Author Topic: Do you budget?  (Read 1578 times)

Omy

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Do you budget?
« on: December 20, 2018, 10:43:53 AM »
I've never had a budget. DH and I are pretty frugal by nature and spend less than 20% of our gross income. If you aren't a spender do you really need a budget?

Am I missing out on something by not having a budget? Do you budget? Why or why not?

Bracken_Joy

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Re: Do you budget?
« Reply #1 on: December 20, 2018, 10:45:47 AM »
Depends on what you mean. Tracking vs budgeting. It's absolutely worth tracking, no matter how frugal you are. The appearance of budgeting can vary significantly though.

I'd say we just track more than we truly budget.

bluebelle

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Re: Do you budget?
« Reply #2 on: December 20, 2018, 10:54:06 AM »
same here, I track more than I budget.....we used to have set spending limits for disposable income items (helped DH get on board with reduced spending), and now it's just a habit (or laziness - it takes effort to go out and spend!)

the tracking let me build a retirement 'budget', which is really just a realistic spend expectation.....so I can guestimate how much money we need for retirement.....

cats

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Re: Do you budget?
« Reply #3 on: December 20, 2018, 11:02:35 AM »
This has come up before and it seems most "advanced" mustachians don't budget but they do track (as mentioned above).  I fall into this camp--we absolutely track every penny we spend, but we don't really have a "budget" of "okay, we can spend $X on Y category this year".  When we talk about whether or not we can afford something, I feel we tend to focus more on whether we really need the item, whether it actually adds value to our lives, and (in the case of big purchases) what the time/stress cost is of spending a certain amount of money.  All of that tends to keep our spending pretty low--when you start to think about purchases in that context, a LOT of stuff just starts to seem like useless crap, or even a millstone around your neck.

I will say that I think we are also able to be so casual about budgeting is that we earn quite a bit more than we need to cover essentials.  If we have a bunch of guests over one month and wind up spending double our usual on food...it's not really a big deal. Obviously that would not be the case if we were earning substantially less.

omachi

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Re: Do you budget?
« Reply #4 on: December 20, 2018, 11:07:14 AM »
Yes, I budget. I don't have to, but I do it anyway. It might be more tracking, like those above said. Still, I have a set of limits on spending that I tend not to reach and don't want to cross. It can be worthwhile to investigate what happened on the rare occasion that one of those limits is reached.

I also find it useful to have long term funds build up for various categories. Like, I have a fund for a replacement vehicle that slowly builds up. If I hit my target I can invest the rest after that. I'd be less comfortable with a big chunk of savings that all those big purchases come out of without knowing how it was currently allocated. Like, just a lump of money sitting around for the eventual replacement of a car, appliances, roof, etc. and using it as needed seems unnecessarily seat of the pants when it takes very little time to track what is going where. How would I know what to invest in safer short- to mid-term places and when I could put surplus into the broader market?

Granted, I only look at things monthly. Put expenses in their buckets and allocate funds. Since I don't really need to do it, I can be lazy about how often I look at things.

I'm a red panda

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Re: Do you budget?
« Reply #5 on: December 20, 2018, 11:08:21 AM »
We do not budget.

We just go with the "don't spend too much, it will work out" theory.*

We save about 50% of our income (was way higher before daycare), so it seems to work for us.
We have some negative months for cashflow (but never for savings- because lots of money goes pre-tax savings first), this month will be particularly bad for cashflow it seems like we are bleeding money; but over the year, it's going to be just fine.  (Well except for the stock market tanking... but over the decade, it will be just fine...)

 *We are high-ish income earners; neither of us makes six-figures, but we certainly aren't wanting...


fell-like-rain

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Re: Do you budget?
« Reply #6 on: December 20, 2018, 11:45:51 AM »
I do in a very rough sort of way; typical month-to-month spending is just tracked without a target/limit, but I set a certain amount each month to go to the travel and major-purchases fund. This is less to guide my behavior and more to have a number to include in forward-looking spending estimates, as I don't really have good data on how much I spend on these things.

honeybbq

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Re: Do you budget?
« Reply #7 on: December 20, 2018, 11:47:03 AM »
I do not budget.

