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I don't budget as in "I'm not going to spend more than $X in this category" however I do track how much I spend in each category. I'm ok with current spending levels and don't stress if I go a little over one month, but if the numbers begin to creep up consistently, I would probably make more of an effort to cut back or figure out what's going on.
I have a set number I want left over each month after all my bills and expenses are paid. I know most my bills won't change month to month. I used to follow my budget weekly to calculate where I'm at, but since I started tracking ALL spending, I have a general idea of where I will be at the end of the month. Typically my extra "fluff" comes from that 5th paycheck I receive every few months (when there's five Fridays in a month) and that covers bigger wants/needs, etc. I.e. I only budget for 4 paydays a month, but sometimes get 5.
I have a set number I want left over each month after all my bills and expenses are paid. I know most my bills won't change month to month. I used to follow my budget weekly to calculate where I'm at, but since I started tracking ALL spending, I have a general idea of where I will be at the end of the month. Typically my extra "fluff" comes from that 5th paycheck I receive every few months (when there's five Fridays in a month) and that covers bigger wants/needs, etc. I.e. I only budget for 4 paydays a month, but sometimes get 5.
There are usually 5 5-week months in a year, so nearly every other month you can about count on that extra paycheck. Good that you like to save it for teh extra "fluff" as you call it.
However, in 3 years of bi-weekly pays, we have had only 2 extra pays per year, {meaning the same as only 4 extra weekly paychecks instead of 5...I don't know if that will change to a year of 3 extra bi-weeklies? }. We are used to weekly payments.
YET another reason for a monthly budget! {Bi-weekly payments instead of weekly.] The bi-weekly payments also come AFTER the bills arrive, so I have a "padding account" that has money in it in advance of the month's bills, so that when a bill comes, I can pay it directly out that day or the next day! I don't wait, I don't play a float, or anything, But BAM! it gets paid Right away!
**I didn't say EVERYBODY who doesn't budget gets behind financially, but most I know who DON'T BUDGET, DO get behind and are financial wrecks!
I just wing it - but my major expenses don't vary much from month to month, and I automatically send a sizable amount of my paycheck straight to my savings/investment accounts so I can't piddle it away, so things work out all right.
There are usually 5 5-week months in a year, so nearly every other month you can about count on that extra paycheck. Good that you like to save it for teh extra "fluff" as you call it.
However, in 3 years of bi-weekly pays, we have had only 2 extra pays per year, {meaning the same as only 4 extra weekly paychecks instead of 5...I don't know if that will change to a year of 3 extra bi-weeklies? }. We are used to weekly payments.
YET another reason for a monthly budget! {Bi-weekly payments instead of weekly.] The bi-weekly payments also come AFTER the bills arrive, so I have a "padding account" that has money in it in advance of the month's bills, so that when a bill comes, I can pay it directly out that day or the next day! I don't wait, I don't play a float, or anything, But BAM! it gets paid Right away!
**I didn't say EVERYBODY who doesn't budget gets behind financially, but most I know who DON'T BUDGET, DO get behind and are financial wrecks!
Actually, there are 4 5 week months usually. 52 weeks in a year, so 4 * 12 = 48 weeks, meaning you have 4 months with an extra week in a typical year. Most companies will adopt one extra week per quarter in what's called a 4-4-5 week arrangement when they operate in terms of weekly costs. So Month 1 is 4 weeks, Month 2 is 4 weeks, and Month 3 is 5 weeks.
That also fits with the fact that as you said, when dealing with bi weekly payments, the 4 extra weeks mean 2 extra pay checks.
That said, having a budget has nothing to do with cash flow management(the case you made above). The two topics are very different. I could have a strict budget but because of poor timing management, wind up over drawing my account because I'm not careful. At the same time, someone who spends like there's no tomorrow could be fine in terms of cash flow management because they just don't have savings and keep all their cash in one place.
I'm not saying a budget is a bad thing to have, but it's definitely possible to be secure financially without one. People who simply avoid spending excessively on "wants" will benefit less from a budget because their daily spending habits work better than a budget. They don't need an empty envelope to tell them that they shouldn't spend any more on eating out.
Its probably a good habit to have for most households but not necessary to be successful with money.
As single person certainly can keep track in his head. A household of 2 adults and 3 kids and 2 dogs and 1 cat multiple cars etc...and budget is a GOOD idea.
I don't know how some get along without budgeting...oh yes I do, they are ALWAYS in financial TROUBLE!
I've never had a budget, and never been in financial trouble. We don't even make that much money. Hubby and my combined income, before taxes, in 2014 was around $60k. But we don't have kids, and we live in a low cost of living area. So we only spend about half our net income each year.
My "budget" consists of "pay the bills, max the IRAs, replace what wears out, and have some fun whenever possible, and put everything left over in the savings account". Hubby and I are naturally frugal people, and just don't spend a lot.
The closest we ever came to "financial trouble" was when the economy tanked, and hubby was out of work, without unemployment, for a full year. We had almost used up our emergency fund when he found work again. But even then, we could have fallen back on credit cards, as we had around $20k in unused credit there.
I used to do it monthly and it was something my wife and I sat down and wrote out together, we moved to quarterly and now we really just do a quarterly review. It is one thing I feel strongly about that can changes people's financial situation and life. Now that we have dialed in our savings I don't really care if our discretionary spending money went to a weekend trip, new shoes or whatever else so long as the savings isn't impacted
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