How many here use a yearly budget? This will be the first full year of data I have from Quicken and with the debt projected to be paid off by the start of next year I'm looking at what the cost for next year will be. My fixed expenses are very low and counting food I think I can live on just over 5000.00 for the year. I'm adding in some other additional expenses that I will have and thinking I will strive to contain my total spending to 10k for next year. Just curious how many others forecast their yearly expenses like this and if you do what kind of tips would you offer to a newbie???
Yearly Budget??
I do. I have data too about what bills I paid last year (and the year before that), and I will use it to project my expenses for this year.
One tip would be to factor in some money for "miscellaneous", because even with a budget that's based on last year's expenses there will always be situations where you'll spend money that wasn't planned. At least I do - a friend asks a donation for a charity, my colleagues want me to join in on buying a present when someone I like, leaves, I meet an old friend in city X and go out for dinner with her, even though I planned a meal at home in city Y. Things like these.
One tip would be to factor in some money for "miscellaneous", because even with a budget that's based on last year's expenses there will always be situations where you'll spend money that wasn't planned. At least I do - a friend asks a donation for a charity, my colleagues want me to join in on buying a present when someone I like, leaves, I meet an old friend in city X and go out for dinner with her, even though I planned a meal at home in city Y. Things like these.
When I was working I used to keep a spreadsheet on my computer. The aim was to keep me motivated.
Looking back when I started working I used to keep a little notebook with me and when I had to do something I didn't like, I'd do a long term projection based on what I was saving and it would give me more determination.
I agree with Dutch girl, if you get an unexpected cost, don't let it rerail you, just adjust your budget to make sure its expected in the future. And start saving toward thousands, then 5000's then 10,000 etc.
A relative who worked in the bank as a first job, he said to me you know those people you see biking around the neighbourhood in outdated clothes etc who look like they don't have a cent to their name, don't believe it, they're the rich ones. Often they have rentals, investments and they just choose to live like that.
One more tip, always have money taken out of your wages directly into a savings account as if it doesn't exist.
And be prepared to act differently than others. Do what is right for you.
One minute it seems you just do the simple, obvious saving tips and the next people at the bank will be asking how you made it.
It really isn't rocket science. And you're on the right track.
Looking back when I started working I used to keep a little notebook with me and when I had to do something I didn't like, I'd do a long term projection based on what I was saving and it would give me more determination.
I agree with Dutch girl, if you get an unexpected cost, don't let it rerail you, just adjust your budget to make sure its expected in the future. And start saving toward thousands, then 5000's then 10,000 etc.
A relative who worked in the bank as a first job, he said to me you know those people you see biking around the neighbourhood in outdated clothes etc who look like they don't have a cent to their name, don't believe it, they're the rich ones. Often they have rentals, investments and they just choose to live like that.
One more tip, always have money taken out of your wages directly into a savings account as if it doesn't exist.
And be prepared to act differently than others. Do what is right for you.
One minute it seems you just do the simple, obvious saving tips and the next people at the bank will be asking how you made it.
It really isn't rocket science. And you're on the right track.
DutchGirl-- Thanks for the tips. I've tried to add a little bit of a cushion to what I think I need for travel and other incidentals that may arise. The only thing I have not counted in this category is what my taxes liability will be. But, I don't think I'm going to think of it as a "normal" expense.
George--- Thanks for suggestions. I like the story about the people biking around the neighborhood. I want to be that guy!! I'm still learning about the acting different part. That is new for me. When you're plugged into consumer mode it doesn't seem so crazy, but when you can step back and look at it there is a different appearance.
George--- Thanks for suggestions. I like the story about the people biking around the neighborhood. I want to be that guy!! I'm still learning about the acting different part. That is new for me. When you're plugged into consumer mode it doesn't seem so crazy, but when you can step back and look at it there is a different appearance.
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frugalinCalifornia
- Posts: 37
- Joined: Mon Sep 19, 2011 8:26 am
I always have a planned annual budget for the coming 12 months. I plan the income and expenses in detail but then we don't spend much time actually tracking expenses. We just track how much we are savings and then have to live off what is left over.
