What's involved in your budgeting method?

I think budgeting and practical finances should be taught at multiple stages throughout a student’s life. I thought I knew the general idea but didn’t appreciate how much neglecting it would set me back.

What is your process for budgeting? As a starting point this article lists a few methods.

I use zero based budgeting where every dollar is assigned a purpose. I don’t end up sticking exactly to the plan, but I do keep a spreadsheet which lists my current balances and all expected expenses, so I can see my future balance and avoid going in the red. A couple times a month I cross off expenses which have been paid and update the balance. This is especially helpful to me because a big portion of my income is irregular month to month.

thorbot,

I don’t really budget. If I notice my credit card amount seems super high, I chill out on spending for a while.

LesserAbe,

Would you be willing to share how old you are? When I was younger I was a little more blase about it, but now I’m about 40 and thinking damn I wish I had savings and more in my 401k

thorbot, (edited )

I have savings and a 401k. I’m your age. $1k per month is auto deposited into savings and 12% per paycheck into retirement.

jcrabapple,
@jcrabapple@infosec.pub avatar

I mostly use the envelope method. My parents used literal envelopes when I was growing up, and somewhat early in my adulthood and in my career I came upon the online bank Simple. That bank changed the way I look at finances and saving money. So I still do it the way they taught me to do it.

I now use a bank called Monzo, and they are working toward building in a very similar budgeting method to Simple, with “Pots” instead of envelopes, that automatically get filled with money every paycheck.

LesserAbe,

I previously had Simple, and One before that, but banks don’t seem to like the buckets/pots/envelopes paradigm. You said Monzo is working towards it, what does that look like currently?

jcrabapple,
@jcrabapple@infosec.pub avatar

They have “Pots” that you can manually move money to, or have money moved to them every time you get paid, or move money to them on a set schedule.

You can link your other bank accounts and credit cards, and have money moved to a “credit card pot” automatically to cover your credit card bills.

monzo.com/us/money/see-it-all/

stoy,

I don’t really budget, I live alone, and make enough money to support myself and live a decent life.

But I do have a few rules:

  1. I will never set up any kind of subscription, be it media (HBO, Netflix, Disney+, Spotify, Apple Music, Tidal), apps (Flightradar24, Vesselfinder), games (Geoguessr). What I will do is buy prepaid cards with credit for those services, and activate them for a set period of time, but I will never buy into a recurring charge for a service, I have seen too many people ruining their economy with subscriptions being a big contributer.
  2. I seldom give into impulse buying expensive stuff, but if I have the money and can afford it I am not against buying quallity even if it more expensive at first.
  3. I don’t accept a seller or sales system stressing me out to buy as fast as possible, I can and have just walked away when I felt uncomfortable with how fast the sale if being pushed, I want to have time to think about if this thing is worth it for that price and if I need it now before I buy it.
averagedrunk,

You may want to see if your bank will let you create disposable cards. I have two credit cards where I can create temporary or reloadable cards at no charge for transactions.

So if I wanted to trial something, I would create a card with $1 on it. The trial starts and does the test transaction. I forget to cancel before the trial is over, but the card has no money so it automatically cancels.

If I wanted a subscription to HBO, I could create an HBO card and load the amount for it every month. When I cancel, I don’t have to worry that they’ll try to keep charging me because I just don’t add anything else to the card. It also makes me think about whether I’m using a service every month.

It saved me a few hundred bucks not terribly long ago. I tried a clothing subscription box that was absolutely terrible. So I contacted their customer service to cancel because they don’t have a real way to do it on their site. They didn’t get back to me in time and attempted to charge my card for another box. Luckily it was on the temp card and there was no cash on it so I just got a rejected charge on my card.

stoy,

They used to allow that, but removed it in favour if having a switch to turn on and off internet access for the card, it is crap.

averagedrunk,

That’s just garbage.

stoy,

Yep, it was an old system, I think it was flash based, which makes it understandable that they shut it off, but not that they didn’t replace it with an updated system.

LesserAbe,

What bank is it that lets you create temporary cards?

averagedrunk,

Capital One lets you do unlimited virtual cards for each service. X1 gives you the ones like I described. There are others.

whenigrowup356,

I always found it easier to basically automate the process as much as possible. “spend” every recurring expenditure and also set aside the most aggressive savings/investments possible using separate bill pay and savings accounts or buckets. Everything is taken out of the main account as soon as your paycheck hits, so it means everything you see on your spending account is a free dollar that you can use for fun or food.

Some people might operate better with a set amount for groceries too, but I personally found that too restrictive.

A good budget is one that you stick to, helps you achieve your goals, and crucially, allows you to enjoy your life to at least some extent. Whatever method works for you, it’s important to give yourself permission to spend some money on fun. However small.

LesserAbe,

Yes, I definitely rely on all automatic payments. When I first moved out on my own thought I had a grip on things but too many bills ended up paid a couple days late, even though I had the money.

We also have recurring transfers to savings and to individual accounts for “fluff” spending.

yessikg,
@yessikg@lemmy.blahaj.zone avatar

I pay everything with credit card and pay it off each month, so my credit card statement works as my expense report

RBWells, (edited )

Husband has irregular income. Like you I do a spreadsheet with the dollars all allocated for my income plus what he tells me he expects on average.

