I tend to stick to my budget very strictly. My contribution to my work retirement account is automatic and is a percentage of my gross. I increase that percentage whenever I get a raise. I also have any bonuses put directly into it.

I put a set amount of each paycheck into our household account, and another amount goes into the property tax fund. I tend to save the rest. I rarely have much more than $25/wk. for "pocket money"; I bring my lunch to work.

Interestingly, while it may seen sort of strict and austere, I have found that doing it that way actually means I have more money available when I decide I want to splurge.

"Watch the pennies and the dollars will watch themselves"!

I watch the budget, but probably could do better.
I think the cash in the envelope idea would be too difficult for me (and my family).

We tend to spend a little more for groceries since we eat mostly home cooked meals and I brown bag my lunch.
We do treat ourselves occasionally on weekends.

I autopay my mortgage (plus extra $150), 401K (max), 529 account.

Don't drink, smoke or gamble so they puts extra cash in my pocket.

Also, an annual vacation is a must!

-jasper

I don't follow a budget.

I am right this minute trying to decide how strict I am. My DH bought a pressure washer over the weekend that blew a big hole in the monthly budget. I could take money out of capital savings - but I don't regard this as a capital expense. I need to go to Costco, but that would be expensive and I could probably get by just buying enough food to get me to the next pay period. My husband would say I was nuts - just borrow out of capital until he is paid again - but I don't like to operate that way

Anyway, on a monthly basis we put 8% of gross into our 403b, 600 into the taxes and insurance account, 1,000 into the capital expenditure/retirement account. My husband gets an allowance of $200 per month and I use the rest for household expenses, church etc. Whatever is left over goes into the vacation fund. That is usually anywhere from $200 to $400. I don't set myself certain amounts for food, clothing, gifts, gasoline etc. That's all one pot

I'm sure you'll get a wide range of responses on this. There's an interesting chapter in the book _The Millionaire Next Door_ on frugality. Turns out (surprise! surprise!) that most of the people who they worked with who have a lot of money are very frugal.

Ours is no longer as strict as it once was - we used to allocate every $, had an allowance, etc. That made for increased marital tension as DH is not as frugal as me. When our incomes went up over time we stopped being that rigid. Now I just allocate all the savings and investments and fixed expenses as soon as I get the paychecks and whatever is left is spent - on basics like groceries, food, gas, clothing, miscellaneous and when it's gone the spending has to stop until the next paycheck comes in. This usually works pretty well as I know how much elective spending can be done and DH doesn't usually buy anything very significant without checking the cash flow.

We operate like devorah describes - only capital expenditures come out of savings. Operating expense comes out of the checking account only.

I keep track of what I spend, but don't predetermine how much is allowed to go to which category. When I had a very small income, I simply didn't spend money I didn't have. Pay rent, utilities, groceries, gas, then whatever was left over could go towards haircuts, clothes, movies, etc depending on which of those things I needed/wanted most at the time. As my income has gone up, basically, I just make sure I'm putting as much as I want into savings and otherwise spend it how I want. Keeping track of what I spend every month lets me make sure my spending in a certain area isn't creeping up without my noticing, but I don't keep track as I'm spending and for example cut myself off halfway through the month because I've already spent my grocery allotment. (Besides depending on when I make my trips to the grocery store, some months I do spend significantly more than others, but the average stays pretty constant). I also don't keep track of every receipt. I pay for most things with credit cards, and when my bill comes, I categorize each purchase, and whatever cash I spend gets counted as "entertainment" expenses (as it's most likely to get spent for restaurants, movies, bars, etc). This means, for example, that shampoo might get categorized as health spending if I buy it at CVS while I'm also getting my prescriptions, or I estimate at whether a particular Target trip was mostly "clothes" or mostly "household", but I think in the long haul it mostly evens out. As I said, it's really just a guideline so I have an idea where my money's going and know I'm not creeping up without noticing.

I use Microsoft Money, categorizing everything, even when paid by cash. But I don't follow a budget or pay particular heed to individual categories. I just want to know how I come out in total at end of the month and end of the year.

