Do you have a monthly household budget?

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jbsmith05
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Do you have a monthly household budget?

Post by jbsmith05 » Tue May 29, 2018 8:11 am

Do you draw up a monthly budget for your family? If so are you using any software to help maintain it?

Jags4186
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Re: Do you have a monthly household budget?

Post by Jags4186 » Tue May 29, 2018 8:13 am

We track our spending which is different than a budget. I think you only need to budget if you are not hitting your savings goals or, worse yet, you are running out of money before the end of the month. We use mint.com to track our spending.

jbsmith05
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Re: Do you have a monthly household budget?

Post by jbsmith05 » Tue May 29, 2018 8:20 am

Jags4186 wrote:
Tue May 29, 2018 8:13 am
We track our spending which is different than a budget. I think you only need to budget if you are not hitting your savings goals or, worse yet, you are running out of money before the end of the month. We use mint.com to track our spending.
Interesting - it's possible to hit your savings goals but still run out of money, I've done it. I've paid myself too much by running a thin line between maxing out accounts and having enough misc $ to cover unexpected events, as a result I can't get the money back without consequence. I like to budget because then it allows me to save even more.

I'm curious if budgeting is a thing of the past or if savvy investors or high net worth individuals still do it.

ChinchillaWhiplash
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Re: Do you have a monthly household budget?

Post by ChinchillaWhiplash » Tue May 29, 2018 8:28 am

I set a budget each month. Sometimes have to pull from savings if something unexpected comes up. With variable monthly income, have to adjust once get paid sometimes. I use a pen and paper to keep track.

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Meaty
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Re: Do you have a monthly household budget?

Post by Meaty » Tue May 29, 2018 8:32 am

I absolutely budget. I do it so I can ensure my income is deployed in an intentional way that generates the most happiness for me and my family. Without tracking every dollar it would be easy to spend money on things that are frivolous (even if you hit your saving goals and don’t spend beyond your means)

I’ll give you and example. I like to travel. I also like eating out at restaurants. Between those 2 items, however, I’d much rather travel more and eat out less. If I didn’t budget I would end up spending more each week at restaurants which would ultimately mean less to spend on travel. Instead, I ensure I only spend $X at restaurants so I can travel more
"Discipline equals Freedom" - Jocko Willink

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gasdoc
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Re: Do you have a monthly household budget?

Post by gasdoc » Tue May 29, 2018 8:35 am

No. But we do follow Quicken and adjust based on the past 12 month snapshot.

gasdoc

Hillview
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Re: Do you have a monthly household budget?

Post by Hillview » Tue May 29, 2018 8:36 am

Yes about 6 months ago we started planning a monthly budget and every month I have xx dollars for the month expenses. I use YNAB (You Need a Budget) for this. It has been a very useful tool to be both more mindful about where I spend dollars and also to plan for larger items (through monthly saving buckets) like our life insurance payments and property taxes.

student
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Re: Do you have a monthly household budget?

Post by student » Tue May 29, 2018 8:38 am

You may find this recent thread interesting.

viewtopic.php?t=244949

Edit: Also viewtopic.php?f=2&t=250168 may interests you.
Last edited by student on Tue May 29, 2018 8:41 am, edited 1 time in total.

KlangFool
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Re: Do you have a monthly household budget?

Post by KlangFool » Tue May 29, 2018 8:39 am

jbsmith05 wrote:
Tue May 29, 2018 8:20 am
Jags4186 wrote:
Tue May 29, 2018 8:13 am
We track our spending which is different than a budget. I think you only need to budget if you are not hitting your savings goals or, worse yet, you are running out of money before the end of the month. We use mint.com to track our spending.
Interesting - it's possible to hit your savings goals but still run out of money, I've done it. I've paid myself too much by running a thin line between maxing out accounts and having enough misc $ to cover unexpected events, as a result I can't get the money back without consequence. I like to budget because then it allows me to save even more.

I'm curious if budgeting is a thing of the past or if savvy investors or high net worth individuals still do it.
jbsmith05,

<<I like to budget because then it allows me to save even more.>>

Why? Does it matter? If it matters, how much? Or, it does not matter?

