What budgeting advice do you recommend? Money management method?
My only budgeting is to earn much more than I spent so I don’t have to think too much about it. That means that I live quite frugal and other than food don’t really buy much on a regular basis.
Even though I’m in the same category (currently spend less than half), this approach isn’t viable for everyone. Some people work hard and long, but just have too high expenses by just existing. You can’t really be frugal on rent and basic food, you need something.
For sure, it took me 20 years to get there myself.
What the fuck. It took you 20 years to get to a point where you can comfortably rent a place to live and buy food?
This system is beyond saving
there were things involved like moving a couple of times between countries, a divorce, refocusing on a different career to be able to get where I wanted to be.
fair enough but still, I don’t think it should take that long for someone to have the basic necessities of a life in this society. that should just be the baseline, regardless of employment situation
Perhaps we misunderstand each other, It took me 20 years to get to the point that all my budgeting is that I earn much more money than that I spent so that I never need to think about budgeting. It’s not only about rent and food.
Seconding this. I love earning money and hate spending money; I check my savings a couple times a year and otherwise don’t worry about it.
I believe the system I use is called reckless abandon.
Good blink 182 song.
YNAB = you need a budget
YNAB is a web app and mobile app. It’s beauty is that it helps you look FORWARD, instead of tracking your PAST spending.
It’s not much use to see that you spent too much last month, again. Instead, YNAB helps you know what your average expenses are and lets you set aside meaningful amounts for each kind of expense = that’s what we call a BUDGET.
Yes, it has a cost. Yes, it’s ironic to spend money on a tool to save money. But here’s the thing: it really works! For me, it’s easily worth the cost.
I second this. I feel silly paying for it, but if you (and your spouse, if applicable) totally buy into their system, it’s a way of life. The biggest thing is how it sets up purposeful sinking funds (instead of just “savings”) - every dollar has a job. Now when we have major expenses, it’s like - meh! Water heater went out? No sweat, home maintenace got you covered. And if it doesn’t, you roll with the punches and transfer it from some other category.
It’s made finances so much less stressful.
Using YNAB’s sinking funds helped me get out of my considerable divorce debt. They’re like envelopes you put money into ahead of time, for every single category/thing you want to spend on or save for.
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If you need to spend more than is in the envelope, you must transfer from another envelope first
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If a bill is higher than expected, transfer money from another envelope
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If you want to make an impulse purchase that doesn’t fit an envelope, make mine and transfer money in from an existing one
And so on. It’s a great system, and I continue to use it even though I’m now debt free, except for my monthly bills and car lease payment.
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Yup. The ease of use for my wife and us being able to check our own funds real time has made it invaluable. I’m sure! there ways i could do it myself but she’s gotta be able to use it.
Same here. I see a lot of people complaining gabout paying for it, but it’s solid software, and worth the money. It’s helped my wife and I manage our finances and we never argue about money. That’s worth a lot of money IMO.
I have my wife handle the budget and finances. She is very responsible. I am not.
The system works very well.
Marrying an accountant was the best financial move I’ve ever made.
“Pay yourself first”. My bank has a feature that allows me to setup automated money transfers to and from different accounts based on rules I setup. The most important one is when any deposit is received from my employer, 20% of the amount is automatically transferred from my chequing account to my retirement account. My paycheque is deposited overnight and the money is already “gone” by the time I wake up in the morning. Treat it like another tax on your income that you have no way to avoid paying. Then live off what’s left.
This is the way for stress free living.
You know for a fact that you’ll have enough to deal with most of life’s surprises.
That and stopping buying things on impulse. Wait a week and buy it if you still remember.
I’ve heard this called the jar method.
I have accounts for travel, house expenses, utility bills, groceries, car expenses, and fun money. Each of them gets part of my paycheck. Every couple of months I take a look to see if things are getting out of whack.
The best part is that I can be an idiot and overspend with the fun money account. If I spend it all, there’s absolutely no repercussions, since everything important is already safely in different accounts.
Also, when car expenses (or vacations) roll around, I already have money put aside for it.
I just go into notes app or pen and paper of choice nothing too fancy
Also take this with a grain of salt as while I’m still living with my parents and don’t really pay
In one section I have subscriptions that cannot exceed like $35 a month and that’s more a list that rarely gets updated
Then as for month to month expenses I divide into money to spend on games and toys/treats for my dogs and taking out the gf and gas and an other category and I allocate money towards those categories
I do it so I don’t over spend in one section like blow all my money on my dogs then have no money to spend for my girlfriend or something
Each month when I “refresh” my monthly budget any unspent money (and minus some to put into savings) rolls over to next months budget
It works wonders and I can move money for spending around easy since it’s all visual
Basically the premise for YNAB. You’re doing good work and have a good habit and mine set. Once you get more cash flow it will be harder to keep track. I use YNAB it may work for you too.
My wife and I have a pretty simple method. First, we each have our own bank accounts with our own spending money. Then, we have a joint account that we use for bills. Finally, we have a separate bank that we use for groceries and gas.
With these allocated separately, we can each have our own spending money, and have enough in every other account to take care of what we need. The paycheck just gets split between these in different direct deposit amounts.
The most important thing is to understand your costs, plan them out, and be aware of what comes out and when. Then, you just follow that plan. The biggest part is making sure you know that you can only spend exactly that much on yourself, which is where our individual accounts come in handy. Whatever we want to buy, we can, because we know safely that our needs are taken care of.