I've used Quicken for years, and monitor our spending closely. Log in all spending religiously. I know I/we spent way less in the decade since I started being more aware (and accountable) with Quicken.

Very very roughly, the budget involves 1/3 to taxes, 1/3 to living expenses and 1/3 to savings (I include prepaying the mortgage pricipal in those savings). It is more about verifying how much we would need to have to keep living as we are, should we try for early retirement. I want to be really sure of that number before we take the big leap away from steady income. So for us, the budget is not so much about a strict keeping spending within our income stream as it is about knowing what we need. If we got used to spending all we could, I know we could never retire!

So far this year we are "in line", despite a nasty huge dental bill in January. We offset that by skipping our winter vacation and cutting back on other non essentials.

It is tedious to monitor spending, but essential to getting control of your finances. OTOH, should DH decide he *wants* to keep working beyond this hypothetical quitting point, it kinda won't matter as much....

It isn't, at all - but it used to be.

By the way - I don't call it a "Budget" - I call it, "Financial Freedom Planning System", that I amend as seems indicated as I go.

It ain't handcuffs - it's a planning system to grow wings. One of my assistants - a major one - on the road to financial freedom.

When the income was low, we lived quite frugally. Which formed a habit. That I follow to this day.

I don't have to put away money for retirement - I've beeen more or less retired for several years.

Many personal financial advisors used to recommend having 3 - 6 mos. income on hand in an emergency account - these days, with so many layoffs and many fewer stable jobs, I and quite a few others recommend 6 mos. to a year's worth.

A little under 9 years ago I bought a 7 year old hatchback car, about 85,000 mi., 1.5 litre engine, standard transmission, for $2,600 (or was it $2,700.?) - paid cash.

Several months ago my mechanic said that I should not drive it any more - at about 210,000 mi., and it took substantial repairs along the way ... but I did use it sort of like a truck: daughter said that (when I wasn't there) son used to boast about how much stuff - mostly his - that I could pack into it.

Or, occasionally, on top. On one such occasion last summer we roped a bunch of stuff on top, with ropes going through the open windows ... so we had to crawl in through the open windows. And out, along the road, if we wanted fuel for the vehicle or ourselves, or coffee - or to dispose of the results of the coffee, as required.

Donated the little Colt to a charity, got a receipt for $400., which will give me about $125. - 150. tax deduction (more than I could have received had I taken it to a scrap yard - where I'd have had to remove battery and 5 tires [and what to do with them?], or face deductions of about half of the proceeds).

Bought a 13 year old station wagon (to carry stuff), larger 3.8 litre engine, auto trans., uses a *lot* more gas, which troubles me, mainly for environmental reasons (plus, though I can afford it, wastefulness of gas, a precious and rapidly depleting resource), 113,000 mi., in good shape, for $2,000. Paid cash.

As I still live quite frugally, pension cheques deposited monthly, I withdraw cash as needed.

There's *always* (unless I buy a replacement car!) a surplus at month end.

That is, 12 years after normal retirement age, my monthly spending is less than monthly income, so the balance grows from month to month - and the cheque from my forced withdrawal from my retirement fund comes annually.

Which I invest when there's a substantial fund in there.

I keep receipts and write most of them in account book, but often there are some mysterious expenditures, as supposed balance on hand when I subtract week or two "Expenses" from "Income" often doesn't agree with the amount in my wallet. Sometimes I can remember where the other expenses were, sometimes not. I'm less worried about the differences now than I used to be- as I have that cushion there, am never strapped.

My account book contains many more than the three columns, "Income", "Outgo" and "Balance on Hand".

Over on the right I have a lot of columns showing the varying uses on which I spent the money.

One month per page.

If you keep such a book, it'll help a good deal as you plan the expected uses of your money in future month, quarters and years.

By the way, I keep .......

I had another section to put in here, but it was written in another place and when I highlighted it to move it - deleted.

I'm too angry to redo it now - may come back and do it later.