We actually have model budgets and savings plans for every year of our lives from today up to over age 100. We do a lot of modeling like what if we stopped working next year and kept our current house, what if we stopped working at 62 and downsized, what if we kept working to age 65, downsized and delayed taking Social Security until 70, what if we took one of our pensions as a lump sum, what if we took the other pension early as an annuity, etc. Then each budget has a parameter to enter different inflation and return rates. It gets very complex because if you stop working before your full retirement age it decreases your Social Security benefits from the annual reports so you have to figure that out from a screen on the SS site.
We spend a great deal of time talking about our budget, when to quit full time work, where to live, etc. We watch the house hunting shows on the home and garden channel quite a bit to decide where we want to live.
We actually have model budgets and savings plans for every year of our lives from today up to over age 100. We do a lot of modeling like what if we stopped working next year and kept our current house, what if we stopped working at 62 and downsized, what if we kept working to age 65, downsized and delayed taking Social Security until 70, what if we took one of our pensions as a lump sum, what if we took the other pension early as an annuity, etc. Then each budget has a parameter to enter different inflation and return rates. It gets very complex because if you stop working before your full retirement age it decreases your Social Security benefits from the annual reports so you have to figure that out from a screen on the SS site.
We spend a great deal of time talking about our budget, when to quit full time work, where to live, etc. We watch the house hunting shows on the home and garden channel quite a bit to decide where we want to live.
I make a habit of reviewing my annual expenses. I usually do it at the end of the calendar year. Then I budget/project what my likely expenses will be for the coming year.
I don't do a monthly budget. And I don't track my annual budget very closely, maybe looking at it a couple of times during the year to see where I stand in comparison to my prediction in January. I don't sweat any variances. Setting a strict budget a year out and demanding that I stick to it without question would be setting myself up for failure and unnecessary hand-wringing.
At one point I would keep every receipt I had in my back left pocket (which was always otherwise empty) and entered them into a log every night when I got home. But holding onto my money is so second nature now that I don't feel the need to do it anymore.
The biggest benefit of the annual budget, for me, is to plan big purchases (several hundred dollars and up) months ahead of time. Not that I need to "save up" the money, I have it already. But so that when it comes time to buy it, I know I'm doing it rationally with the best information. Things like a bike, used car, a new suit, a move, a trip, etc. I can review my desire to buy those things in their totality, completely non-emotionally, right there next to the amount I want to save. Some things you can get a better deal on depending on the time of year as well, and I plan for that.
Sitting at home, looking out the window, and deciding to set aside a few hundred bucks for a trip (not necessarily planning it, or even where I'd go or what I'd do, but just ear-marking some money) is far better than not doing it and then later deciding to go somewhere spontaneously. In the latter case I'd wonder even as I was trying to enjoy myself, "Is this really the best way to spend this money when looked at on balance with all my other desires." Hard to tell when you're in the moment. It's easier to be objective when the decision to spend the money is made long before it's time to enjoy the purchase.
I don't do a monthly budget. And I don't track my annual budget very closely, maybe looking at it a couple of times during the year to see where I stand in comparison to my prediction in January. I don't sweat any variances. Setting a strict budget a year out and demanding that I stick to it without question would be setting myself up for failure and unnecessary hand-wringing.
At one point I would keep every receipt I had in my back left pocket (which was always otherwise empty) and entered them into a log every night when I got home. But holding onto my money is so second nature now that I don't feel the need to do it anymore.
The biggest benefit of the annual budget, for me, is to plan big purchases (several hundred dollars and up) months ahead of time. Not that I need to "save up" the money, I have it already. But so that when it comes time to buy it, I know I'm doing it rationally with the best information. Things like a bike, used car, a new suit, a move, a trip, etc. I can review my desire to buy those things in their totality, completely non-emotionally, right there next to the amount I want to save. Some things you can get a better deal on depending on the time of year as well, and I plan for that.
Sitting at home, looking out the window, and deciding to set aside a few hundred bucks for a trip (not necessarily planning it, or even where I'd go or what I'd do, but just ear-marking some money) is far better than not doing it and then later deciding to go somewhere spontaneously. In the latter case I'd wonder even as I was trying to enjoy myself, "Is this really the best way to spend this money when looked at on balance with all my other desires." Hard to tell when you're in the moment. It's easier to be objective when the decision to spend the money is made long before it's time to enjoy the purchase.
