Budgeting Tips & Tricks

  • Budgeting Tips & Tricks

    Posted by FLH Team on August 11, 2024 at 12:36 am

    Navigating the waters of personal finance often starts with mastering the art of budgeting. Whether you’re looking to stretch your paycheck further, save for a big-ticket item, or simply gain better control over your finances, understanding effective budgeting can be transformative. In this forum, we invite everyone, from budgeting novices to financial aficionados, to share their favorite tips, hacks, and strategies. Whether you swear by a particular budgeting app, follow the envelope system, or have your own unique approach, let’s create a treasure trove of budgeting wisdom together and empower each other towards financial well-being.

    Garry Moore replied 3 weeks, 1 day ago 14 Members · 13 Replies
  • 13 Replies
  • Laura Elkins

    Member
    May 3, 2024 at 2:45 pm

    Hi there! I’m seeking some general advice on budgeting. Overall, my finances are in decent shape, but I’ve struggled to find a budgeting method that suits me well.

    Here are my thoughts on the ones I’m familiar with. Am I overlooking any important methods or techniques?

    Do you have any systems you use to manage your money effectively yet easily?

    1. Zero-Sum/Every Dollar/Dave Ramsey:

    I like the idea in theory, as it offers a lot of control over expenses, but I find it overwhelming and impractical for me. My income and expenses can vary each month, and I’m not keen on scrutinizing every single expense.

    2. 50/30/20:
    This method feels too broad and doesn’t match up with my financial goals.

    3. Envelope system:
    I’m not keen on using cash, and this seems similar to the zero-sum approach.

    4. Pay yourself first:

    This approach interests me, but it feels a bit vague and gives me anxiety about keeping enough money available.

    5. Sub-savings account:

    This sounds intriguing, but having multiple accounts seems complicated. Are there any downsides to having several savings accounts? Should they all be with my main bank or somewhere else? I’m interested but confused.

    6. Budgeting apps:
    I’m not very tech-savvy and prefer something more traditional.

    7. The “No” Budget:
    This is more or less what I’m currently doing, and it’s okay. However, I want to give budgeting a genuine try to see if it affects my spending and saving habits. While I like the simplicity of this method, I’m looking for something more comprehensive.

    I’m hopeful to get some helpful feedback, but I’m also open to the possibility that these options might be the best fit for me.

    • Patricia Frawley

      Member
      May 3, 2024 at 2:47 pm

      Take a look back at your spending in each category over the past year. Divide that total by 12 to get a monthly budget. For example, if you spent $4795 on groceries last year, that’s about $415 per month.

      Do the same for your savings goals. For instance, if you aim to max out your IRA at $585 every January, that’s about $49 per month. If you budget $1800 per trip for travel, three times a year, that’s about $450 per month. And if you need to replenish your home fund to its previous level, say $2400, you’d budget about $200 per month.

      Once you’ve set your budgets, you’re in good shape as long as you can meet your savings goals and your expenses don’t exceed your remaining income. If you find it hard to meet your savings goals, you might need to cut back on expenses or rethink your goals.

      Personally, I’m not interested in tracking every single expense. Since my spending and saving habits are pretty consistent each month and I use a single credit card for all my purchases, I can easily see if I’ve overspent when the bill comes. If I notice a pattern of overspending for a couple of months, then I know it’s time to review my budget and make adjustments.

      I usually review this loose budget once a year, but my spending habits have remained fairly consistent month after month for years. Take a look back at your spending in each category over the past year. Divide that total by 12 to get a monthly budget. For example, if you spent $4795 on groceries last year, that’s about $415 per month.

      Do the same for your savings goals. For instance, if you aim to max out your IRA at $585 every January, that’s about $49 per month. If you budget $1800 per trip for travel, three times a year, that’s about $450 per month. And if you need to replenish your home fund to its previous level, say $2400, you’d budget about $200 per month.

      Once you’ve set your budgets, you’re in good shape as long as you can meet your savings goals and your expenses don’t exceed your remaining income. If you find it hard to meet your savings goals, you might need to cut back on expenses or rethink your goals.

      Personally, I’m not interested in tracking every single expense. Since my spending and saving habits are pretty consistent each month and I use a single credit card for all my purchases, I can easily see if I’ve overspent when the bill comes. If I notice a pattern of overspending for a couple of months, then I know it’s time to review my budget and make adjustments.