I do track spending.


dcheesi

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Re: Do you budget?
« Reply #8 on: December 20, 2018, 11:49:25 AM »
I have a "budget" in a broad sense, but I don't "budget" as a verb. I track, and I periodically compare my actual spending to my idealized "budget" in various categories, but I don't plan or restrict my spending with a particular budget number in mind. I will make changes if I see a particular category running over several months in a row, but that's more of an awareness and mindset change rather than a hard limit.

Blueberries

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Re: Do you budget?
« Reply #9 on: December 20, 2018, 12:17:40 PM »
I have a budget; it's a yearly budget of our fixed expenses and income.  I also track certain categories of spending.  I'll adjust the categories I track based on our spending the previous year. 


oldladystache

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Re: Do you budget?
« Reply #10 on: December 20, 2018, 12:44:53 PM »
Nope. Never have.

I have always hated to spend money, so when it comes in I generally keep it. Then when I really want something there's always enough money available. It just keeps growing.

I do calculate my net worth twice a year. It's almost always up significantly.

Raenia

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Re: Do you budget?
« Reply #11 on: December 20, 2018, 01:08:13 PM »
We officially have a budget, but it's more a guideline than a rule.  We don't worry about going over-budget in any given month, it's more important for me to keep track of the average over several months to make sure we're not drifting out of line, and to remind us to cut back if we had a more expensive month to even it out.

NV Teacher

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Re: Do you budget?
« Reply #12 on: December 20, 2018, 03:35:42 PM »
I don't budget so much but I do track spending. 

DreamFIRE

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Re: Do you budget?
« Reply #13 on: December 20, 2018, 07:29:46 PM »
I've never had a budget. DH and I are pretty frugal by nature and spend less than 20% of our gross income. If you aren't a spender do you really need a budget?

Am I missing out on something by not having a budget? Do you budget? Why or why not?

There was this thread a few months ago:

https://forum.mrmoneymustache.com/ask-a-mustachian/do-you-actively-budget-and-is-it-worth-it/

Radagast

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Re: Do you budget?
« Reply #14 on: December 20, 2018, 10:09:55 PM »
-Does not budget
-Does not track
-Has no IPS

I just put our numerous credit cards into Mint but the data isn't long enough to show anything. It did allow me to "say cutie we've been eating out too much recently" but I knew that before I checked. Also Mint doesn't know about money that leaves bank accounts directly, only CC's. So it is basically just to track frivolous spending.

sparkytheop

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Re: Do you budget?
« Reply #15 on: December 20, 2018, 11:52:31 PM »
Yes, I do.  No, I do not "have to" (only started a few years ago, but I've never been much of a spender).  I do it because I have some big money goals (like building a house on my property) that I would like to happen sooner or later.  If I budget and track, it helps keep me on track to meet the goals.

I do get random overtime, so I can help bump my numbers on some stuff when I want (I may give myself $50/month to spend on quilting/knitting/crochet related expenses, but if I work OT, I'll bump that up to $75, or, if I see a great sale and want to stock up on yarn, maybe $200 of my OT money can be put into the fund).  But, 90% of my OT money goes toward the big goals.

Once the house is built, and I'm done helping my son with college, I will probably go back to not tracking money or budgeting, but my old method of "My bills are x amount, my income is y amount, I should see my checking/savings grow by z each month.  If it grew by less than z, I spent too much, and I'll cut back next month to make up for it."  For a non-spender with a good income, low expenses, and nothing big to save for, it's enough for me.

Omy

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Re: Do you budget?
« Reply #16 on: December 21, 2018, 06:41:56 AM »
Thanks for all of your responses! I don't track on a regular basis, either. Last year I made a spreadsheet to guess what our expenses might be post-FIRE (based on what we are currently spending in certain categories and best-guessing on what our discretionary expenses would be). My spreadsheet indicated that we could live on $35k, be "comfortable" at $50k, and super-fat FIRE at $70-80k (4% withdrawal rate would be $100k not including home equity so we are FI but haven't pulled the retirement trigger).

To "spot-check" my assumptions, I looked at what we actually spent the year before by adding up total cc and bank expenditures. It was right under $50k (after subtracting business expenses that would go away after retiring and after adding $12k for health insurance that we would likely need to spend after retiring).