I do a yearly budget, and have done this for the past 8 years or so. It's very detailed, including postage and haircuts (things that got forgotten in earlier versions). I find it very helpful.
I also budget certain things a year in advance-- meaning that I set money aside in 2011 for travel in 2012. Three categories are funded a year in advance: travel, miscellaneous, and gifts. Misc for me doesn't include unexpected dinners or gifts, it's things like costco membership, AAA membership, and my accountant's fees-- I don't know where to put these things otherwise. Unexpected dinners and gifts are budgeted under dining and gifts-- it's not unexpected that these things will occur, it's just when and who.
You'll surely develop your own system over time. I enjoy the annual budget, it helps me keep perspective on a larger time frame.
I also budget certain things a year in advance-- meaning that I set money aside in 2011 for travel in 2012. Three categories are funded a year in advance: travel, miscellaneous, and gifts. Misc for me doesn't include unexpected dinners or gifts, it's things like costco membership, AAA membership, and my accountant's fees-- I don't know where to put these things otherwise. Unexpected dinners and gifts are budgeted under dining and gifts-- it's not unexpected that these things will occur, it's just when and who.
You'll surely develop your own system over time. I enjoy the annual budget, it helps me keep perspective on a larger time frame.
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DividendGuy
- Posts: 441
- Joined: Sun Dec 05, 2010 9:58 pm
I budget every expense through my Mint account. This is the first year I've budgeted hardcore like this, so I'll have a yearly total at the end of December. I'll use that as a baseline figure going forward. I'm hoping to be somewhere around $14k-15k a year, which is 2 Jacobs. If it wasn't for my student loan payments, I could be a little lower.
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baggywrinkle
- Posts: 24
- Joined: Sun Oct 02, 2011 2:57 am
We've been using YNAB for three years now with great success.
No magic going on here, it is just an envelope system, and when
you blow the budget in one category you must rob from another
or take the hit in the next month.
One of the strong points of this system is the one month buffer.
Your paychecks from this month are paying for next months expenses. Or, if you really have it going on like Jacob does,
your paychecks from this month are paying expenses 24 months
down the road. I have found it a great modeling tool for that
reason. It is easy to budget for a years worth of propane next
May by looking at last years monthly average for propane.
Back in the day I always would get killed by car insurance even
though you know it is coming. I would end up taking food off the
table to make that bill. Now it is just there, no worry.
We used it as a modeling tool to pay off our mortgage at an
accelerated pace. $158000 in the last four years with 90 days
to go till free and clear without working overtime.
It works for us, YMMV.
No magic going on here, it is just an envelope system, and when
you blow the budget in one category you must rob from another
or take the hit in the next month.
One of the strong points of this system is the one month buffer.
Your paychecks from this month are paying for next months expenses. Or, if you really have it going on like Jacob does,
your paychecks from this month are paying expenses 24 months
down the road. I have found it a great modeling tool for that
reason. It is easy to budget for a years worth of propane next
May by looking at last years monthly average for propane.
Back in the day I always would get killed by car insurance even
though you know it is coming. I would end up taking food off the
table to make that bill. Now it is just there, no worry.
We used it as a modeling tool to pay off our mortgage at an
accelerated pace. $158000 in the last four years with 90 days
to go till free and clear without working overtime.
It works for us, YMMV.
Thanks gang for posting the comments. I like seeing how other people do this as it will be the first time I've attempted to project a yearly budget. It's also the first time I've actually had a years worth of data to base it off of. The only big budget buster I can see is travel. I get an annual leave that is usually about six weeks and can get out of hand if I'm not careful. Thanks again for the help...
2012 Spending Goals
Here is what I've come up with for next yrs spending (amounts are yearly):
Rent 1580.76
Phone/Internet 480.00
Misc 63.36
Auto Ins. 700.00
Vehicle Tax 150.00
Prof. Tax Prep 450.00
Food 1500.00
Household Item 50.00
Shopping 200.00
Travel 3500.00
Medical 100.00
Total: 8774.12
I'm going to try and keep total spending under 10000.00. I'll use the remaining 1225.88 for "reserve" unexpected expenditures or things I just have not thought of here. The big challenge will be keeping travel expenses under control. I go on annual leave once a year back to the states and tend to spend a little more than I should. Hopefully if I give myself a set amount I can stick to it.