      I usually review this loose budget once a year, but my spending habits have remained fairly consistent month after month for years.

  • Sean Humphries

    Member
    May 3, 2024 at 2:55 pm

    I gave Mint a shot, but it didn’t click for me. My credit union’s system makes it tough to sync transactions, and dealing with daily verifications was too much hassle.

    Now I’m testing out Rocket Money. It syncs a bit better with my CU, although there was a hiccup for about a week (I’m using the free version). Fortunately, it finally updated yesterday.

    What I really like about Rocket Money is the ability to see my spending categorized. My CU doesn’t offer this feature yet.

    For planning my budget, I stick with the classic Excel spreadsheet.

  • Rick Frazier

    Member
    May 3, 2024 at 3:04 pm

    I prefer to keep it simple with a spreadsheet for budgeting. I’ve always been cautious about data security, so I’m hesitant to hand over my financial info to third-party companies.

    My spreadsheet method is straightforward. Every payday, I pay off my credit card, download the statement, and transfer it to my budgeting spreadsheet. Then, I categorize all the charges. My spreadsheet isn’t fancy; it’s just a running tally of all my charges for the year, categorized, with a couple of pivot tables for summary (like total spending per category for the year and monthly breakdowns).

    Tracking cash spending requires discipline. I jot down every cash purchase in my phone’s notes and add them to the spreadsheet on payday.

    Overall, tracking spending has curbed my impulse buys. There’s something about seeing those purchases logged that makes me think twice about splurging.

  • Rod Guzman

    Member
    May 3, 2024 at 3:06 pm

    I used to use a program called dsBudget, which was okay but required manual input for everything and didn’t handle credit transactions well.

    Then I switched to YNAB (You Need A Budget), and it’s been a game-changer, especially with credit cards. YNAB links all your accounts, including credit cards. When you make a purchase with a credit card, you assign it to a budget category, but the money isn’t spent yet. YNAB tracks the transaction and sets aside the funds for that card, so when the statement comes, you’re ready to pay it off.

    YNAB also helps break the paycheck-to-paycheck cycle. Once you’ve funded all your categories for the current month, you can allocate extra money toward next month’s bills. It feels amazing to have everything funded for the entire month by the 1st, and personally, I aim to stay about 1.5 to 2 months ahead.

  • Samantha Morell

    Member
    May 3, 2024 at 3:13 pm

    +1 for YNAB!

    I’ve been really liking YNAB for budgeting compared to Mint or Rocket Money. Mint feels more like tracking expenses, whereas YNAB feels like actual budgeting.

    With YNAB, you set limits for each category, and when you make a purchase, you add it to YNAB and it deducts that amount from your category.

    It helps me to see, “Oops, I only have $10 left for eating out this month, so I can’t really splurge at Taco Bell.” I check the budget regularly to make sure I’m tracking everything I spend. This active budgeting style has made me more aware of my spending habits in each category.

    YNAB is a bit pricey at $15/month or $100/year, and its integration with American Express isn’t the best. But for me, it’s worth the cost because of its effectiveness.

    • Abe Roberts

      Member
      May 3, 2024 at 3:33 pm

      Another vote for YNAB!! Using YNAB has been a game-changer for me because it helps me avoid budgeting money I don’t actually have yet, which I used to do in the past.

      With YNAB, I assign every dollar of my income to specific categories as soon as I get paid. Before making any purchases, I check my budget to ensure I have allocated funds for that expense. If I happen to overspend in a category, it’s a sign that I need to reassess my priorities. I make it a habit to review my transactions and reconcile my accounts weekly.

      After using YNAB for just 2 months, I already feel much more in control of my finances and confident in reaching my savings goals.

  • Beth Wilkes

    Member
    May 3, 2024 at 3:17 pm

    Here’s my system, which might be a bit over the top, but I don’t mind.

    I’ve linked all my accounts to Mint and set up automatic payments for all bills, retirement contributions, credit cards, and some savings goals like vacations, cars, and gifts.

    Every week or two, I transfer all transactions into a spreadsheet.

    I then categorize and balance each transaction in the spreadsheet based on its category for the month.

    Living below our means means we’re prepared for unexpected expenses, like a $1,000 repair bill. Is it a hassle to sort through all the transactions my wife makes at Target? Yes. But does it give us a solid understanding of our finances? Definitely.