If your saving percentage let you reach your FI and/or retirement goal at X number of years, why should you save more? If not, you should adjust saving percentage.

Money is a tool. It is a poor master.

"Enough" is the key word to happiness.

<<I'm curious if budgeting is a thing of the past or if savvy investors or high net worth individuals still do it.>>

1) If and when your portfolio is big enough, you could save nothing and you still could reach your FI and/or retirement goal in X number of years. For example, if your portfolio is 20 times your annual expense, your annual saving do not affect the time to reach your FI goal by much.

2) It is my observation that folks save substantially more than 30% of their gross income do not budget. They track their expenses but they do not budget.

KlangFool

Accrual
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Re: Do you have a monthly household budget?

Post by Accrual » Tue May 29, 2018 8:41 am

Yes. YNAB - You Need A Budget

sailaway
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Re: Do you have a monthly household budget?

Post by sailaway » Tue May 29, 2018 8:43 am

I don't think budgeting is a thing of the past, rather this forum self selects for a high percentage of people who can do well enough without keeping track of their monthly buckets. We save more than twice what we spend. We have decided that it just isn't worth any additional effort to save more, given our current goals. For one thing, we like the idea that we can live easily at this level when we are working out our retirement budget.
Last edited by sailaway on Tue May 29, 2018 8:53 am, edited 1 time in total.

Jack FFR1846
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Re: Do you have a monthly household budget?

Post by Jack FFR1846 » Tue May 29, 2018 8:51 am

I've never had a budget. I predict upcoming big bills on a calendar in my office and make sure I have enough in my checking account. Tuitions for my kids dominate outgoing money in our house, followed by taxes and then savings and lastly living expenses.

Our spending is different from those who don't have kids in college. To us, buying a new car would be a "who cares?" cost wise compared with the tuition bills. It's certainly given me a new perspective on money and once most of these tuition payments are done, I'm going to buy a nice car for a change. Getting a couple hundred grand Porsche instead of 2 years of tuition payments will certainly ride better down the highway.
Bogle: Smart Beta is stupid

mak1277
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Re: Do you have a monthly household budget?

Post by mak1277 » Tue May 29, 2018 8:57 am

Never used a formal budget. But I'm an oddball in the boglehead group because I have never subscribed to the "pay yourself first" theory. I have always lived the life I wanted to live, and if I have extra at the end of the month then I save it.

runner3081
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Re: Do you have a monthly household budget?

Post by runner3081 » Tue May 29, 2018 9:00 am

Yes, this has been asked hundreds of times. Might be worth a quick search.

We use a Google Sheet file.

Jags4186
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Re: Do you have a monthly household budget?

Post by Jags4186 » Tue May 29, 2018 9:03 am

jbsmith05 wrote:
Tue May 29, 2018 8:20 am
Jags4186 wrote:
Tue May 29, 2018 8:13 am
We track our spending which is different than a budget. I think you only need to budget if you are not hitting your savings goals or, worse yet, you are running out of money before the end of the month. We use mint.com to track our spending.
Interesting - it's possible to hit your savings goals but still run out of money, I've done it. I've paid myself too much by running a thin line between maxing out accounts and having enough misc $ to cover unexpected events, as a result I can't get the money back without consequence. I like to budget because then it allows me to save even more.

I'm curious if budgeting is a thing of the past or if savvy investors or high net worth individuals still do it.
It depends what your idea of savings goals and spending are and how you structure your finances.

I don't "save" every excess penny. We max two 401ks and my HSA from payroll deductions. Every week we transfer $105.xx to each of our Roth IRAs so we max out by year end. That gets us to 30% savings. We also transfer a fixed amount to our taxable account every week. After this, we still run a $1000-$1500/mo surplus on our spending. If we have an expensive month, we have it covered. Every 6 months our checking account will swell and then we look to see if there's anything "big" we need or want--new car, new toy, etc. If the answer is year, we deploy the money that way. If the answer is no I'll make a one time transfer to our taxable account and continue on.