Question for you guys. I have a vehicle that I keep back home. My dad stores it for me and drives it just enough to keep it from sitting and decaying. The expenses are taxes, liability insurance and maint. I would say less than a 1000.00 a year. Should I keep it or sell it? I've held onto it this long as it is nice to have when I back in the states. If I didn't have it I could rent car for the time in and probably be close to the same level of yearly expense. Curious what you guys think??
Here is what I've come up with for next yrs spending (amounts are yearly):
Rent 1580.76
Phone/Internet 480.00
Misc 63.36
Auto Ins. 700.00
Vehicle Tax 150.00
Prof. Tax Prep 450.00
Food 1500.00
Household Item 50.00
Shopping 200.00
Travel 3500.00
Medical 100.00
Total: 8774.12
I'm going to try and keep total spending under 10000.00. I'll use the remaining 1225.88 for "reserve" unexpected expenditures or things I just have not thought of here. The big challenge will be keeping travel expenses under control. I go on annual leave once a year back to the states and tend to spend a little more than I should. Hopefully if I give myself a set amount I can stick to it.
Question for you guys. I have a vehicle that I keep back home. My dad stores it for me and drives it just enough to keep it from sitting and decaying. The expenses are taxes, liability insurance and maint. I would say less than a 1000.00 a year. Should I keep it or sell it? I've held onto it this long as it is nice to have when I back in the states. If I didn't have it I could rent car for the time in and probably be close to the same level of yearly expense. Curious what you guys think??
As for the car: is there value in the fact that your father can drive it too? (For example, if it is your dad/mum's second car, then I can imagine that there are a few times during the year when it really is useful to have two cars - I think for each of these occasions you could say having the car available to them is worth for example $50).
If you wouldn't have that car there, are you sure you would rent a car for the whole time that you were there? Or would you maybe stay at home most of the weeks (and borrow your parents' car now and then), and rent a car for, for example, one week (which would cost maybe $150-200).
If you wouldn't have that car there, are you sure you would rent a car for the whole time that you were there? Or would you maybe stay at home most of the weeks (and borrow your parents' car now and then), and rent a car for, for example, one week (which would cost maybe $150-200).
DutchGirl-- No, there is no value of him having the truck around. He doesn't need it for anything(has his own) and is just watching for me while I've been gone. I kept it not knowing how long I was going to stay overseas, but now with it looking like I'll be here for awhile I'm not sure if I need it for a few weeks out of the year.
In all honesty I'm so use to having a vehicle that I just assumed I would need one for the whole time I'm in. Honestly I don't. Hmmm.... that brings up another fear of mine. When I return will I continue my new found frugal living or revert back to my old behavior? I like to think that I have given a lot of consideration to transportation and housing costs, but it is still a concern. Thanks for bringing this to my attention.
In all honesty I'm so use to having a vehicle that I just assumed I would need one for the whole time I'm in. Honestly I don't. Hmmm.... that brings up another fear of mine. When I return will I continue my new found frugal living or revert back to my old behavior? I like to think that I have given a lot of consideration to transportation and housing costs, but it is still a concern. Thanks for bringing this to my attention.
This is a great thread. Thanks for all the insightful comments.
My budget is neither yearly or monthly, but continuous. Let me explain. I've made my own spreadsheet with which I can see six months of daily expenses on one page. It tracks the balance in my primary checking account. Each month is one column of 30 rows, each row showing the date, description, deposit or withdrawal, and running balance. I fill in rent on the first, water on the 10th, transfer money to my spending account on the 1st and 15th, etc. If I get an unexpected expense I add that too. I've been keeping this spreadsheet since 2004 and I have it projected out until 2016. I highlight unexpected expenses in red, so at any time I can scroll up and see quickly what went according to plan and what didn't. I can also quickly see how adding a new bill or changing my spending will have over the long term. It did take me a while to build, but it's better than any program I've seen.
That's just the first tab. I also have tabs for amortization charts of all debts, retirement projections under five different scenarios, savings projections, a financial goals timeline, and tucked way in the back I have a payday chart, paycheck calculator, and monthly budget.
I spend a lot of time playing with this and doing "what if" scenarios. As a result I have a very good understanding of not just what our situation is this month, but what effect spending or saving extra today would have on us in 6 months, 2 years, or 5 years.
