was in there and whether it was necessary. Being a flabby mustachian I found up to $10 a month on parking, that I could lose. I was only drinking 3 cups of coffee a week, one a day at work @$1.50 a go i.e. $4.50 a week. Not exactly a starbucks habit, but hey thats about $200 a year. Another couple of "Miscs" and bam there's $500 a year off the budget. So for the time being there is NO Misc. Until there's actually not much to put in misc if I had a misc. Again lumping all the utilities together created a huge sum of several thousand a year. Staggering it was. Hey how did I spend that much?…back to splitting to see what was the problem and what could be shaved.

The above is pretty much how I manage my spend.  I lump the following together:
 - Groceries, eating out, alcohol, and household things like paper towels
 - RX / Vitamins / Health costs
 - Pet - includes food, baths, vets

Everything else pretty much has a line item in my spreadsheet.

frugaliknowit

  • Handlebar Stache
  • *****
  • Posts: 1636
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #13 on: June 16, 2014, 08:14:02 AM »
Wrong.  You are tracking the fixed (the expenses you have little or no control over:  rent & utilities, car insurance, phone, and gas) and not tracking the ones you have the most control over (discretionary).  You need to break it down further to look for possible ways to cut expenses.

Some of mine are food, booze (includes bars and liquor purchases), meals out of home (work lunches and restaurants), sports (that includes ski tuning, bike repairs, bottles of gatorade, etc.). 

Erica/NWEdible

  • Pencil Stache
  • ****
  • Posts: 881
    • Northwest Edible Life - life on garden time
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #14 on: June 16, 2014, 08:21:51 AM »
I like to be pretty specific. Here are my categories:

Food
- Groceries
- Snacks
- Restaurants
- Maple butter
- Costco renewal

Damn. How much Maple butter are you buying? ;)

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27665
  • Age: -999
  • Location: Traveling the World
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #15 on: June 16, 2014, 08:33:26 AM »
when thinking about private budgets, I'd say that the sequence of it is the most important, not the level of detail…

check out:
http://www.getrichslowly.org/blog/2009/10/19/pay-yourself-first/

I disagree.  I think paying yourself first is a good strategy for beginners, but I think most advanced Mustachians should move past that.  The goal, IMO, is to pay yourself last and pay yourself all of the extra money you have after spending on all your expenses, including discretionary, but you would weigh whether those discretionary are worth it. If they are, you spend it. If they aren't, you save it. But there's no need to try and save first and then blow all the extra money that you have at the end.

Of course, with that mindset in place, no budget is even needed.  IMO that's the ideal. Spend all of the money you want, save the rest.  It's just that you don't want stupid shit, and your spending is so optimized, that you end up saving a large percentage.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27665
  • Age: -999
  • Location: Traveling the World
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #16 on: June 16, 2014, 08:37:01 AM »
Wrong.  You are tracking the fixed (the expenses you have little or no control over:  rent & utilities, car insurance, phone, and gas) and not tracking the ones you have the most control over (discretionary).  You need to break it down further to look for possible ways to cut expenses.

I would say you have plenty of control over those fixed expenses you listed. You have direct control over how much gas you use, you can find cheaper insurance, you can choose a cheaper cell phone bill, etc.

I track though to know how much I'm spending. Not to try and cut out expenses. I was trying to cut expenses I would want to look at those fixed costs, and optimize them. For example, move to a cheaper apartment.  The discretionary I would need to track, I would just stop buying things I didn't need.

I don't personally do that, as I like my level of spending, but that'd be the best way to cut your spending in a hair on fire emergency: Optimize your fixed costs, and cut out the discretionary.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

DoubleDown

  • Handlebar Stache
  • *****
  • Posts: 1989
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #17 on: June 16, 2014, 09:07:34 AM »
Yeah, I think of "budgeting" as somewhat remedial. It's a very good thing to do if you don't have a handle on your spending or if you don't know where your money is going. Once you've optimized your spending, and you're mindful about it, no budget or categories are needed. At that point, if you wanted to verify some increased expense hasn't slipped by without you noticing, you can just check your bank account.