We also have an emergency fund if something really big comes up. We haven't had to use it yet, but if we did we'd stop taxable contributions and rebuild it.

jbsmith05
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Re: Do you have a monthly household budget?

Post by jbsmith05 » Tue May 29, 2018 9:09 am

The responses are interesting to me and insightful.

couple comments from me as to why you may be wondering why I asked the question in the first place.

a) Yes I budget monthly - family of 4, 2 grade school kids
b) we save 30-35% of gross income - retirement accounts, 529s, HSA, brokerages
c) I'm not worried about FI right now (maybe I should be, maybe I am already FI, I don't know), I have goals, but they are small financially, the budgeting process helps make sure I'm not overspending (not as in frivolous spending, but being sure I'm not paying too much for something like car insurance - I want to ensure I'm not paying a high rate when I don't need to.

But I was curious to hear if the bogleheads budget or not, and or if there's a level of income/savings where people just forgo it.

GCD
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Re: Do you have a monthly household budget?

Post by GCD » Tue May 29, 2018 9:18 am

I used to budget when I was single and for about 10-15 years after getting married. We don't anymore. We are retired and have more money coming in than we spend. When our checking account seems too big we roll it into a money market account. When that gets too big we put it in a taxable index fund.

My wife and I are on the same page financially and neither has to worry about the other doing anything dumb. We also know roughly where our spending is. All of our big expenses like college for kids have already been saved for and are on autopilot.

We sit down and talk through anything major like a pool, boat or car. We undoubtedly are somewhat inefficient in moving money out of checking into MM and into the index fund. But it's worth it to us not to be spending our effort tracking our money so close. It's matter of time vs. money and which is more valuable. When I was younger I expended time to save money, now I burn money to save time.

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bengal22
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Re: Do you have a monthly household budget?

Post by bengal22 » Tue May 29, 2018 9:25 am

Never budgeted per se. Every paycheck I always did my giving first, my saving second, my expenses third, and then anything left over went into my savings. But I knew my knowable expenses and if I had to I could dip into my taxable accounts for my unknowable expenses. It worked.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

KlangFool
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Re: Do you have a monthly household budget?

Post by KlangFool » Tue May 29, 2018 9:34 am

jbsmith05 wrote:
Tue May 29, 2018 9:09 am
The responses are interesting to me and insightful.

couple comments from me as to why you may be wondering why I asked the question in the first place.

a) Yes I budget monthly - family of 4, 2 grade school kids
b) we save 30-35% of gross income - retirement accounts, 529s, HSA, brokerages
c) I'm not worried about FI right now (maybe I should be, maybe I am already FI, I don't know), I have goals, but they are small financially, the budgeting process helps make sure I'm not overspending (not as in frivolous spending, but being sure I'm not paying too much for something like car insurance - I want to ensure I'm not paying a high rate when I don't need to.

But I was curious to hear if the bogleheads budget or not, and or if there's a level of income/savings where people just forgo it.
jbsmith05,

1) Your saving rate is high enough that you do not need to budget.

<<I'm not paying too much for something like car insurance - I want to ensure I'm not paying a high rate when I don't need to.>>

2) This is part and parcel of being a good shopper. Aka, look out for the best deal whenever you make a big purchase. It has nothing to do with budgeting. Why pay more when you do not have to? This does not change whether you are worth 1 million or 10 million.

KlangFool

P.S.: There is a point when it is not worthwhile to shop around. I do my oil change once a year. I pay for the more expensive synthetic oil. It may not matter. But, this is the point where the amount is too small for me to care.

FootballFan5548
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Re: Do you have a monthly household budget?

Post by FootballFan5548 » Tue May 29, 2018 9:39 am

Random question, but when you calculate your savings, would you include the company 401k match? For instance my company matches 6% of my salary+bonus for 401k. It works out to roughly $16k per year.

When calculating my savings rate, would you include that $16 or skip it?

I'm trying to come up with percentage of gross savings to then help figure out a budget amount.

jbsmith05
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Re: Do you have a monthly household budget?

