Do you have an annual budget?

[naturewalker420]

My wife and I want to have one but am looking for realistic advice on how to make it work.

Has anyone successfully kept one? If so, how?

I have done a budget for the past few years. I do it out of neccessity. If Im not responsible with my budget consequences would be less savings for retirement, missed bills, or increased credit card ultilization.

As prices rise I had to either cut back or increase line item budget.
But without a budget I dont know where Id be.

I think the best way in my experience of having this work is to stress the importance of living within and below your means. I see some budgets where a family will budget for 10,15, 20k a month expenses. For most of us the reality is we need to stretch what we do have to meet our needs.

Im going to do actual spending for 2025 and see if its more practical. Ie save up gas receipts for month, grocery bill, all spending vs having monthly predetermined budgets. Total up at end of the year/12 to have a look at the year in review.
Currently my savings are
$550 month towards house downpayment (get to 20% down payment
$450 month retirement (I feel like I can do this til my 80 and not have enough.
$125 month for next truck (need to get to 8-10k)
But children coming in next few years and that will change things. Continue to work hard and build traits abilities in my career. But without a budget I would be on an secluded island with no boat or paddle.

[stocknoob4111]

Had a budget for years, without it I would literally be flying blind not knowing if my spending is within limits or not. If you have ridiculous level of wealth then I guess a budget may not be necessary but for most I think it's essential.

[YeahBuddy]

No, we do not set an annual budget. We evaluate moderate to major expenses as we face them. I set our EF and investment goals. She keeps her cookie jar money. As long as we are meeting those, we don't feel a need to budget.

[Mr. Rumples]

Yes. I have always done this. It has wiggle room built in. I have too many friends in their 70's who are either still struggling - or even flat broke - to make ends meet or still amassing wealth and they haven't a clue how to spend it, enjoy it and relax.

[HooCares]

Our family operates on an annual budget. We do it over Christmas break.

It’s important to do an annual budget because there are many expenses that are not monthly and are easily forgotten about until the bill comes.

Insurance premiums
Property taxes
Gifts
Vacation/travel
Home maintenance
Vehicle maintenance
Vehicle purchase
Unexpected medical expenses
Myriad small expenses — piano tuner, car registration, license renewal, girl scout cookies

The process goes basically like this:

How much do we think we will make this year?
How much of that do we want to save this year?
What are our anticipated and/or desired expenses (annual budget)?
Did we meet savings goal?
If yes, great.
If no, go back to the budget and adjust.
If there’s no more adjusting to be done, then adjust savings goal.

I will tell you we typically go over budget but also typically go over projected income. I typically get $5,000-$10,000 in credit card rewards which I use to subsidize a lot of the “extra” spending.

[_nvrltthmknwyrnxtmv]

Use an automated tool to track finances and set goals, such as Monarch.com

Do not use it for budgeting per se. Use it to plan and monitor income, expenses, and available funds for saving and investing. Also to set and track goals. Track all assets and net worth.

Use the budget module as a target to monitor spending and identify areas of overspending.

Regularly review historical charts to see where the money has all gone, use this insight to plan future finances and adjust spending habits.

[MrBobcat]

Had a budget for years, without it I would literally be flying blind not knowing if my spending is within limits or not. If you have ridiculous level of wealth then I guess a budget may not be necessary but for most I think it's essential.

How detailed is your budget? I track overall spending to verify I stay within my "budget" but it's secondary to my savings goals, if I meet the savings goals (which is the first thing I do at the beginning of the month) it's pretty hard for me to overspend.

[jebmke]

Had a budget for years, without it I would literally be flying blind not knowing if my spending is within limits or not. If you have ridiculous level of wealth then I guess a budget may not be necessary but for most I think it's essential.

How detailed is your budget? I track overall spending to verify I stay within my "budget" but it's secondary to my savings goals, if I meet the savings goals (which is the first thing I do at the beginning of the month) it's pretty hard for me to overspend.

yes; I think there are two basic approaches, neither of which is "best." One is to save first, spend the residual. The second is to spend to budget, save the residual. I'm sure there are other permutations. We followed #1. We had a savings and investment plan and stuck to it. The rest was fair game. There was no practical way to overspend.

[dknightd]

My wife and I want to have one but am looking for realistic advice on how to make it work.

Has anyone successfully kept one? If so, how?

Save a part of what you earn. Rinse and repeat.

[Wanderingwheelz]

Nope.

Never have, hopefully never will. I’ve never calculated our saving rate or anything like it, either. It's been very high, though.

[Gecko10x]

Not sure why this thread got revived. It's nearly a year old and not a single response from the OP.