I take about 3-5 minutes to check two things each month, since all spending comes from those two sources: credit card account, and checking account. As long as everything looks copacetic there, I'm done.

warfreak2

  • Handlebar Stache
  • *****
  • Posts: 1140
  • Location: UK
    • Music by me
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #18 on: June 16, 2014, 09:23:31 AM »
I have a "Misc" category on Gnucash but not very much goes there. It's just not any harder assigning things to the proper category, and at some point Gnucash's guesses are accurate enough.

That said, there isn't much sense splitting a lot of transactions, like other household consumables from groceries - though I do split grocery transactions when they include one-time purchases (e.g. kitchen equipment) because I want to seperate them from ongoing costs, or alcohol (which goes its own subcategory under "Entertainment") because I think it's good to know how much I spend on it.

Like some others here, I don't "budget", I think it's a bit irrational to make decisions about individual expenditures like "well, I'll go to a restaurant today because I spent so little on restaurants this month". However, I'd say it's still important to see how your spending is categorised, to inform your habits, your ongoing strategy for dealing with each spending decision. Like, "I'm totally comfortable spending this much on my hobby, but I spend less on visiting my family, and that gives me even more happiness - I should visit them more often."

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27665
  • Age: -999
  • Location: Traveling the World
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #19 on: June 16, 2014, 09:38:27 AM »
Like some others here, I don't "budget", I think it's a bit irrational to make decisions about individual expenditures like "well, I'll go to a restaurant today because I spent so little on restaurants this month". However, I'd say it's still important to see how your spending is categorised, to inform your habits, your ongoing strategy for dealing with each spending decision. Like, "I'm totally comfortable spending this much on my hobby, but I spend less on visiting my family, and that gives me even more happiness - I should visit them more often."

That's a good point.  We decided we wanted to eat more fast food after looking what we were spending on that category.

We haven't done a very good job of it though.

And we decided to set an entertainment spending minimum for when we start traveling the world to purposefully spend more, so we don't cheap out and miss on experiences that seem too expensive but really aren't.

Looking at your spending to inform is a good reason to track.  It may not necessarily be a good reason to budget though.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

dcheesi

  • Pencil Stache
  • ****
  • Posts: 814
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #20 on: June 16, 2014, 09:43:29 AM »
For recurring bills, I know how much each one generally is, but I don't track them month to month. The total is what matters, and they don't change enough to warrant micro-managing. 

For discretionary, I still maintain categories, mainly so I know where I need to focus my attention. One for groceries, one for entertainment, a separate lump for weekends (long distance relationship), etc.

Spartana

  • Guest
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #21 on: June 16, 2014, 09:46:38 AM »
Since I spend a lot of time on various MMM-type websites, I see a ton of budgets.  And most of them have categories like entertainment, restaurants, groceries, household goods, etc.

I think it takes too much time, and I don't bother with it.  I lump everything that I don't get a bill for into one pile and just call it "discretionary," so my spending just has 5 line items: rent & utilities, car insurance, phone, gas, discretionary.  Am I oversimplifying things too much and missing potential savings, or making my life easier by not micromanaging the budget?

It also has the weird effect of making me feel poor at the beginning of the month, instead of the end, since it's X dollars divided by days left in the month, which inevitably goes up when I don't spend it.
I do this now but only after years of tracking my expenses to see where I was spending and if that spending could be reduced. Once I had my life (and spending) where I wanted it to be I stopped tracking and everything is discretionary.  I'm also retired on a fixed income so I just spend the amount I have after bills are paid. As long as I stay within that budget amount I'm good. Don't really care what it gets spent on, just don't want to go over that pre-set amount each month.