Post by jbsmith05 » Tue May 29, 2018 9:43 am

FootballFan5548 wrote:
Tue May 29, 2018 9:39 am
Random question, but when you calculate your savings, would you include the company 401k match? For instance my company matches 6% of my salary+bonus for 401k. It works out to roughly $16k per year.

When calculating my savings rate, would you include that $16 or skip it?

I'm trying to come up with percentage of gross savings to then help figure out a budget amount.
I wouldn't because it's not coming from my gross income - it's free money (assuming your 100% vested). But that's just me.

onourway
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Re: Do you have a monthly household budget?

Post by onourway » Tue May 29, 2018 9:43 am

I budget even though we don't need to. We save 1-1.5 years of expenses every year, but budgeting makes sure that we don't let certain types of spending come to dominate what we keep to spend, allowing us to have more to spend on what we really want. Budgeting is simply about allocating resources with the greatest degree of control.

We use YNAB.

mptfan
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Re: Do you have a monthly household budget?

Post by mptfan » Tue May 29, 2018 10:06 am

Jags4186 wrote:
Tue May 29, 2018 8:13 am
We track our spending which is different than a budget. I think you only need to budget if you are not hitting your savings goals or, worse yet, you are running out of money before the end of the month.
Same here. I track my spending, but I do not have a budget.

mrsbetsy
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Re: Do you have a monthly household budget?

Post by mrsbetsy » Tue May 29, 2018 10:38 am

Yes, but we just use an excel spreadsheet with multiple tabs. We have a very clear and precise budget and rarely sway from it. If there's a big purchase we want to make, we save up for it in that category.

For example, concert tickets which cost more than our allotted monthly entertainment budget, will be saved for over a 2-3 of months and then purchased. Home maintenance gets a set amount (light bulbs, etc.), but if there's a project or something big that needs replacing, we save up for a few months for it.

We have weekly budget meetings to discuss and agree on everything.

We do not merely track spending, but live within a true budget. We've looked at online versions, but in the end we revert back to our own spreadsheet.

Nate79
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Re: Do you have a monthly household budget?

Post by Nate79 » Tue May 29, 2018 10:58 am

Yes, I prepare a household budget and track using Mint. While I have had a budget for a long time now about a year ago I started to get much more serious about it when my wife stopped working after having our first child. I have found that really paying attention to the budget means we are much more intentional with our money and has helped ensure we stay on budget and keep a healthy savings rate.

DetroitRick
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Re: Do you have a monthly household budget?

Post by DetroitRick » Tue May 29, 2018 11:16 am

Yes. I always have, but with varying levels of precision over my life (since around age 16, I think) . My primary budget development tool is now Quicken (because that's where my history is), supplemented by Excel (for what-ifs and special planning). Performance monitoring vs. budget - all Quicken, because it's essentially automatic.

Two things have made the process a success for us - having basic underlying budget objectives (a purpose), and using the "right" level of detail for our individual needs. Choosing the right level of detail is what keeps the process both useful and fast, and it's a highly individual thing. There's always a balance between extremes there. Too much detail and you become a slave to the process. Too little detail - nothing is actionable. In the end budgeting has been a big help in building our net worth.

It can also be a great communication tool between partners (or, I suppose, a catalyst for divorce). My wife really appreciates the underlying decision process. So much so, that when I proposed discontinuing the process about 5 years ago, she adamantly wanted to continue. Which worked out well, because I later realized how much easier it made retirement cash flow and tax planning.

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Toons
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Re: Do you have a monthly household budget?

Post by Toons » Tue May 29, 2018 11:37 am

I kept a budget for decades so that one day I wouldn't have to.

:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Afty
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Re: Do you have a monthly household budget?

Post by Afty » Tue May 29, 2018 11:40 am

mak1277 wrote:
Tue May 29, 2018 8:57 am
Never used a formal budget. But I'm an oddball in the boglehead group because I have never subscribed to the "pay yourself first" theory. I have always lived the life I wanted to live, and if I have extra at the end of the month then I save it.
I also use this system -- we spend whatever we are going to spend, and the leftover goes to savings. I aim to keep our cash savings at a certain level, and once a month I sweep any amount over that target into our investment accounts. This system works well for us.