Son says instead of clicking "Control/X" I should have right-clicked, then hit "Copy".

Had I done that ... I'd still have it. And you'd have it. Well, maybe not have it - you'd have the option of using it, should you choose to.

Sounds like a lot of sense, to me.

I tried it, this time - when I right-clicked ... didn't have the option.

A budget can be a strait-jacket, or it can be a very useful tool on your road to financial freedom: depends on how you choose to use it, as a tool or a boss.

Have a great week.

ole joyful

yikes, that was a long post.i should have searched to see the abridged version, or maybe the Cliff notes on the post.. :)

Hi questionalble dog from NJ,
Hi quality dog from NJ, (that looks better)

Yeah - and it would have been somewhat longer had I not inadvertently deleted that other part.

Guess it was a good thing that I did, huh?

Preachers do have a reputation of being (slightly?) long-winded.

o j

I didn't mention this in my first post, but celticmoon makes a good point about keeping track of what you spend to know what you would need to have in changed circumstances. Not anywhere near retirement, early or otherwise, but since I have a pretty good idea where all my money goes, if I wanted to consider doing something different (buying a more expensive house or taking a job that pays less, for example) it's very easy for me to look at what I'm currently spending and figure out what I would have to give up to make that happen.

We don't follow a budget. Unless you want to track everything, it really doesn't help.

In my younger days, I did do the cash in the envelope and that worked since I did not have access to additional money. Now, we have all things like retirement, bills, savings, etc. removed from the "spending cash" and we really know what's there. Those earlier frugal habits still pay off. I don't fritter it away. I also no longer check on prices if I want something. It seems to come out in the wash.

The biggest thing fo us is to always have adequate savings so that no emergency makes us dip into other funds. If we decide we want something like a new couch, we usually start a "couch savings" mental account. May take 2 months or six months, but we don't use funds for other items on an impulse buy.

Gloria

Good point, quirk.

It's inportant to make our money work for us effectively, working toward avoiding unpleasant surprises, over each pay period, month, quarter and year (in that some major expenses are on an annual basis).

It helps if we keep records spanning several years, also, so that we can have an overview of our financial picture over an extended period. If we consider making some major changes in lifestyle, they will most likely help us form a reasonably accurate picture of what changes we may want to make, whether we may be able to manage them, and how to go about doing so.

We make certain choices in life, which bring certain results.

Some choose to keep fairly accurate records of their income and expenses, others keep only approximate records and some choose to keep scarcely any records.

The choices which they make enable them to make more or less use of those historical records as they look forward to the future, and assist their planning for that future life in various degrees, depending on the precision of the records.

When you build a solid foundation - you can build a stronger house. A larger house, possibly. A more complex house, as well - should you so choose.

I hope that you all have an interesting, productive week. With some friends with whom to enjoy it.

ole joyful

P.S. Even, possibly ... building a measure of "friendship" with an account book???

Well, ... how about an active working relationship?

o j

no budget, but like a post above track ALL financial aspects with Quicken, have been for 10 years..Savings is used very rarely, perhaps for an emergency expenditure,which occurs maybe 1 time a year or less...everything else is paid as it comes due

So they don't use paragraphs in Canada?

Thanks everyone for your great responses!

I guess I was thinking more about money after bills are paid. My mortgage & savings (percentage of monthly income, which varies) always gets the first bite then everything else follows. My problem is that I seem to never allocate household/personal expenses properly so I guess I need to start tracking what gets spent where.

aphilla,

Sound bytes, mostly.

o j

I went from poverty (med student) to plenty (surgeon). If you want to meet some people dumb about money, hang out in the surgeons' lounge. The men are dumber than the women, except for those women who graduated from med school but "let their husbands handle all that". Incomprehensible.

Anyway I never had time for any elaborate budget so I went with 'pay myself first' which meant rent etc, student loan payments (way early), mortgage, car, etc. When I owe money other than mortgage I find that I automatically adjust my discretionary spending because I can feel that debt floating out there needing to be fed. I don't have envelopes or sub-budgets, I just have The Question: What Happens if I Say NO to Myself Regarding this Expenditure? Everything is classified as an expenditure, but the answer for 'mortgage payment' or 'dog to vet' is obviously not the same as that for Starbucks visit.