Since we have our math to allow more money in than money out, each account (minus our spending ones) accrue their own savings, and can be transferred between at any time. Overall, it works for us.
Chaos. It’s stressful but somehow it works
I avoid automatic payments like the plague. I never give insurance companies, utilities, credit companies, etc. permission to withdraw from my account. All it takes is one underpaid office drone to make a mistake, and you’re overcharged a thousand dollars. You can (probably) get the money back, but not without a time consuming hassle.
Ever notice that billing mistakes on paper bills are virtually never in your favor? In my experience, I’ve always been overcharged, and never undercharged. I don’t expect automatic payments to be any different.
I let them mail me paper bills, which I then pay through my bank’s website. When the payment is made, I write the confirmation number on the bill itself. Yes, it’s more cumbersome, but that’s a price I’m willing to pay. There’s a verifiable paper trail, and I’m completely in control. Since it’s my money, I deserve to be.
In my country you can set an upper limit to the automatic payments. (It’s mandatory for the banks to implement.) So I just put in like plus 3-4 dollars as the max they can withdraw above my average bill and I’ll just get a notification if they try to withdraw above that limit (and they would be refused to do so). Fortunately it never happened.
That would be a very reassuring feature to have! People like me might reconsider automatic payments if that was a law in the US.
Where is that?
I only know that I can set a upper withdraw limit for sending money (say >300€).Hungary.
I use one credit card for groceries and other essential items and another one for “luxury” expenses like buying hardware, games, online subscriptions and such.
Other than that I just use my default online banking to occationally check that everything is alright.
Same, it’s great separating the two and itemizing at the end of the month so you get a better idea where the majority of money is going
I have an Excel workbook with three worksheets. One worksheet calculates my paydays out over the next few years, and using Excel formulas a table of paydays per month is calculated. I get paid every two weeks, so some months are 3 pay checks and the rest are 2. If you get paid a fixed amount per month it’s easier.
The next sheet has tables for annual, monthly, and weekly expenses. The annual table has a column for month of the year. If I have a quarterly payment, I add it to the annual table four times, each with the correct month.
The final worksheet is a basic revenue less expenses table, one for each calendar year. It lists my income per month for each month, and then lists my monthly expenses, my annual expenses that hit that month, and weekly expenses calculated to reflect the partial weeks. All using formulas do it is easy to extend out to future years.
The worksheet also calculated how much I have left over, and what my savings target is (80% of unbudgeted funds). It’s important for the actual costs of each month to be accurate, because averages hide real world things, like in November I have a large amount of renewals including my annual car insurance payment. I will always spend more than I make in November, and knowing that means I’m not panicking with unexpected expenses.
What I’ve found is that there is an art to budgeting. For example, I budget $100/month for discretionary purchases, plus $20/week to take my kids out for cocoa. You want to be specific enough in the budget that you have fairly few purchases not directly accounted for, with a little bit of latitude that it doesn’t become a grind to track purchases.
Over the course of the month any purchase that exceeds the budgeted amount or that doesn’t fit a budget category gets tracked on a separate sheet so I can see if I need to rebudget or if there was just a one time thing. Generally speaking, if it is too much work to track your individual purchases, you might be making too many small or impulse purchases that add up.
I also use Excel for my shopping lists to stay focused when I go to the store, and the mobile app easily lets me strike through items as I get them.
GnuCash. I’m with Starling Bank. I transfer about £550 to my credit card pot to spend for the month and do my very best not to exceed it. I have an Amex (default) and MasterCard credit cards on which all my day-to-day spending occurs. American Express gives me a balance text every Sunday, but entering purchases in GnuCash makes sure I know what it is roughly.
Maybe a bit basic but at the beginning of every month I clone this Google Sheets template, set goals in each category, and manually log receipts as I spend. Then at the end of the month, I “audit” my budget against my credit card transactions, pay off credit, and create the next month’s budget with any adjustments learned from the previous one.
For bigger view, long-term, I just linked all my accounts into Quicken and look at it sometimes.
I created my own, very simple sheet back in the day and it served me well enough.
Reality is, unless you’re running a business, tracking every cent in super granular accounts/columns isn’t really useful. My approach was to simply categorize into running expenses, groceries, cloth, leisure, major expenses (washing machine, phones). That makes tracking very simple, so it doesn’t take long and you actually keep doing it.
I have a single spreadsheet with fairly simple formulas for calculating monthly expenses based on average recurring bills vs. (after tax) salary income.
I can see generally what my “discretionary” balance should be and that gets spent on food, stuff, etc.
Things that are recurring: Mortgage, Utilities (take annual average if you can), services, savings, etc.
Use savings like any other bill - a certain amount must be paid/deposited every month. Use automatic balance transfers from checking->savings on payday to facilitate.
I don’t try to get too fancy with it and heavily leverage automatic bill pay for making sure I can’t forget anything.
Check all your accounts regularly. For me that’s a weekend task to do with my morning coffee. Check account balances, make sure credit accounts are addressed as needed, review investments if applicable, but don’t freak out about them.
I’m partial to treating investments as long term gambles that are NOT something I’m relying on for retirement. It’s just something else to slowly build up over the long run that might be something that can help later or pass on.
We have a retroactive Google Sheet which pulled from Reddit years ago where we put our transactions in and categorise them. Lets us see where we spent money