Zikoris

  • Magnum Stache
  • ******
  • Posts: 3373
  • Age: 32
  • Location: Vancouver, BC
  • Vancouverstachian
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #22 on: June 16, 2014, 10:44:53 AM »
I like to be pretty specific. Here are my categories:

Food
- Groceries
- Snacks
- Restaurants
- Maple butter
- Costco renewal

Damn. How much Maple butter are you buying? ;)

Too much. My boyfriend's crazy about it! We separate it out more because it's his thing so he has to pay for it, rather than groceries, which we split evenly. According to Mint, we spent $106 on maple butter in 2013.

darkadams00

  • Bristles
  • ***
  • Posts: 381
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #23 on: June 16, 2014, 11:27:41 AM »
I break out utilities because those monthly figures prompt me quickly about a habit that we might have slipped into without noticing--ran A/C longer in the day or left it on when traveling, ran the dishwasher more, whatever. The amount of money for these is small individually, but I found that a few of these can add up to > $100/month otherwise. We also use a Large Purchase/Asset category because we like to remind ourselves of atypical items that we bought that could make our annual spending appear a bit higher, e.g. items that do not fit in any of these categories other than Miscellaneous but are over $100.  If it's over $300-400, I will remember it. If it's smaller, I probably won't, but I'd like to. These categories help me to know if I'm doing well with regular, billed expenses, large purchases, and savings but missing some savings potential in the areas where we most often overspend.

Categories
Housing
Electricity
Natural Gas
Water
Phone
Internet
Insurance
Groceries
Restaurants
Gifts/Contributions
Clothing
Education (kids' college costs)
Auto: Gas
Auto: Other
Large Purchase/Asset
Travel
Miscellaneous

rmendpara

  • Pencil Stache
  • ****
  • Posts: 602
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #24 on: June 16, 2014, 12:03:14 PM »
Since I spend a lot of time on various MMM-type websites, I see a ton of budgets.  And most of them have categories like entertainment, restaurants, groceries, household goods, etc.

I think it takes too much time, and I don't bother with it.  I lump everything that I don't get a bill for into one pile and just call it "discretionary," so my spending just has 5 line items: rent & utilities, car insurance, phone, gas, discretionary.  Am I oversimplifying things too much and missing potential savings, or making my life easier by not micromanaging the budget?

It also has the weird effect of making me feel poor at the beginning of the month, instead of the end, since it's X dollars divided by days left in the month, which inevitably goes up when I don't spend it.

I think there are two approaches to consider:

1) Lumping - like you mentioned, it may be easier to understand since rent/util go together... but it wouldn't make sense to combine phone and gas. I think if you are overall happy with your savings rate, then getting too detailed can be difficult since life has a lot of random/irregular expenses that throw off your monthly amounts (car repairs maybe 1x/yr, oil change 2-3x/yr, etc). It helps if you take trailing 3 month averages, or 6 mo, but that gets more complicated.

2) Inverse lumping - I just made this term up, but I combine categories like "grocery/restaurants/entertainment", since if I spend more on groceries.. I'll probably spend less on eating out, and a large part of my entertainment expenses are dinner/drinks out with friends. In reality, I really just track my total expenses each month (though I have a good idea of the details within) between rent/util and everything else.

Rent/util - $1.3k
All else - $1.2k (food, gas, drinks, everything else)

A lot of months, the "all else" category is $600-800, then other months it's upward of $1,500-1,800. Things like buying a GMAT review set, passport/visa renewal and application fees, and other random stuff will make spending higher, but most months will only include the regular stuff. For me, it's helpful to track 3-mo averages, and I'll dive deeper if I think the total is off, or seems higher than I remember.

At the end of the day, I am trying to hit a savings rate of 40%, and I'm usually above that, so no need for me to micromanage as long as I'm meeting my goals.

Maybe you could try the same? Just track monthly amounts in those categories, and see what seems to fluctuate how much and when, and look further into your expenses if the "discretinoary" category seems higher than you think to make sure you understand what caused the jump.

For people who are having trouble finding areas to cut expenses, it's probably helpful to break out a much more detailed list.

oldtoyota

  • Magnum Stache
  • ******
  • Posts: 3114
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #25 on: June 16, 2014, 12:29:30 PM »
Since I spend a lot of time on various MMM-type websites, I see a ton of budgets.  And most of them have categories like entertainment, restaurants, groceries, household goods, etc.