CnC
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Re: Do you have a monthly household budget?

Post by CnC » Tue May 29, 2018 11:42 am

jbsmith05 wrote:
Tue May 29, 2018 8:11 am
Do you draw up a monthly budget for your family? If so are you using any software to help maintain it?
We have what we call a 'budget' it's more of a monthly ad mortem.

We keep an Excel spreadsheet (by we I mean my DW) we track our expenses each month then are able to compare expenses month to month and year to year. It doesn't tell us where we can spend our money, it tells us how we do spend it. This gives us a good idea of our cash outflows each month and year and lets us see when certain spending gets out of hand.


Lol looks like once again on here we are not out of the ordinary. :mrgreen:

Usually people think that idea is crazy. But here it seems common.

MnD
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Re: Do you have a monthly household budget?

Post by MnD » Tue May 29, 2018 12:04 pm

No. Our saving amount is all automated and we spend what is leftover, either immediately or by moving excess in checking to a spending account for later spending on big ticket items. We put virtually all our expenses on credit cards so I know a month ahead how large or small the "surplus" will be. Its been a few years since we had a monthly cash-flow deficit - those were usually associated with college tuition bills.

Hukedonfonix4me
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Re: Do you have a monthly household budget?

Post by Hukedonfonix4me » Tue May 29, 2018 12:10 pm

Not anymore. We have automated our savings goals and spend the rest. I did use mint.com to keep an eye on expenses but haven't updated in a while.
"While some mutual fund founders chose to make billions, he chose to make a difference." | -The Bogleheads' Guide to Investing

2015
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Re: Do you have a monthly household budget?

Post by 2015 » Tue May 29, 2018 12:31 pm

I gave up equating happiness with spending long ago (there's no "there" there), so I usually come in under budget. OTOH, I've never spent so much money in my life since retiring.

GCD
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Re: Do you have a monthly household budget?

Post by GCD » Tue May 29, 2018 12:45 pm

2015 wrote:
Tue May 29, 2018 12:31 pm
OTOH, I've never spent so much money in my life since retiring.
:sharebeer Crazy right? Takes getting used to after saving so long.

Sandi_k
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Re: Do you have a monthly household budget?

Post by Sandi_k » Tue May 29, 2018 12:46 pm

We have a written budget, and we have a savings/investment budget. Occasionally, we over-save, and have to compensate by reversing a savings account transfer.

I always budgeted as a singleton, because I found it reassuring to see a path forward for debt reduction and retirement savings. DH is the opposite - he's never going to use Excel, and just buys something if/when he has the cash accumulated from not spending. :D

We meld our styles with the written "plan" (a new one each month, based on past bill cycles), and I find it useful to say to DH - "We can't afford to buy that this month, but I'll add it to next month's plan." This works because he's learned to move away from impulsiveness/DIY, and it makes sure that we communicate with each other about our wants and plans.

As a result, we're on a good track to retire at 60 and 62, and we're living a very good life these days.

2015
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Re: Do you have a monthly household budget?

Post by 2015 » Tue May 29, 2018 1:07 pm

GCD wrote:
Tue May 29, 2018 12:45 pm
2015 wrote:
Tue May 29, 2018 12:31 pm
OTOH, I've never spent so much money in my life since retiring.
:sharebeer Crazy right? Takes getting used to after saving so long.
Actually, not really. My budget in retirement simply has lots of padding in it (maybe too much? oh well, there's always increased legacy). So I can book that expensive trip to a secluded atoll in the Maldives just because I want to, for example. OTOH, I refuse to spend money just for the sake of doing it. Doing so seems pointless as what I seek is to maintain contentment, fulfillment and satisfaction on the inside.

MikeG62
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Re: Do you have a monthly household budget?