A lot of my staff try to get financial control of their lives through elaborate budgeting processes which overwhelm them. It works for some people, but if you don't have the motivation or time to go that route, just use The Question. You have to be honest though... :)

It all comes down to "want" and "need"; the more years I put behind me the more I become convinced of this simple fact. Take care of the "needs" and be selective when it comes to the "wants". How MUCH do you really want the item that has captured your fancy?

We all pay different bills. Rileys. budget is a lot different than mine, lol. But of greater importance is how we have decided to view our "needs and wants".

I am more in line with OJ ("sound bytes", LOL! perfect!); our budget isn't a straightjacket or a set of handcuffs! it's simply a tool in our kit. How we have chosen to use it allows us great freedom. I'm downright "cheap" when it comes to brownbaggin' it! I drink morning coffee at home. I couldn't care less about buying the latest fashions. I drive to work and return to the "compound", accomplishing routine errands "on the way". I don't feel the least deprived or constrained by our assiduous adherence to a budget.

When we need a "new" car, we write a check; if interest rates are favorable we put some down, and make some payments. If we want to do something exciting to the house, we do it.

I believe we have that ability and "freedom" BECAUSE we have always had a budget and stuck to it. We always ask, "do I need this? or do I simply want this?" if the answer is, "I want this" the next question is, "Why do I want this? and how MUCH do I want this?". There are no wrong answers, but asking questions of yourself can reveal a great deal.

What interesting answers you've supplied! Thanks.

Hi all,

Many people refer to using the envelopes-in-the-desk system, especially in the early days of their ongoing project of meshing their income and expenditures system so that there aren't too many, hopefully eventually no, unpleasant surprises.

While I've said that I never did that, that's only partly true, for I kept the envelopes in my head, so to speak. I knew that if I spent certain dollars now in my pocket for something that I wanted at the moment, there wouldn't be enough later in the month to pay X dollars of phone bill, or Y dollars for power, or Z dollars for rent. And I needed maybe W dollars for food, V dollars for cable, U dollars for bus pass, etc. All of which costs stood higher on my scale of necessities than the item that I considered at that moment. With no expected inflow of dollars in the interim to cover those essentials when they came due.

qdognj and aphilla,

I've given some thought to your comments.

It seems to me that I covered a large number of issues in that long post, many of them following a sequence, but enough unrelated, or illustrative of a different facet of it, that I felt that they merited a different paragraph.

While I went on at some length about the two cars, it illustrated how I deal(t) with what is for most of us a major expenditure to serve us over a number of years, in a fashion which has been financially advantageous. The issue of the stuff on the roof was rather unnecessary, but I thought might offer a bit of more or less humorous respite in the middle of a long exposition (in addition to illustrating a way to deal with minor difficulties that develop in life).

Maybe it would have been more helpful had I dealt with retirement issues in one place, rather than scattered - but the early one dealt with the lack of need to invest for it, the latter with how it relates to current financial issues.

The issue of inadvertent deletion of part of the information that I intended to offer was off topic, so easily deletable.

What I'm saying, qdog, is that the stuff was pretty heavily condensed as it was (in my opinion, humble or not: ... yours may differ ...... and I considered making a new paragraph for this, but decided against it).

Fortunately, while my post was rather lengthy ... it didn't require use of my precious paper!

Some time was required, however - as is true of this one, as well. At such a time - nice to be retired: every day's vacation.

And just think: if your shrewd use of current resources enables you to retire one year earlier - or even five - you go on that permanent vacation so much earlier. Maybe young enough to participate in some long-desired activities while still healthy enough to enjoy them fully.

Which potential benefit is strong enough in my mind to justify the investment of some time, skill and emotional pressure currently (unless you assume your possible death in the meantime).

