Budgeting is a very crucial part of your finances that will either break you or make you survive into another month. I have a very unpopular belief that says, if we take away the inflation issue, take away the wage issue and wage theft problem in America. I do believe that a lot of people are just simply bad with money.
And I’m no bank-level financial advisor or anything. I’ve been able to sustain all of my expenses without a hitch. I’ve paid my monthly loans on time, actually, pretty well in advance we’ll say because as soon as I see bills come up infront of me, I want them out of my face as soon as possible.
I always advise people when they’re out on their own and that’s to watch their numbers. Always total the amount you’ll be paid by the month, if it’s fixed income. Then, take all of the expenses you’re paying for by the month and total them up. Then, subtract the amount of your expenses from the total earning and you’ll figure how much you’ve got left to work with and how you’ll spend it if you want to. Saving is also key.
I’m not here to tell you what to do with your money. People get vehemently defensive when you point out the flaws of their spending habits, always treating it as a control issue when you’re just simply finding what’s wrong with it as they complain all of the time as to why they’re broke.
But all I will say in regards to that, is that, you really need to weigh your needs from your wants. Impulsivity is a bad driver in how it ruins our finances. I’ve done things where I’d be in a store and I’d take something I thought I’d really want to have and I’d carry it around for a while. Eventually over time, the feeling of wanting that thing, washes away because I know that it is simply an impulse issue.
I do get concerned when people lay out their budget plans. They spend triple the amount of groceries for just themselves. They actually even make budgets for bad money sinks like weed and alcohol. They never save anything, it’s always spending by the paycheck. You’ll never know if something will come up that’ll require a specific amount of money and you’ll find yourself in a tough situation where you are having to decide whether you want the lights on for another month or your car tire needs to be replaced because you’ve neglected it for so long that the threads are worn.
I think making a budget for bad habits is a great thing. Better to know and be aware than not be.
I have a budget for weed and alcohol, like I do for everything else. I also have a budget for savings, charity, portfolio contributions, gifts, retirement contributions, emergency fund, and other “good” things.
Being a human is hard, no need to disparage an “unnecessary” pleasure budget.
I would TL;DR your post with really the idea that you must save and avoid debt. However you do it, budget or not, spending money or not, does not matter. You can be super frugal and save, or not be super frugal. You must save, though.
You actually gloss over saving and focus on budget, when really I see the budget as a means to the end of controlling your spending so that you can save.
If saving was not the ultimate goal, there really is no reason to budget in the first place.
All that said, I agree with a lot of what you’re saying. We’ve been using YNAB for about 5 yrs now and it’s been wonderful.
To this end, for some it might be helpful to start with tracking spending (speaking from personal experience). I couldn’t determine what was a reasonable amount for a given category for a budget because I didn’t see my current circumstance.
I spent several years categorizing my expenses into two broad categories: fixed vs variable.
Fixed costs are utilities, mortgages, grocery, and insurance etc, variable costs were anything else (more or less).
By doing it this way I could see the minimum I needed to live—and also how much I was spending on frivolous shit.
Use Google Docs, and make a simple spreadsheet to track numbers. It doesn’t have to be a beautiful sheet, just functional. It will grow with you over time as you add and remove functionally to track different aspects of your finances that are important to you. If you don’t know how to use spreadsheets, online MOOCs have courses for a tiny amount of dollars relative to what you learn.
deleted by creator
This is the type of post we love to see!
Just adding in a couple thoughts… there are lots of apps for this or you can keep it simple with your own spreadsheet. I’ve used EveryDollar for like 6 years now, it’s gotten a little bloated but the core functionality is the same.
Budgeting sucks at first. It feels super restrictive, and it’s a little stressful. This goes away after like a month or two and you will feel the complete opposite. It feels like so much more freedom once you get the hang of it and you will feel very empowered controlling your money.
I had a buddy try it out, saw how much he was spending on weed, then gave up trying. What you should do is just factor in your spending on weed and work around it if you need to, or change habits if you’re ready. Budgeting doesn’t mean you have to change your spending habits… you likely will, but it’s more about being in control of your money.
For sure. The key to getting into budgeting is to base your budget off current spending rather than desired spending.
Setting a goal to budget and cut spending at the same time conflates the budgeting with “I can’t spend money anymore” feeling, and adds a hugely unnecessary, negative connotation to it.
This was a much more succinct way of saying what I wanted to say.
budgeting is super easy though, just spend less than you deposit in your spend account.
done
If I could throw my little tidbit of advice onto the already great pile here: when it comes to expenses where you don’t know for sure the amount, always err on the side of overestimating. Then you can save any extra that was left.
Budgeting is one of those things that seems really obvious once you “get it”. And in this case, “getting it” means your income is above average.
So I definitely have some privilege here in the form of not paying rent. But I’m able to live off my savings and being as frugal as possible while letting my investment account slowly grow and mostly come out net zero for the last 6 months. Pretty nice not having to work and just living as low-impact and low-cost as possible. Of course this isn’t possible for people who have unavoidable bills and payments but I still absolutely agree that many people could do better with saving and budgeting.
I have had two accounts for a while, when I get paid I leave an amount in the account with the regular payments set up to cover utilities and mortgage and then I copy over the rest to a different account that I know I can spaff up the wall.
