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I've used Mint . com (by Intuit), a free online aggregator and budgeting tool, for almost a decade now. It has made life so much easier because all transactions are imported automatically, both income and expense, as well as investments, multiple account totals are updated automatically, and I don't have to manually track anything.
I can see where I'm spending, everything is categorized, it was easy to customize my expense and income categories and update or add on the fly, and I know what each month's income and expenses are, along with my account totals. There are reports that can be run for instant viewing -- trends, net income, net expenses, spend over a period of time, by category, etc. etc.
I do not "hard" budget as my monthly income exceeds my monthly out go. I keep an eye on things, but I do not budget per say.
We have a similar approach. We "pay ourselves first", then we don't worry too much about where the rest of the money goes. Even then, we often end up with a little bit more to add to savings. Usually, we'll put some of that extra into some "play" investments.
I do not "hard" budget as my monthly income exceeds my monthly out go. I keep an eye on things, but I do not budget per say.
Yeah, same. I’ve done it in the past though. Two years of accounting for every single penny. I used an app called Spending that I still use for all of my corporate accounting. It’s the best and easiest for me honestly, I don’t need Quicken or some nonsense boring program. Spending allows me to add every expense, create categories, and also add income, back up to the cloud automatically, and export PDF files for my accountant. When I was tracking my personal expenses it helped a lot because the act of having to enter an expense deterred spending by itself lol.
When I moved to my new house last year, I made an exact budget of fixed expenses so I could have a great idea what my costs will be month to month at minimum. But that’s as far as I needed to take that. My income is roughly 5-6x higher than my living expenses, so I really don’t care about writing down each item I buy or doing any sort of careful accounting. If I spend more one month, I’m still going to be saving 75% of what I made at worst. I like to live below my means, though, for a lot of reasons. If I keep my cost of living in the more “middle class” range, I don’t need to worry so much about tax increases I can’t control, or various costs rising over the years, or a fall in income, etc. I just don’t think I’d be any happier spending a lot more money frankly, I’m happy with what I have and it’s great. Life can’t just be some big hamster wheel of making more money, but adjusting your lifestyle to spend more, rinse and repeat indefinitely. That isn’t what I want.
Our budget doesn't really change much.
I use the envelope system for "unfixed" or "unknown" items...such as food and household supplies (I may buy these at the grocery store, but are a separate line item on a budget).
I only do the budget once/twice a year, but have been doing it monthly since covid-19 has disrupted two of 3 jobs for us. So, had to keep track and deal with removing money from retirement to make those loose ends meet.
( Unenployment? Sorry but my OH already has another"essential" part-time job [ forget that it takes two part time jobs here to Equate to a full time job], so can't get for the second job, and I didn't qualify).
We started doing ok as they were paying a bonus to employees during covid-19, that kind of made up for my OH s second job loss, but now it's going away. And summer hour cuts are coming.ugh.
Back to the budget board.
One good thing was gasoline usage was down to just $10-15/week, sometimes if that. Usually around $250-300 month! That also helped the be dget.
And the utilities company lowered our budget payment because last year we used less due to mild winter. THAT will change again come readjustment next spring when balanced budget renews itself, I'm sure we'll have a balance due, not a credit like this year as next winter is to be harsher, if this summer isn't hotter on addition. That we'll just have to wait to see.
Otherwise, the budget outgo stays relatively tte same, it's the income side we have problems with now!
The good thing is debt has been drastically reduced even still, the stimulus check helped with that.
If the covid-19 bonus stayed active, we'd be just right equal income and expenses, no savings allowed. But it's going away, until covid resurges next winter, and it will.
I am probably closer to the Bogleheads approach. I actually manually document every expense. I used to use Personal Capital for a while, but I found that it was easy to just not look at it. Personally documenting everything forces me to look at the expense I incurred and I have to re-visit whether I think that was a valid expense or extremely frivolous. At first, this was difficult and it was difficult to dial in what my expenses were in each category each month and then once I went over I gave up and quit for the month. Now it's less of a "budget" and more of a way for me to actively track my expenses in categories that resonate with me. I just like to hold myself accountable even if it's hard to see that our expenses went up by 25% from one year to the next.
We don't really need to do this. In any given year we really only spend about 25-30% of our gross income, but I just want to know if/when the expenses go up where specifically they did go up. If we decide that was valid (like new flooring) ok, but at least it's documented. Plus as I think about early retirement it's easy to forget about those types of expenses that need to be accounted for that don't usually fall into the normal monthly budget. By the time I hit that time I'll have at least 10 years of expenses tracked, which will give me a good idea of what my on-going expenses can be expected to look like for big-ticket items that many people often forget about.
Knowing your monthly and yearly spend over several years as you get closer to retirement is a powerful planning tool because part of figuring out "are we there yet" is knowing what your expected expenses are likely to include in retirement.
Someone who normally spends $100K/year isn't suddenly going to only spend $35K in a typical retirement year, and their planning would need to take reality into account.
Yeah I’ve never understood that from my perspective. My expenses wouldn’t be any less in retirement, I basically live a retired lifestyle in the first place lol. I work from home, I don’t have crazy clothing or transport expenses, so there’s no reason at all that my budget would go down. It would if anything go up if I ever retired, which I wouldn’t.
I've used a spreadsheet that I call my budget for years (I believe the first version was in 2002). I say call it my budget because it's actually so much more than a budget, it's basically my entire financial life in one doc, and I change it as needed year over year.
At a minimum, it always has a breakdown of what needs to be paid paycheck by paycheck, and tabs tracking various debt (student loans, credit card balances....basically anything I am keeping a close eye on). When I was looking for my home, I had a few tabs with custom mortgage calculators that I built and a duplicate to the payments tab so I could model out how monthly mortgage payments fit into the budget.
However you budget (expense by expense, high level), just the act of budgeting/paying attention to inflow/outflow is powerful. Everyone does it in a way that works for them. Those who don't do it at all are in for a mess eventually lol.
On the Flex side, we have looser round-number average spends, bumped up to the nearest hundred. We charge all groceries on a single Credit Card (2% cash back) so each month we see that we're within a limit. Dining Out goes on a different card (4%), easy to track. Transport has a line for Gas (5%) and a sinking fund for Maintenance. Entertainment is a large slush fund, where any unspent allotment gets swept, and any over-spend gets absorbed. This now serves as our Emergency Fund. Entertainment includes Concerts, Ballgames, Galleries/Museum......and is robustly funded. What doesn't get spent this month toes into the slush fund.
You can get better return on groceries, if you are into juggling cards to maximize earnings.
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