Comments on: One Family’s Personal Finance Tale: April Edition

By: Thicken My Wallet » Blog Archive » One Family’s Personal Finance Tale, May edition

Fri, 30 May 2008 09:03:27 +0000

[...] you to all who posted with suggestions on my budget and angst last month. There was a general consensus that there should be fun money, or a slush fund, the spending of [...]

By: brew99

brew99 — Thu, 24 Apr 2008 21:14:27 +0000

My wife and I first started out setting a budget in which we thought we could handle. This budget was heavely arranged with the help of our financial advisor, in which maximum savings (by cutting each category)was acheived every month. Of course, these savings were then used to buy mutual funds through the financial advisor. This worked for a year or so, but was very difficult to stick to, and my wife felt like she had no room to “treat herself”. Our life changed (had a child, changed jobs) and then decided to introduce a “pay yourself” category in which we each had a set amount per month that we could do as we wish, with no questions asked. This has worked for us, and now we both feel that we are not loosing out on the things we enjoy or want.

To me, a budget is only useful it it reflects what you want out of life (i.e. are you saving every cent, do you balance spending with savings). It also needs to be updated regularily as prices of goods increase.

We also sit down once a week to do a quick review of our spending to date for the month to see if we are on track or where we need to focus restraint on spending. We use an excel spreedsheet where all spending is recorded and can easily be referenced to the amount budgeted in that category.

We both want a comfortable working and retirement life, which requires a balance or spending and saving

By: Gene

Gene — Wed, 23 Apr 2008 23:55:02 +0000

Good post. If you feel your budget is realistic, you could try to do your discretionary spending in cash. Have all your fixed bills taken directly from your bank account, but anything with wiggle room could be paid for from cash. You can set up separate envelopes for groceries, eating out, and clothing. If you run out of cash in these envelopes, you have to cut back on these items until next month. Spending cold, hard cash on items has more of an impact than putting a credit card down.

I would avoid setting up a “misc” item on your budget, unless it’s fairly small. I agree with someone else on the thread, that you could easily put $30 a month into manicures and the like and let it accumulate month to month. Then you could get a manicure every other month and not break the budget.

By: H_Roarke

H_Roarke — Wed, 23 Apr 2008 11:03:04 +0000

I have two budget goals a month. An Ideal Goal and a Realistic Goal. My Ideal Goal is to save 35% of my salary, while my Realistic Goal is to save 25%. I never go below the Realistic Goal. Psychologically this works great, as always hit the Realistic Goal, as it’s not rediculously hard. I hit the Ideal Goal about every 3rd month and come close one or two more times a year, which is a great feeling.

By: Potato

Potato — Wed, 23 Apr 2008 04:11:40 +0000

Tim from CD has a good suggestion — a float. Plan to be surprised.

Another suggestion might be to focus on a yearly or 6-month budget which you should be concerned about sticking to, but which allows some leeway within individual months. For example, I have a set amount I can spend towards eating out. From October through December it seems there’s one special occasion or birthday or grant deadline or something that comes up so I end up eating out just about every week, completely blowing my budget out of the water for those 3 months. Then in January through March, the weather is nasty and I just don’t feel like going out, so I make up for my earlier extravagance, and at the end of the 6 months come out pretty close to what I budgeted.

Also, look to what other things you can cut back on even more to make room in your budget for the things you really enjoy. For example, do you buy books? Could you cut that out entirely and just use the library, freeing up more money for things you really like? (And the library is also a great place to bring your little ones for story time, which might also help with your child’s entertainment expenses). At the bottom of that list lies your savings goals: would you consider cutting back on them to make sure your budget suits your life? It might sound painful, but since that’s what’s essentially happening by not staying within your budget, you might as well be honest with yourself, give it a shot and see if you can pick up the skills/tools to stay within a more “realistic” budget. Then once you get the hang of staying on-budget, start looking again for ways to redistribute spending to savings.

Finally, have you considered just handing off responsibility for the majority of the purchasing to your SO, even if just for a month? That might help with the “emotionality” of the whole budgeting process.

By: Nicolas

Nicolas — Wed, 23 Apr 2008 03:05:13 +0000

As a lot of readers of the different financial blogs out there, we tend to become obsessed with figures and goals. All this is great but was is greater is a solid relationship. Otherwise, those figures and goals serve no purpose.

My advise is obvious. Invest in your family.

By: A

Tue, 22 Apr 2008 20:55:23 +0000

I think that developing and sticking to an expenses budget is almost impossible for most people. It takes a lot of work and you’ll always struggle to meet it. We do budget savings goals, but beyond what comes out of our account monthly — savings, mortgage, and various other bills) we spend what we want when we want. Part of our savings goals, by the way, is a ’slush fund’ that we add to every month so that we can take unplanned trips, buy a new washing machine when the old one dies, or whatever. If you’ve never met your monthly budget then you should accept that this form of financial planning doesn’t work for you (insanity: doing the same thing over again and expecting different results). Try something else.

By: Canadian Dream

Canadian Dream — Tue, 22 Apr 2008 18:53:18 +0000

Does your budget have a float in it? I think most people make the mistake of trying to plan to spend every dime in a month and it just doesn’t work. Life happens and you know you can’t predict ever dime of spending. So just plan for that fact. I know we started with a float of $100/month beyond our basics. For a while we tended to use it, but in recent months we haven’t use it that much.

I hope that helps,
Tim

By: Mom2KG

Mom2KG — Tue, 22 Apr 2008 17:53:46 +0000

The “why did we go over” changes every month. One month, it’s 5 kiddie birthday parties, and the next it’s eating out too much. Some expenditures we can avoid, some we can’t. I also feel like we’re already “sucking it up” a lot – but at least those dollars go to debt reduction and savings.

Part of the frustration is looking at the spending each month, but not finding anything we could have avoided. There’s a good reason for everything – but should/does that matter?

I like what I’m hearing, and will try to re-negotiate fun money, as well as adjust for months where some costs may fluctuate.

Thanks – more comments welcome.

By: Potato

Potato — Tue, 22 Apr 2008 17:26:25 +0000

Well, budgeting can be an iterative experience. You may have a fixed bottom-line, but you can play with each component of your budget to make sure that it fits you. If it’s more important to have a discretionary/manicure component to your budget, then find somewhere else to sacrifice and make it happen. Look at your spending: how well did you live up to your budget? Where did you go over? Did you over spend because your budget doesn’t adequately represent reality or your desired trade-offs? Or is it more a matter of just sucking it up and sticking to it? Budgeting is as much about prioritization as it is about dollars and cents.