Post by MikeG62 » Wed May 30, 2018 7:00 am

I posted this to a similar question a few months back:

viewtopic.php?f=2&t=240364&p=3760717&hi ... t#p3760717
Real Knowledge Comes Only From Experience

BogleMelon
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Re: Do you have a monthly household budget?

Post by BogleMelon » Wed May 30, 2018 7:02 am

Another fan of YNAB here. Its methodology is just different than any other software in the market. P.S: I use the classic version not the current one.
"One of the funny things about stock market, every time one is buying another is selling, and both think they are astute" - William Feather

truenorth418
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Re: Do you have a monthly household budget?

Post by truenorth418 » Wed May 30, 2018 7:20 am

I keep a monthly budget and have been doing so for almost 20 years using an excel spreadsheet.

I used to use Quicken but I tired of the cost and realized I could easily manage it myself by simply downloading my bank and credit card files at the end of each period and manually assigning the account names and then updating the spreadsheet from there.

The entire process takes about 10 minutes per month.

daheld
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Re: Do you have a monthly household budget?

Post by daheld » Wed May 30, 2018 7:31 am

Jags4186 wrote:
Tue May 29, 2018 8:13 am
We track our spending which is different than a budget. I think you only need to budget if you are not hitting your savings goals or, worse yet, you are running out of money before the end of the month. We use mint.com to track our spending.
^^^This. We sit down monthly and track how much and in what categories we spent. It's not a budget in that we don't start each month saying "We can spend $X on groceries this month." It's a helpful tool to retrospectively see how we did and see if we can do better the next month. We're both frugal people, but we also really enjoy great food and entertainment. It's all about balance.

daheld
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Re: Do you have a monthly household budget?

Post by daheld » Wed May 30, 2018 7:33 am

truenorth418 wrote:
Wed May 30, 2018 7:20 am
I keep a monthly budget and have been doing so for almost 20 years using an excel spreadsheet.

I used to use Quicken but I tired of the cost and realized I could easily manage it myself by simply downloading my bank and credit card files at the end of each period and manually assigning the account names and then updating the spreadsheet from there.

The entire process takes about 10 minutes per month.
Exactly what my wife and I do. She created an excel spreadsheet with pivot tables that, after we copy and paste expenses and assign them an expense category (TV/Internet, Groceries, Car, Eating Out), totals each category for the month. It's a really helpful way to see how we did that month.

SQRT
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Re: Do you have a monthly household budget?

Post by SQRT » Wed May 30, 2018 8:45 am

I call it budgeting but it’s really just expense/cash flow tracking. Retired for 12 years. Forecast out 2-3 years and record monthly expenses by category via excel spreadsheet. We like to know where the money is going so we can decide on where it can best be spent.

Colorado13
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Re: Do you have a monthly household budget?

Post by Colorado13 » Wed May 30, 2018 8:50 am

I have non-negotiable goals for contributions to my retirement accounts (>30% of net income) and track monthly expenses in Excel. I don't set a monthly budget because I achieve my retirement account goals/pay my retirement accounts first. I am fairly frugal so this approach has worked well for me.

NextMil
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Re: Do you have a monthly household budget?

Post by NextMil » Wed May 30, 2018 9:09 am

Yes. I built an excel spreadsheet that tracks everything, and I overestimate monthly bills. Anything left over gets shoved into investments and mortgage pay down. I couldn't imagine not doing it, and takes about 5 minutes a month. Once a month I copy the the tab and paste it for the next month, and yearly bills such as life insurance etc, get a monthly budgeted amount so I have the money to the bill when it comes due.

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Earl Lemongrab
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Re: Do you have a monthly household budget?

Post by Earl Lemongrab » Wed May 30, 2018 12:03 pm

No, I never had much need for one. I'm frugal by nature and when I was working I spent much less than I made. Since 2007 when I got my investing plan made, I would put the max allowed into the 401(k), then a Roth IRA. After that I'd spend what I spend, and accumulated excess would go into taxable.

In preparing for retirement, I did some spending analysis to figure out a monthly base.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

pepelepuanteur
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Re: Do you have a monthly household budget?