My budget is neither yearly or monthly, but continuous. Let me explain. I've made my own spreadsheet with which I can see six months of daily expenses on one page. It tracks the balance in my primary checking account. Each month is one column of 30 rows, each row showing the date, description, deposit or withdrawal, and running balance. I fill in rent on the first, water on the 10th, transfer money to my spending account on the 1st and 15th, etc. If I get an unexpected expense I add that too. I've been keeping this spreadsheet since 2004 and I have it projected out until 2016. I highlight unexpected expenses in red, so at any time I can scroll up and see quickly what went according to plan and what didn't. I can also quickly see how adding a new bill or changing my spending will have over the long term. It did take me a while to build, but it's better than any program I've seen.
That's just the first tab. I also have tabs for amortization charts of all debts, retirement projections under five different scenarios, savings projections, a financial goals timeline, and tucked way in the back I have a payday chart, paycheck calculator, and monthly budget.
I spend a lot of time playing with this and doing "what if" scenarios. As a result I have a very good understanding of not just what our situation is this month, but what effect spending or saving extra today would have on us in 6 months, 2 years, or 5 years.
I used to keep a yearly budget, but to be honest it made my maniacal and ended up creating more fights between my wife and I than I cared to continue.
I've since begun doing a monthly budget. This way, if we miss on one item or another (which we usually do), by the time you realize it its already water under the bridge. With a yearly budget, my wife would go over on clothes in February and I'd be frustrated every month until December when I could finally let it go.
Lately, we don't budget individual categories, we just have an overall monthly target. We then analyze our expenses at the end of the month and confirm whether it was a good use of our money (life-energy). This is a technique I learned from Your Money Or Your Life, and it has been a much more pleasant way to approach expenses.
I've since begun doing a monthly budget. This way, if we miss on one item or another (which we usually do), by the time you realize it its already water under the bridge. With a yearly budget, my wife would go over on clothes in February and I'd be frustrated every month until December when I could finally let it go.
Lately, we don't budget individual categories, we just have an overall monthly target. We then analyze our expenses at the end of the month and confirm whether it was a good use of our money (life-energy). This is a technique I learned from Your Money Or Your Life, and it has been a much more pleasant way to approach expenses.
ExPatERE: I'm a little surprised at the "Prof. Tax Prep 450.00" line. Maybe it is because you have lots of investments, or living overseas?
If I didn't have a small business, I could do the short form myself. I used a pro one time, but since then have switched to TurboTax and think that really does a better job than she did.
If I didn't have a small business, I could do the short form myself. I used a pro one time, but since then have switched to TurboTax and think that really does a better job than she did.
Mirwen-- I like the custom financial sofware you got going on. I would love to set up something that give me exactly what I want. I need to get a lot better with my excel skills...
tjt-- I know it makes it easier just having myself to talk into following the budget. Budget sounds like such a nasty word, but it basically is the manner in which I spend the money. Now that I have paid off the debt I really want to buckle down and see how much I can save. Wish me luck...
justjohn-- The high tax prep fee is due to working overseas. The last couple of years have been a little complicated, but I think after this year I will be able to reduce it. There were some issues I really didn't won't to tackle on my own. However, this will be an area I look to reduce.
tjt-- I know it makes it easier just having myself to talk into following the budget. Budget sounds like such a nasty word, but it basically is the manner in which I spend the money. Now that I have paid off the debt I really want to buckle down and see how much I can save. Wish me luck...
justjohn-- The high tax prep fee is due to working overseas. The last couple of years have been a little complicated, but I think after this year I will be able to reduce it. There were some issues I really didn't won't to tackle on my own. However, this will be an area I look to reduce.
Never.
The first thing I did before I got free was to figure how much money I needed to save, decide how long I wanted to wait to be free and simply deposit that much into savings or investments. If I wanted to save $30K in a year divide 30K by 26 pays and deposit $1154 per pay into my savings instrument.
djc
The first thing I did before I got free was to figure how much money I needed to save, decide how long I wanted to wait to be free and simply deposit that much into savings or investments. If I wanted to save $30K in a year divide 30K by 26 pays and deposit $1154 per pay into my savings instrument.
djc