I think it takes too much time, and I don't bother with it.  I lump everything that I don't get a bill for into one pile and just call it "discretionary," so my spending just has 5 line items: rent & utilities, car insurance, phone, gas, discretionary.  Am I oversimplifying things too much and missing potential savings, or making my life easier by not micromanaging the budget?

It also has the weird effect of making me feel poor at the beginning of the month, instead of the end, since it's X dollars divided by days left in the month, which inevitably goes up when I don't spend it.

I live off of last month's paycheck, so I never feel poor and I have all the dollars available to budget.

For me, it works well to use categories because I used the data to create a retirement budget. I want current and future data to confirm my retirement budget estimates are correct.

ETA: With budgeting, I find it's best to use a method that works for your personal goals. There's really no other answer than that. =-)
« Last Edit: June 16, 2014, 07:24:10 PM by oldtoyota »

Cassie

  • Walrus Stache
  • *******
  • Posts: 5444
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #26 on: June 16, 2014, 02:40:18 PM »
I really like using a budget because I feel like it keeps us on track. I also separate groceries from eating out, etc.  I like to know where the $ goes in each category.  Pet food & grooming are all separate items for me.  I think you should find what works best for you and then follow that approach.

ohyonghao

  • Pencil Stache
  • ****
  • Posts: 635
  • Age: 35
  • Location: Hillsboro, OR
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #27 on: June 16, 2014, 04:50:34 PM »
I've gone from having lots of categories to consolidating a lot of them.  I think the many categories helped at first, but it can be overbearing to split everything up.

Our food is split into Groceries and Restaurants, but we'll borrow from one to give to the other, they also roll over to the next month.  Gas has an upper limit of what rolls over, then everything above that goes to retirement.  I usually fill up once a month or so, that costs about $60, but our upper limit is $150 and our budget has $75 which usually gets cut at the beginning of each month when I work out our budget because sometimes we go a month and a half without filling.

Recently I combined our Doctor budget with our Emergency savings.  Haven't been to a doctor in 2 years and I figure it counts as an emergency so why have money tied up where it isn't needed.  Emergency is also going to get cut a bit because of the new Emergency plan we are going to implement.

The main things which have their own budget are annual expenses.  We take the annual expense, divide by 12, and add that to the category every month.  This lets us pay less for car insurance because we are paying in a lump sum amount instead of monthly payments, usually a savings of 10% or more which is better than a stock market return.

Then utilities I run a spreadsheet where I have a rolling average going and will probably adjust our monthly category once a year or so with it.  Being our first year in the house I have it a little high on purpose, after next winter we may be able to axe it by 10% or so.

I agree with Arebelspy and that the bigger picture is to work on not wanting to spend all this extra money and that sometimes the danger of a budget is that it gives you permission to just spend wildly.  I've been cutting back my "allowance" budget and doing more of talking with my wife for things I want to purchase.

NinetyFour

  • Walrus Stache
  • *******
  • Posts: 6338
  • Location: Southwestern US
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #28 on: June 16, 2014, 05:06:22 PM »
My spreadsheet helps me track spending (and no, I do not lump categories together), but I also use it to set goals for myself when I am so inclined.

Interesting that this is referred to as being "remedial" and that it doesn't rise to being an "advanced mustachian".  Whatever.

My system works really well for me.  I hardly spend any money--and I do not feel deprived.  I like numbers and data--and I enjoy the occasional challenge of, say, "Can I keep my groceries under X this month?" or "How long will it take to bring my average gasoline spending per month down to Y?"

Caoineag

  • Pencil Stache
  • ****
  • Posts: 522
  • Age: 37
  • Location: Denver
    • My Journal
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #29 on: June 16, 2014, 08:12:24 PM »
I generally lump in broad categories. That said, thanks to mint I can always drill down farther if I have a concern or want to double check. In fact, checking trends for the year is how I decided that as much as I love food, its a category that needs trimming.

Food
Gas
Utilities (Water, Electricity, Phone)
Each big bill is its own category just so I see when it clears
Everything else

All large irregular expenses are their own category in the month they come out (i.e. auto insurance, vet bill).