Post by pepelepuanteur » Wed May 30, 2018 12:51 pm

FootballFan5548 wrote:
Tue May 29, 2018 9:39 am
Random question, but when you calculate your savings, would you include the company 401k match? For instance my company matches 6% of my salary+bonus for 401k. It works out to roughly $16k per year.

When calculating my savings rate, would you include that $16 or skip it?

I'm trying to come up with percentage of gross savings to then help figure out a budget amount.
I'm very curious about this as well. Any other bogleheads care to chime in?

Sandi_k
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Re: Do you have a monthly household budget?

Post by Sandi_k » Wed May 30, 2018 6:01 pm

pepelepuanteur wrote:
Wed May 30, 2018 12:51 pm
FootballFan5548 wrote:
Tue May 29, 2018 9:39 am
Random question, but when you calculate your savings, would you include the company 401k match? For instance my company matches 6% of my salary+bonus for 401k. It works out to roughly $16k per year.

When calculating my savings rate, would you include that $16 or skip it?

I'm trying to come up with percentage of gross savings to then help figure out a budget amount.
I'm very curious about this as well. Any other bogleheads care to chime in?
Nope, it's not my savings. It's a benefit, just like employer-paid health care premiums.

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Cycle
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Re: Do you have a monthly household budget?

Post by Cycle » Wed May 30, 2018 7:01 pm

Monthly budget, no, but I can back out how much I spend annually based on how much I contribute to may savings. We save 80% net. Trying to get to 4MM in todays dollars for a retirement in ~10 years at 45.

a monthly budget is of little value if you've already taken care of the big inhibitors of prodigious wealth accumulation, which are housing, loans, vehicles. On housing we make $2k per year (live in a duplex), no loans, $4k on our one car which is currently worth $7k (1:157 car to Net Worth ratio).

hmw
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Re: Do you have a monthly household budget?

Post by hmw » Wed May 30, 2018 8:01 pm

No. We don’t have a monthly budget. Never did. My wife and I are not big time consumers, and we always have money left at the end of each month.

This may be a naive/stupid question. For people who do budget, what do you do exactly? Do you plan to spend x dollars on grocery, y dollars on eating out etc at the beginning of each month? What if you go over? Stop buying grocery for a week, or just tell yourself that you actually needed a bigger budget for groceries? It sounds like a lot of work.

annielouise
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Re: Do you have a monthly household budget?

Post by annielouise » Wed May 30, 2018 9:47 pm

We track all spending in an Excel spreadsheet. We budget all of the flexible spending categories (like eating out, gifts, housewares, vacation, etc).

foamypirate
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Re: Do you have a monthly household budget?

Post by foamypirate » Thu May 31, 2018 9:47 am

hmw wrote:
Wed May 30, 2018 8:01 pm
No. We don’t have a monthly budget. Never did. My wife and I are not big time consumers, and we always have money left at the end of each month.

This may be a naive/stupid question. For people who do budget, what do you do exactly? Do you plan to spend x dollars on grocery, y dollars on eating out etc at the beginning of each month? What if you go over? Stop buying grocery for a week, or just tell yourself that you actually needed a bigger budget for groceries? It sounds like a lot of work.
Yes, in our case, we plan expenses ahead of time, exactly as you describe ($xxx dollars for grocery, fuel, etc). Most bills are known, but power and water I'll budget based on the season, with an extra buffer.

If we go over in one category, we take money from another. If there is no other category to borrow money from, tough poop for us, we'll manage without. On occasion, this means eating a frozen pizza from the deep freeze, or I take a basic sandwich to work instead of eating out. It sounds draconian, but it's really not.

Once you get into the habit, it's not much work, and it becomes easier to work within the predefined budget. Some people may not need this, but we are a family of 4 on a single income. If we don't tighten the belt a little bit, it's very easy to spend money on frivolities to the point where we can't make our savings goals. We still have very good quality of life, take a vacation every year, kids get to do their extracurricular activies (as much as a 4 and 2 year old can, anyway!), etc.

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