Have a lovely weekend.

o j

I wouldn't call it strict, but we do try to track fairly carefully. On top of our other categories (mortgage, groceries, gas, dining out, etc), I use a miscellaneous category (about $200 a month) for small things that come up unexpectedly or I forgot to allow for. That allows me some flexibility and doesn't derail our other categories when things come up.

I usually check the budget about once a week or so. If we're off track, I'll try to rein in that category for the remainder of the month. If we've gone over or things have just come up, I'll increase the category and find the money somewhere else. It used to be that our savings category would take a hit, but now I have that taken out first, right on payday.

My goal is to understand how we spend, not to necessarily dictate it. I used to put our grocery budget at a very low level and every month it would cause me grief. I tried to find ways to be more frugal and always felt guilty, then I finally just increased the budget. Other things I've looked at and decided to cut, like cable tv.

I'd rather have a realistic budget that we stick to, than one that looks great on paper but is impossible to live with. And, as long as we're not in the hole, I don't feel guilty anymore about spending money on good things, like groceries.

We have a budget on paper (well, on spreadsheet) and one in our heads. Interestingly we don't go into debt, but we seem to spend whatever we have, whatever it says on the budget. I was looking at our budget today and even allowing for entertainment, haircuts, "running money,", clothes, etc, we still have $1500-$2000 a month that seems to evaporate. What the heck are we DOING with it? School pictures? Diet pepsi? Bewildering.

This summer building a house will be a stringent lesson is watching where it goes. While I feel guilty asking my family to go from an easy lifestyle where the mortgage represents 8% of the budget to a more difficult one where it's more like 20%, part of my motivation (only part, mind you-- mostly I just want a nicer house) is that it will put at least some part of that monthly evaporation towards an asset.

I think the pay yourself first thing is where it's at. We don't notice the 401K contributions-- if it's not there, we don't spend it. The plan is to start channeling my (negligable) salary towards savings (my main contribution is paying for the health insurance). I really want to get back to a place where we can feel relaxed about money because we know there's enough. Considering we have three children and college is looming, not sure we'll ever reach that point :)

Turquoise, good tips. I'll try that once a week checkin thing this summer.

You may have it on "paper" (NOT). Until you make yourselves adhere to the "paper" budget (cash in yout wallet!) on a daily basis your "budget" will be worth precisely what it's presently "printed" on.

The sad reality is, that most people have a "disconnect" with their means and legal tender. Everything is about credit/debit cards. I love credit cards, personally. I pay one bill every month and I pay it full. But I don't think most people operate that way; I've confiscated more than a few credit cards over the years.

A budget can't be set in concrete to be effective. But neither can it be so vascular that whatever you want may be accomodated. It's about LIMITS and choices. Budget is tantamount to "needs" and "wants"... . It's about long range planning and what you want for your future. It's about tough choices and going without or settling for less. Or not.

Think about this when you don't feel like packing your snack and lunch for the coming work day. Or when you feel like firing up the "tin Lizzy" and going for a cruise to the "maul"...

ANYONE can gain control of their budget, but not everyone has the willingness to do what must be done to accomplish it.

Are you people all twelve or eighty years old? If you have to sort money into envelopes, You should have someone taking care of you on a full time basis.

Perhaps, biglarc, you might have something of interest to offer to the discussion? something that might be germane to the topic in the heading?

;)

biglarc, did you even read the entire thread? Or even the entire original post?

Please share your wisdom . . .

I'm in the budget group with many above. We have many auto-pays set up: paycheck, mortgage, HELOC, 401(k), Roths, investments, all household bills, and "basic" savings of $50/week. I have a budget for gas, groceries, and entertainment (movies and dinner). We have a reasonable amount of loose money left over which goes for small home repairs, additional savings, additional principal payments, clothing (no monthly budget), pet expenses, etc.

We are also "penny wise, pound foolish", or as chelone says: "Watch the pennies and the dollars will watch themselves"! Or as my mother (and above posters) says, "buy what you need when you're young so you can buy what you want when you're older".