Then each month I compare to actual results, and use that information to get a better estimate for the next year.

The black hole is credit card repayment because it was spent on something but goes in as debt repayment but we are working on that.

ETA: also do forecasting bank balance by day in months when things are tight. We do have savings but most of it in retirement accounts.

AshKetchup,

At the very basic level, I predict how much money i expect to make in a month. Then subtract all bills and expenses that will definitely occur in the month. The difference is what i have to play with. Most times that extra goes into getting more groceries. Sometimes I can put that extra into my emergency savings which gets drained out more often than i’d like.

milkytoast,
@milkytoast@kbin.social avatar

just a spreadsheet, every paycheck gets a row. I write in how much to savings, spending, etc. then how much I spent of last paycheck. make sure everything lines up with what bank acct is at. works pretty okay for me

gerryflap,
@gerryflap@feddit.nl avatar

None really. I think I’ve always been in a privileged enough position that I never really needed to worry. I’m not a big impulse buyer and tend to regulate myself on this. If I buy something that I don’t really use as much as I thought I would, it annoys me so much that I become much more conservative with spending in the following weeks/months. It kinda self-regulates.

I don’t have a car, and instead bike everywhere or use public transport which saves me a lot of money. This is again a privilege, because I managed to land an affordable place to live that’s close to work.

My only way of keeping track of all this is the division between my payment and savings accounts. If my payment account goes above a certain value, I move money to my savings account. As long as this keeps happening regularly, like it has for years, I have nothing to worry about. Obviously I do check the details of my spending every now and then, but nothing organised.

Lividpeon,

We pay bills, rent, get food (all generic and heavy sales) then the money is gone. Its a good month if we have 20$ at the end of the month, thats how we budget, by having no money. Donated a decent amount to medical aid for Ukraine and ate plain rice most of that month, priorities

cheese_greater, (edited )

There’s an app called MoneyStats which does balance forecasting. Forecasting is necessary for me because I need feedback about how my decisions or plans affect the big picture and to be able to see whatever timeframe that I choose

Its the only thing that keeps one foot out of the financial aby$$. I just program in all my recurring and correct any imbalances every few days and review whenever I start losing the plot or just to make sure my model is representative of my reality and how I need to comport to ensure things stay tight

Coskii,
@Coskii@lemmy.blahaj.zone avatar

At the start of 2023 there wasn’t one for me. I was in a rut and generally felt that if I didn’t spend the money on myself, my SO would. About 6 months later I had one entire paycheck vanish midway through the week from excessive takeout purchases (150+ daily) and quickly set a budget. We each get about 200 a week for ‘allowance’ to do with as we please, about another 200 for food for both of us, and the rest was going into aavings/toward bills, but then in November I realized just how little the principle on the credit card we haven’t used in two years was being paid with auto-pay and diverted the savings money towards that.

Currently, I’ve knocked down the CC by a third, plan to get it under control by march of work keeps up, then going back into savings and continuing with the basic plan.

z00s,

I use the “barefoot investor” method (basically various buckets with percentages). It’s the only method that’s stuck for me.

kabukimeow,
@kabukimeow@lemmy.world avatar

Every month, I put some money into a savings account for future apartment, and a fund. I try to buy the essentials and little extra. My income is regular as long as I’m employed…

lvxferre, (edited )
@lvxferre@lemmy.ml avatar

Apparently my method is a mix of those listed in the text.

I’m in a similar situation as OP, some of my income is irregular. So my monthly budget isn’t directly based on the last month income, I use the average of the last six months, relying on a checking account for that. (I keep it with enough money to last me one or two months.)

Then I split that budget into four categories:

  • savings - I aim for 25%. Into the saving account it goes.
  • monthly fixed expenses - periodic, somewhat predictable, monthly. For example bills, cornmeal and rice, cat food, etc.
  • variable expenses - they’re necessities like the above, but there’s some wiggling room. Like, if necessary I don’t mind eating eggs four lunches a week and walking instead of taking a bus, but I’d rather not to. Usually split into four weeks, so I expend it gradually.
  • **"fluff"***¹ - avoidable expenses that I still want for some reason like “it improves my mood”. Things for my hobbies, going to a restaurant, buying nicer clothes or hardware, etc. Unused fluff gets transferred to my savings account in the following month.

Then here’s how I address some complexities:

  • periodic expenses for things that I buy every few months (e.g. gas canisters) - I include a fraction of them into the monthly fixed expenses, and only remove the money from the checking account when buying it
  • erratic but large expenses (e.g. house repairs) - I usually “borrow” this money from the savings, then “repay” it in the following months, as a fixed expense*².
  • high income multiple months in a row - I cap the budget and send the overflow to the savings.
  • low income multiple months in a row - cut down fluff, then reduce variable expenses, then reduce monthly fixed expenses, then reduce savings, in this order.
  • really low income multiple months in a row - if really necessary I borrow from the savings, keeping in mind that I’ll need to repay myself.

Notes:

  1. The actual name that I give to this category is “imposto das lombrigas”, or roughly “roundworm tax”. That’s from from my family jokingly referring to cravings as "to have roundworms for [something].
  2. Some people might use a credit card instead for that, to build credit; that also works, but it depends a lot on the government that you pay taxes to. I do have a credit card but I tend to avoid it, as often there are discounts for paying things in cash.
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