  • Janice Sousa

    Member
    May 3, 2024 at 3:23 pm

    I’ve experimented with numerous budgeting systems, but none seem to stick.

    What’s causing the issue? What makes you give up?

    Maybe the solution is to lower your expectations. In other words, give yourself more leeway in your spending limits. Then, if you find yourself with money left over, it’ll be a pleasant surprise.

  • Heather Newman

    Member
    May 3, 2024 at 3:25 pm

    When I struggled to stick to my budget, I turned to the envelope system and simple pen-and-paper budgeting. Every payday, I’d withdraw cash for groceries, gas, eating out, and miscellaneous expenses like school fees and car repairs. I’d leave just enough in my checking account to cover online bills and automatic payments, with a little extra as a buffer. The remainder went straight into my savings account. I used this system for three years before feeling confident enough to switch back to using my debit card for everything this year. However, I’m open to reverting to the envelope system if I find myself overspending again.

  • Tracey Reich

    Member
    May 3, 2024 at 3:27 pm

    I don’t strictly follow a budget, but I focus on managing my cash flow — how much money comes in versus how much goes out. Since I get paid twice a month, I’ve set up automatic transfers from my checking account to savings and investments accordingly. These transfers cover rent, utilities, subscriptions, and other regular expenses. Whatever’s left is what I have to spend for the next two weeks, covering everything from groceries to entertainment. Some paychecks may leave me with more spending money than others, especially if the start of the month is heavy on bills.

    Throughout the two weeks, I keep an eye on my credit card balance and the remaining balance in my bank account to ensure I’m not overspending. Then, when I receive my next paycheck, I use it to pay off my credit card. To prevent myself from overspending, I often keep my checking account balance low by moving excess funds into savings or making one-time transfers to my investment accounts. If there’s a significant purchase I want to make, I’ll simply withdraw the necessary funds from my savings.

  • Dakota Harris

    Member
    May 3, 2024 at 3:30 pm

    I’ve always used the percentage method, and it’s been quite effective for me. Here’s how it works:

    First, I set up two accounts at the bank: one for my paycheck direct deposits and another for my bills.

    When I receive my paycheck, I deposit it into my checking account and then immediately allocate percentages of it to different categories. For example, I allocate 65% for bills (like groceries, rent, utilities, subscriptions), 22% for spending (gas, beauty products, clothing, night outs), and 13% for saving and paying off debt (although I hope to increase this over time).

    To manage my spending more effectively, if I’m paid bi-weekly, I split the spending portion in half and only give myself half of it each week. For instance, if I receive $200 for spending per paycheck, I’ll only allow myself $100 to spend each week.

    Another tip I have is to set up your rent payments to be made on your credit card, which you can then use for your 65% spending. This way, you can earn cash back on your essential expenses. Just remember to pay off your credit card in full each month and avoid spending beyond your means.

    Consider shopping at big box stores like BJ’s and Sam’s Club for groceries. The membership fees are worth it, especially since Sam’s Club offers 2% cash back on all purchases at the end of each month. Plus, you don’t need a credit check to get a membership card.

    I also recommend ditching your debit card, creating a Credit Karma account to monitor your credit, and being patient with yourself as you adjust to this budgeting method.

    Try not to equate having fun with spending money. Instead, find enjoyment in simpler activities like making coffee at home, cooking meals, and taking advantage of outdoor or at-home workouts or Zoom classes. These small changes can add up to big savings over time.

  • Garry Moore

    Member
    May 3, 2024 at 3:35 pm

    When my wife and I combined our finances, we merged our accounts into a single checking and savings, and opened a brokerage account. We ensured we maxed out our contributions to our 401Ks. My wife tracks our spending meticulously using Quicken, monitoring everything from home repairs to entertainment expenses. We treat credit cards as short-term loans, always paying off the balances each month. Our income now comes from pensions, social security, and investment returns, as we’ve reached what I call “financial critical mass.” Our investments generate returns that exceed our expenses, allowing us to live comfortably without dipping into our principal. We have a net worth of over $2M, monitored monthly by my wife, and live in a $1M home with $124K left on the mortgage, which we’ll pay off in six years. Apart from Quicken and TurboTax, we rely solely on Excel to manage our budget, taxes, and investments.

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