There is really only one place left to trim and that's food. Its also clearly not a grocery issue but a restaurant issue so we know to really evaluate the eating out. Everything else is on auto pilot.

Bookworm

  • Guest
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #30 on: June 17, 2014, 12:37:50 AM »
I seem to be the only one, but I keep a budget (YNAB) and separate everything because if it's not right there in front of me like that all the time, I literally forget what I have and haven't paid. I will forget to pay something important.

As far as discretionary spending, I have been adding more and more categories and trying to shrink "misc," because I feel like it puts us in a better place to start conversations about particular spending decisions. A lot of the anxiety I tend to go through comes from not feeling like my spouse and I are on the same Mustachian level at any given time with regard to the same categories. Detailed tracking lets us have accurate numbers for hashing things out.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 8466
  • Registered member
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #31 on: June 17, 2014, 12:41:11 AM »
My budget looks like this:

Shit I spend my money on: $X/mo
Savings: $Y/mo

Ozstache

  • Pencil Stache
  • ****
  • Posts: 834
  • Age: 51
  • Location: Oztralia
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #32 on: June 17, 2014, 03:42:21 AM »
I've been using Quicken, or an equivalent predecessor, for over 25 years now, so my expense tracking habits are quite ingrained. I currently use 15 expense category groups and nearly 60 sub categories and budget against each of those.

While the majority of the sub-categories are for regular annual expenses, 11 of them are from a rolling 10 year major expense budget that I have created separately in a spreadsheet. As such, my annual budget is the sum of a regular annual budget and this year's window in the 10 year major expense budget. FWIW, the split is roughly 75% regular to 25% average 10 year major expense for one year.

This probably sounds complicated, but I assure you that it is not. Once you have set up categories in Quicken, they are super simple to use and do provide me useful granularity when analysing my expenses against budget. Tracking regular and 10 year major expense budgets allows me to cover off on any expense I will or may encounter in my lifetime.

happy

  • Magnum Stache
  • ******
  • Posts: 4854
  • Location: NSW Australia
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #33 on: June 17, 2014, 06:51:51 AM »
I've been using Quicken, or an equivalent predecessor, for over 25 years now, so my expense tracking habits are quite ingrained.

Huh, years ago (like early1990s I think) I had a simple Quicken program which I loved. Then it got all fancy schmancy, and I never upgraded. I kept using that old software until the windows updates wouldn't run it. I was lost for ages trying to find a replacement.

BPA

  • Handlebar Stache
  • *****
  • Posts: 1191
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #34 on: June 17, 2014, 07:09:59 AM »
My budget looks like this:

Shit I spend my money on: $X/mo
Savings: $Y/mo

Yep.  Me too.  I spend mindfully, so don't need to question or analyze where the money is going. 

Ozstache

  • Pencil Stache
  • ****
  • Posts: 834
  • Age: 51
  • Location: Oztralia
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #35 on: June 17, 2014, 07:15:49 AM »
I've been using Quicken, or an equivalent predecessor, for over 25 years now, so my expense tracking habits are quite ingrained.

Huh, years ago (like early1990s I think) I had a simple Quicken program which I loved. Then it got all fancy schmancy, and I never upgraded. I kept using that old software until the windows updates wouldn't run it. I was lost for ages trying to find a replacement.

Quicken 2004 runs on any windows version up to 8. It can be obtained (legally) free from Intuit as an intermediate version' to use to migrate really old data files to the latest variants. It just so happens that it is fully functional too :) Yes, it has some fancy schmancy features, but it's quite easy to use just the basic functions without getting caught up in them. It is easy enough to use that my 67 year old parents can use it. The link for the program download is here if you are interested: http://http.intuit.speedera.net/http.intuit/CMO/quicken/patch/Support_Files/QW04DLX.exe 

stripey

  • Pencil Stache
  • ****
  • Posts: 772
  • Age: 119
  • Location: Australia
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #36 on: June 17, 2014, 09:41:37 AM »
My budget looks like this:

Shit I spend my money on: $X/mo
Savings: $Y/mo

Yep.  Me too.  I spend mindfully, so don't need to question or analyze where the money is going.