[vfinx]

No budget, but started diligently tracking through an aggregation app. Every account is registered. Every cash withdrawal gets tagged as frivolous shopping, so there should be no leaks. We invest a few minutes every week fixing the category assignments.

If I wanted to set a budget, I could easily do so now, given the organization of the data. But we've been ok with the spend level so far. It is about 10% higher than I had estimated it to be, before we signed up for the service. There's also a bit of "observing impacts behavior" in effect. We sometimes forego on certain discretionary expenditures as a form of gamification.

[stocknoob4111]

How detailed is your budget? I track overall spending to verify I stay within my "budget" but it's secondary to my savings goals, if I meet the savings goals (which is the first thing I do at the beginning of the month) it's pretty hard for me to overspend.

I'm retired so not saving any more. I track spending using my own dashboard I created in Google sheets, I enter transactions just like I used to do in Quicken and it automatically tabulates the budgeted categories and over/under. If I am heading to overshoot one category I adjust in another to keep the overall budget on track.

[TipsQuestions]

Budgeting is useful for those whose spending is close to some limit they mustn't go over. In early retirement I've calculated the amount I can safely spend per year. I track spending in Excel and know I'm way under this amount, so don't need to budget.

[Tib]

Retired. Have never bothered to budget or to track expenses. I keep track of my real net worth (and of my age), which requires little effort but gives me a good sense of how I'm doing. Inclination to spend varies with the size of my portfolio.

[Nebraska_Drought]

We have a monthly budget that includes all of our regular utilities and cost of living items. As part of that monthly budget includes what we put into Roth IRA's, brokerage accounts, HYSA's and our annual bills such as property taxes and homeowners insurance. I have the budget balanced out to the point that all of our monthly take-home pay is accounted for. Some months, not as much will go to the HYSA but we have always employed the "pay yourself first" mantra and all of those types of investments are 100% automated and done each month without worry. As we have no kids at home and I plan on retiring in 10 years at 61 or 62, we are dialing in what our absolute monthly minimum on bills will be and we are working on our "number" we are going to be shooting for as we hit the end of our accumulation phase. As we have similar incomes, my wife and I are pretty much living on one income right now and saving the other and we are quite comfortable in our lives that this is working without much angst.

Knowing what your absolute minimum for monthly bills in retirement will be quite helpful as one can adjust from there, but you need a starting point.

[StayTheCourse60]

I have an annual investment/savings goal.

I adjust the Roth 401k contribution % appropriately to max out at the end of the year
I fully fund my wife and I's Roth IRAs in January.
We identify and automate monthly investments to a taxable account.
We identify an end of year cash equivalents balance (essentially our emergency funds, which is incrementally padded each year, usually 100k)

We receive lumpy inflows in the first quarter of the year which allows us to do this...

Once the end of year target is set, the delta between our current cash equivalents balance and the end of year balance is our "annualized budget". This allows us to apply the brakes or speed up at anytime of the year without sweating every dollar each month. We pace our larger outflows throughout the year to balance the highs and lows of fun expenses, not fun expenses (taxes/insurance) and planned improvements.

[jand87]

I have a budget set up but it’s mostly to monitor expenses. I track every single expense in excel and then categorize them. I do set it up for annual projections but I’m not strict about my categories. It mostly just gives me an idea and keeps me in line from impulsive spending or shows me where I need to make adjustments. I’ve been doing this for 3 years now and it has improved my discipline significantly.

[jackholloway]

Before marriage, I tracked every expense down to sales tax in Managing Your Money. After marriage, we used excel, and then google sheets to track and split almost every expense according to income. Now we use soft envelope accounting. Every dollar has a purpose, and we try not to spend more than a given envelope has. Each paycheck goes to the envelopes, RSUs go to mostly invent accounts, and we heavily front load the 401k and mega backdoor Roth.

We have a few hundred envelopes, and two decades of tracking g history. This gives us insights into where we splurge, and where we can trim easily. Some columns have run negative, so we ran the last two years of expenses to figure out our true spending - turned out expenses had gone up about 3% since our last adjustment, some balances were growing without bound, others needed a boost, but in all, we were living on a third to a half of our take home, depending on where we extracted retirement accounts and taxes

That was not where we started. When we first married, we save 5% of each check plus max IRA. Then each raise went half to us, half to savings, until we hit saving 30%.

[gwanghoops]

Been tracking "living expenses" forever and always lived beneath our means so we never actively "budgeted" while working.

Before retirement, it was used for early retirement feasibility by guesstimating future travel expenses.

During retirement, it was used to determine how much of an annual travel budget is possible such as 4 month long world cruises and the impact of such a decision over the long run.