This one time exercise gave me some amount of confidence that our assumptions were in the right range. It felt like MMM's annual spending report - no matter what they do, they spend about $25k.
I assume we will do more tracking (and possibly some budgeting) when we retire - at least initially to see that we aren't going too crazy when the income from our jobs goes away.

Is it reasonable to assume we could just track our net worth quarterly after FIRE to make sure that all is going smoothly (and adjust if not) - or do you feel it's necessary to track expenses as well?




omachi

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Re: Do you budget?
« Reply #17 on: December 21, 2018, 11:15:46 AM »
It's probably not necessary if you're already disciplined and keep some tabs on where you are in terms of net worth. From what you report, you have wide latitude on spending compared to your normal working expenditures. But it also only takes me maybe an hour a month to track my expenses in detail, so I don't think it'd hurt too much for you to look things over monthly and make sure expenses are still where you want them to be. Maybe they grow without work providing a constant thing to do, maybe they don't, but in your shoes, I'd want to have hard data for at least a little while before falling back to an approximation.

partdopy

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Re: Do you budget?
« Reply #18 on: December 21, 2018, 11:43:57 AM »
Loosely.  My savings is automated, so I typically treat whatever shows up in my account on the 1st as disposable.

I budget in that I try to maximize spending money and minimize what goes to recurring expenses.

Omy

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Re: Do you budget?
« Reply #19 on: December 21, 2018, 11:59:38 AM »
But it also only takes me maybe an hour a month to track my expenses in detail, so I don't think it'd hurt too much for you to look things over monthly and make sure expenses are still where you want them to be. Maybe they grow without work providing a constant thing to do, maybe they don't, but in your shoes, I'd want to have hard data for at least a little while before falling back to an approximation.

I agree. With lots more time on our hands, it will be easy to track and will provide peace of mind if all is well (and will let us adjust quickly if things aren't going well.) We've been complacent about tracking while the fire hose of income has been turned on (and while we haven't had lots of spare time to fill with projects/hobbies/travel.) Certainly we will want to track new FIRE-related expenses and see if they offset current expenses that we expect to become smaller (gas, eating out, etc).

CindyBS

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Re: Do you budget?
« Reply #20 on: December 21, 2018, 12:01:28 PM »
Don't budget, don't track.

We did track for a stretch this year just to work with hard numbers for some future planning and got pretty much what we expected.

We have goals on the other end - savings, HSA contributions, amount in slush fund, etc. and if those are good we are ok with them. 

Neither one of us is a big spender and while we know we could wring more money out of our budget and reduce spending, it just isn't that high of a priority given our already high savings rate.

SquirrelStache

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Re: Do you budget?
« Reply #21 on: December 21, 2018, 12:06:26 PM »
I thought I was budgeting until I started using YNAB just over a month ago. That sucker slapped me in the face and sorted me right out! I can see where our money is leaking now and what to do about it. Well worth the annual fee (not mustachian, but if it's saving me money overall it's worth it).

Side note - I am very OCD about money, so I don't think I could ever not do any kind of tracking on it.

35andFI

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Re: Do you budget?
« Reply #22 on: December 21, 2018, 12:15:15 PM »
I do not budget but I do track. I use Mint, Personal Capital, and my favorite (Excel).

I have a worksheet that shows how much I make and how much I spend/invest. I check Mint from time to time to make sure that the monthly spending is accurate. I use (yearly spending)/12.

All of my spending figures are conservative enough to be safe yet realistic enough to use in future calculations.

After I have a good idea of how much I am spending, I use my patented (not really) "4HITS" method to check to see how much I can invest in each account.

4 = 401k
H = HSA
I = IRA
T = Taxable
S = Spending

I wanted to see if I were to max all of my accounts, how much would I have left to put into taxable.
The only other variable that you need is yearly income.

(Net yearly income) - (4+H+I+S) = How much I can contribute to my taxable account.

This wouldn't have been possible if I didn't accurately track my spending.
« Last Edit: December 21, 2018, 12:34:14 PM by 35andFI »

pachnik

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Re: Do you budget?
« Reply #23 on: December 21, 2018, 12:30:00 PM »
I don't budget but i do track my expenses.  Having to write down the $$$ keeps me honest.