That's where I hope to be in a few year's time.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 27665
  • Age: -999
  • Location: Traveling the World
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #37 on: June 17, 2014, 09:45:21 AM »
My budget looks like this:

Shit I spend my money on: $X/mo
Savings: $Y/mo

Yep.  Me too.  I spend mindfully, so don't need to question or analyze where the money is going.

Sure, my budget looks like that.  But I do still track (automatically, via Mint) so I know how much I'm spending, to be able to project a FI budget, and sometimes to look backwards at what I've spent. 

It's not a budget in terms of "I can only spend $X on category Y," but my spending is tracked.
We are two former teachers who accumulated a bunch of real estate, retired at 29, and now travel the world full time with two kids.
If you want to know more about me, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

dragoncar

  • Walrus Stache
  • *******
  • Posts: 8466
  • Registered member
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #38 on: June 17, 2014, 10:14:42 AM »
My budget looks like this:

Shit I spend my money on: $X/mo
Savings: $Y/mo

Yep.  Me too.  I spend mindfully, so don't need to question or analyze where the money is going.

Sure, my budget looks like that.  But I do still track (automatically, via Mint) so I know how much I'm spending, to be able to project a FI budget, and sometimes to look backwards at what I've spent. 

It's not a budget in terms of "I can only spend $X on category Y," but my spending is tracked.

I track how much I'm spending, but not on what.  That's all in my electronic records, so I could go back and check.  But in my experience, it's a real pain to go and make sure all the classifications are correct -- they often aren't.  I get lots of phantom transactions due to work expenses, returns, securities transactions, etc.  Thinking about trying PersonalCapital in the hopes that the software has improved over the years, but IMO every time I've tried it's just been a royal pain.  I know what my rent and insurance is every month, and whatever I spend on top of that is discretionary spending.  Also, as you mentioned, even the rent and insurance are somewhat discretionary since I could move back in with my parents, somewhere cheaper, change insurance, etc.

SingleMomDebt

  • Guest
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #39 on: June 17, 2014, 09:56:35 PM »
I lump it all into my "sinking funds" category. Makes it easier to track my discretionary expenses that way.

secondcor521

  • Handlebar Stache
  • *****
  • Posts: 2112
  • Age: 50
  • Location: Boise, Idaho
  • Big cattle, no hat.
    • Age of Eon - Overwatch player videos
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #40 on: June 18, 2014, 04:26:30 AM »
I've thought about lumping my least used categories in Quicken just to simplify things.  I have maybe 10-15 categories overall, but the top 5 account for at least 80% of my dollars spent, and the bottom 5 account for maybe 5%.  Logically they're not at all related, they're just relatively irrelevant to anything in terms of reducing expenses or making projections for the future.

My budget is a 60% budget:

Of my gross income, 60% goes to savings.
Of the remainder from there, 60% goes to taxes.
Of the remainder from there, 60% goes to child support.
Then everything else comes out of what's left.

aj_yooper

  • Handlebar Stache
  • *****
  • Posts: 1091
  • Age: 7
  • Location: Chicagoland
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #41 on: June 18, 2014, 04:46:48 AM »
We budget and track our expenses in YNAB using a lot of categories.  The budget planning is most helpful for large expenses (property taxes, travel, gifts, and home improvements).  Tracking all expenses gives us incentive to reduce costs where we can and a long-term average of budget categories. 

Insanity

  • Handlebar Stache
  • *****
  • Posts: 1026
Re: Anyone else do this with their budget? Lumping categories together.
« Reply #42 on: June 18, 2014, 05:12:31 AM »
I never had a budget until my wife became a stay at home mom.  We were saving.  We were paying all our bills.  We had no issues. We were even saving roughly all of her income.  If we spent a little more, then we didn't care.

We knew roughly were all the money was going.  When she stopped working, we knew we would be tight and needed to track things better.