2018: What's in your budget?

[Anonymous]

I'm updating my outdated budget review spreadsheet for 2018 and figured I'd ask folks here what's in their budget, so I can make sure I didn't miss something new.

My budget spreadsheet is pretty easy to use, because it includes 3 different values for each category: survive, thrive and arrive.

Survive means what it would cost at a bare minimum.  Think beans and rice diet if needed, for the dining category.

Thrive means what you're spending as a normal cost of living.  Not beans and rice unless you love them, but groceries, some dining out, a night at the bar, etc.

Arrive means what you're spending if you're meeting all your savings and investing goals and you want to live a little beyond the norm.  Maybe it includes Starbucks every morning plus a $25 lunch and then a fancy dinner 5x a week?

It's important to chop categories into these 3 because a lot of folks want to fight and bicker with me over things like Spotify or Hulu, or even things like Amazon Prime or holding on to spending at Victoria's Secret nonstop.  So allowing them the option to put those spends in but still remove them from the "survive" category is important so they can analyze things if income stops or an injury or illness happens.

Do you keep a budget?  What are some categories you track that other budgeters might not think about?

[Anonymous]

I don't do a survive, thrive, and arrive section, but I usually know approximate numbers in my head or can figure them out with a quick review of my budget. Mine is so basic. Just a notebook with projected income/expenses and actual income/expenses. I do plan for larger or annual expenses monthly and save for those. I'm not sure you could get more simplistic than my way. I had a fancy excel sheet once but I returned to paper because it was more convenient for me.

[Anonymous]

Nice -- I actually make people print out my spreadsheet/PDF and use pen and paper.  The act of writing things down is very helpful for a lot of folks.  I regularly get people telling me just a month into active budgeting that they're spending anywhere from $200 to $1000 more per month than they had realized.  It was the pencil scratching the numbers that opened their eyes.

I suggest a survive/thrive breakdown for those who haven't used a budget before, or who failed because they tried to rely on a complicated app.  The first step before writing a budget is to do my reverse budget first going back 3-12 months.  I suggest folks do this around the middle of the month looking back on the prior month, just to compare their written budgets with their actual spend.  After they've done at least 3 months looking back, they can create their "thrive" budget fairly accurately, and then figure out their "survive" plan.

My required 3 months emergency fund ("ditch fund") is based on 3X either thrive or survive -- a lot of folks start with 3X survive but then realize they'd rather have 3X thrive just because it's difficult to pivot from thriving mode to survival spend.  In some odd cases, people who lose their jobs or get an injury actually switch from thrive spending to arrive spending because they've just given up.  It's senseless but I get the emotional connecting to rampant overspending.

[luxeprw9]

I have a spreadsheet that I use to track my net worth and savings goals but I don't track my day to day spending.  I still "budget".  I have a certain percentage of my paycheck that is portioned out to church tithes, my CU savings account, my Roth IRA and my regular savings account. Then I live off the rest. After paying monthly expenses, whatever is left I have to make do with it.  I never dip into my savings accounts.    

I don't spend a lot,  so when I've tried tracking my day to day expenses it really didn't net any benefits.  But I do understand the importance of it.  

[iced]

Do I keep a budget? Hmm...I'd like to say yes, but it's probably not a budget in the traditional sense. I have money carved out each month for obligations:

- $1100 for mortgage (includes $100 extra principal monthly)

- $360 for student loan (includes $100 extra principal monthly)

- $550 parking space anchor (aka car but it sees less than 5k miles/year in use)

- $80 cable/internet

- $70 gym

And that's it. Everything else is discretionary spending. Because I have all of my savings withheld prior to deposit into my account, I can't cut into savings by spending too much in one month...sort of. We'll get to that part in a bit. My wife does similar with her check, but her obligations are different than mine. She pays HOA, electricity, gym, and her personal phone, and everything else in her check is discretionary.

Looking at my last pay stub, my take-home pay is 29% of my gross paycheck. 40% is withheld into various retirement/savings/espp plans, 30.5% is withheld for various taxes, and the last 0.5% is insurance withholdings. Because we're taking home so little of our checks, any month we do anything above the normal "thrive" level you describe means we're paying for it out of savings. This means months where we take a vacation or make a large purchase.

At the end of it, we're blowing our "budget" 3-4 times a year and tapping into savings, but the savings net we have is such that it's not a problem, so that discretionary amount basically just becomes the buffer we use before having to touch anything that's earning dividends or interest. It's also worth noting once a year things like auto/homeowners insurance fall into this bucket - rather than budgeting auto insurance into a monthly budget, we just pay the whole year out of savings and are done with it.

[Anonymous]

That'sa pretty awesome policy -- taking so much of your check into automatic savings and investments is great!

I know a guy (have known him for 20 years!) who lives this month off of his paycheck from January 2008.  Always ten years ago.  He has a hilarious process where he withdraws from his direct deposit account what his net paycheck was 10 years ago.  He's been living like this since the 70s (before direct deposit of course) and doesn't really monitor much beyond that.

So his "ditch" fund is 10 years of pay.  I guess he was homeless in his teen years and has had the same job since he was 18 (factory warehouse manager) and just ignores everything else.  Pretty funny that he lives on a forklift operator's salary because that's what he did 10 years ago.

[iced]

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@Anonymous wrote:

That'sa pretty awesome policy -- taking so much of your check into automatic savings and investments is great!

I know a guy (have known him for 20 years!) who lives this month off of his paycheck from January 2008.  Always ten years ago.  He has a hilarious process where he withdraws from his direct deposit account what his net paycheck was 10 years ago.  He's been living like this since the 70s (before direct deposit of course) and doesn't really monitor much beyond that.

So his "ditch" fund is 10 years of pay.  I guess he was homeless in his teen years and has had the same job since he was 18 (factory warehouse manager) and just ignores everything else.  Pretty funny that he lives on a forklift operator's salary because that's what he did 10 years ago.

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We're not really doing anything all that different. When you consider we're bringing in close to 20k/month combined, the fact that we have a $1000 mortgage or 15 cable channels with no HD is very much what we would have done right out of college rather than at this point in our lives. Granted, we didn't draw a line at 10 years ago, but we very much decided that just because our incomes are significantly higher doesnt mean our cost of living has to be.

[Anonymous]

I use quicken. I enter transactions weekly against a budget I update as time goes on. Gives me reports regarding spending and tracks net worth. 

[Anonymous]

These are the categories I have.

Rent

Student loans

Electric/Gas

Water

Gas (Fuel)

grocery

phone

Child care

Lunch (work)

[tacpoly]

We don’t have a budget per se, but we lock in a specific amount for savings then consider what’s remaining as ours to spend for necessities and luxuries. We usually find we end up with a surplus that is added to savings.

Our target savings will allow us to meet short and long-term financial goals while also leading a very comfortable life. We don’t have to nickel and dime everything but neither are we constantly in luxury. For example we fly business or first class (except short hops), but we’re not booking suites at the Four Seasons. It’s a good balance.