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March 01, 2012

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Thanx for the clarification on the use of a budget. Even though we do not have a running tally monthly, which I think we would never keep up, I do have a mental image of a budget. I know all our monthly costs and our pay does not vary so I know how much we generally spend and save. I use to keep track when we were first married and it was me who spent the most not my wife. However these were expenditures like maintenance on the cars and house. Then again when my wife does spend a lot she does tell me and reminds me that this big expense will be coming. ( Christmas, glasses for us all, etc.) So rarely is it a shock.

I could see how a budget would work for someone who is a shop-a-holic and does not have spending under control.

I feel like I am committing the cardinal sin of personal finance. . . I do not keep a budget.

When going over budget (say 20%) in a SINGLE month (as opposed every month) would significantly effect our financial health/goals, then a pre-planned budget was important. Once we got to the point that the amount we may "overspend" in a single month was fairly insignificant to the overall picture, true budgeting seemed unnecessary.

Now I simply click download once a month on quicken and look a the categories from a saved report (a process that takes all of 2 minutes). If anything in a particular category or the whole seems over the norm, I take a closer look. Otherwise, don't worry about it until next month. Of course, it was probably because of years of strict budgeting that we don't overspend just out of habit now.

I do an annual budget, and then keep it in mind, and, now that I bank online, my credit union has a program where I can track my expenditure. It's really great. At this point, I save 40 percent of my salary (periodic expenses, home improvement, vacation, next car, and emergency fund). When I pay off my mortgage in two months, I'll add most of the former mortgage payment to my savings. With a mortgage, I find myself more aware of what I spend and on what.

I have a budget mostly to figure out how much I can afford for things like housing and how much I can save (automatic bank transfer) out of my paycheck.

Then everything is a wash as long as I hit my intended savings rate.

I have a budget guideline because I use Mint... but I don't hold myself to the numbers there for more than just personal curiosity.

Sometimes I'll be $50 over in my shopping budget, or $25 over in food... but other months I'll be at least that much, or more, under budget. Maybe I haven't done enough due diligence to set my targets at something and hold to those targets. My situation doesn't necessitate tracking every single dollar, because I've been diligent in keeping my monthly costs down, so I have some decent wiggle room with the leftovers.

We followed pretty much the same process as FMF. We had a budget when we first started out, and we reviewed each category monthly.

At first, we identified some specific areas that were consistently excessive, and made conscious decisions about them. In some cases, the decision was to up the budget and maintain or even increase spending. In others, it was to cut the spending. I feel like the key is not to use the budget to police your behavior, but rather to guide and inform.

Later, we reviewed and revised less and less frequently and ultimately stopped budgeting by category. However we still review spending by category on a regular basis and every year we look at the big picture. These days our top expenditure is tax (yes I am in the 1%) and we try to ensure that vacation and entertainment are next!

Our financial situation probably doesn't require it, but I suspect that this tracking and consciousness is a form of financial self-discipline.

I also still enter EVERY expenditure in Quicken once a week. To those who claim they know their spending without doing this, all I can say is that you must be way smarter than me. If you don't record it, I seriously doubt that you know your spending. I do it manually even though downloading would be much quicker. Manual entry forces me to review and remind myself what I did with my money that week. Again - a way to remain conscious about our spending.

We have never had a budget - my wife and I are both fairly frugal by nature, but once we graduated college and started working we also had a common vision about our future, one which required lots of savings and investments early in our lives. From that perspective it became easy to simply save as much as we could without having to obsess over expenses. We make good enough incomes that we don't need to worry about small purchases, occasional nights out, etc when warranted, but we still keep major expenses to a minimum and are well on track toward our goals nearly 6 years after graduating.

I have a monthly Excel spreadsheet where I record expenses. It helps me see where I may need to adjust for things like food expenses creeping upwards. I zero everything out at the end of the month and we start over with the next months pay. I don't understand adjusting monthly. What changes that much from month to month? If there's an irregular expense like a new pair of shoes, I wait to see how everything stands at the end of the month and then pull money from savings as needed. I've been keeping track this way since my husband and I were married 5 years ago. I think it's interesting to look back on past years expenses occasionally.

I have a spending plan which is done in Excel that I've been doing for the past decade. It is such a useful planning tool for EVERY aspect of my financial life. I look at it daily and basically plan for all upcoming expenses, savings, etc. I don't know how I would keep up without it.

I track all my expenses in Excel spreadsheets. Starting doing this a few years ago because I wanted to estimate what my living exspenses would be in retirement. My payroll statement already tracks what I spend on health insurance, long-term care insurance, dental insurance, TSP (govt 401K) which I max out and I also max out my Roth IRA. I have categories like Food, Housing, Auto, Medical, Personal Discretionary, and Others (gifts, holidays, charity, travel to relatives). Then I have subcategories in each one.

This is our approach now after years of budgeting. We stick to the big things and make adjustments as we can, in hindsight as well.

Definitely still budgeting. I budget out of control. I have three dry erase calendars on the walls in my home office to show the next three months of spending. I have a spreadsheet I use to track all money earned and all money spent AFTER its spent. I have anothrr spreadsheet I got from EOD to preplan spending. I have a phone app I use to enter transactions at the end of the day. I have a google calendar that mimics my three calendars on the wall. Its a whole thing I got going on. I have to do it this way because I'm very forgetful. And I don't mind it because its fun. When my wife and I get to the point where there's only about 6 or 7 bills that need attention every month then maybe we can lose the budget.?

Therman, do you automate anything? Goodness gracious! I figured out what I can afford to spend on rent based on my income, and I automate all the rest of my bills. My credit card is set up to be paid in full every month, and every single piece of my finances is fully automated, except the rent check. I don't really have a budget, per se, but I do have a spending/savings plan. I guess it's just a matter of how you look at it.

I don't automate anything. I wouldn't mind doing it, but I have to build a one month buffer (like what YNAB subscribes to). I just feel too nervous letting it all happen by itself while I'm still in my current situation.

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