We don't each lunch out (me, never, DH, 1x/week for work functions), don't buy coffees, rarely buy clothes (Old Navy and Payless are our good friends), only go to matinees, and skimp on salon-related expenses (annual pedicure, haircut every 8+ weeks). However, we do love to travel. And make house repairs.

We like my system :), it works, and our savings are in very good shape for young people.

It's been interesting reading this thread!
Lindsay

I guess my budget is pretty strict - since PITI on my house is roughly around $1050/mo and I am on fixed income of $1025.00 roughly/ month!

And I don't even get any food stamps! LOL! (Not that I've tried to - It's GREAT for losing those extra lbs!)

A budget is the plan that one makes seeking to block out what one's expected expenses may be during a coming period.

The crunch comes with the accounting - writing down all of one's expenditures.

Did you note that I said, "all" of one's expenditures - that's where one finds out where the money is going.

Best to write it down daily for a while, to get into the habit of keeping track of it in one's mind. If one buys stuff for cash without getting a receipt - write it on either individual slips, or one ongoing piece of paper.

Reconcile the amount in the wallet and what the report in the account book shows rather frequently, in the beginning, until the habit becomes established - then maybe once a week will do.

I have a large sheet of paper, with five columns on the left for date, info, Income, Expenses and Balance on Hand. When I find that there's less in the wallet than the record shows, if I reconciled fairly recently, usually the missing amount is a single item, which makes it easy to remember what item I forgot to write down. If it's only a couple of items, it's not so bad - but when it's 5 or 6, that's when it gets difficult.

Then, usually the next step is to quit, saying, "This thing isn't working"!

But - if one persists - the payoff can be quite surprising - in terms of more money on hand.

Then, over on the right side of the large page, I have a number of columns, headed by the various items that I've included in my budget. I enter each item purchased under the appropriate heading, sometimes splitting them between two when they relate to several disparate items bought in a store that sells a wide variety of stuff.

Then at the end of the month I add the various columns to see how closely those amounts are to the amounts that I'd budgeted monthly (or 1/12th of the annual amount) for those issues.

While it's not a good idea to write one's budget in stone and force one's self to conform, it's easier if one adjusts the budget to conform to one's needs. If one feels too confined by the budget, the chances may be stronger that one will decide to dump the whole project.

The system is meant to be liberating, not confining.

The only one to whom one must answer for one's expenditures is one's self - you don't need to apologize to anyone (except immediate family, maybe) - certainly not to us.

Quite often one finds that when all of the expenses are written down, some of the totals at month end cause quite a surprise - and one decides that one does not want to spend that amount of money on such an item in future, so some adjustments are in order.

The purpose is to redirect one's spending to items of higher priority on one's scale of important systems in one's life.

If one saves early in life and can afford to make a 25% down payment on a home, rather than 15%, that saves a lot of dollars of interest expense, over a number of years. Money that can be used for other things.

This whole issue is about building greater freedom for one's self, financially, as the years go by.

Have a great week, everyone.

ole joyful

No budget, though I do max out my 401k, so that gets taken out automatically before I see any money.

One thing that I do - I charge almost everything to a credit card (get 5% back at gas stations, pharmacies, and grocery stores, and 1% on everything else), and I will go online every couple of days to check the account. It kind of mentally keeps me in check so that if I'm aware that the balance is increasing faster than it should, I need to cut back. I pay off the credit card every month.

Not that paying the bills has ever been a problem. I live below my means - both DH and I work, but I bought our house a couple of years before we got married, and could easily afford the payments on just my salary.

There are some months where it gets a little tighter - just remodeled the kitchen, though almost all DIY - cost about $15K, but still paid for it out of pocket - no loans. The only debt we have is the mortgage. But we are both savers, and have saved a very comfortable cushion over the years, so that we could pay off the house if we wanted to. But I'm paying a great interest rate - 4.625% for a 15-year loan, so why bother?

I don't believe in the money in the envelope thing. Expenditures are expenditures, no matter what they're spent on. So if one category of expenses is costs more this month, then I should cut back somewhere else. Which is why I just pretty much only look at the total.

Amy