Ask the Readers: Do You Honestly Follow a Budget? (Chance to win $20)

by Linsey Knerl on 24 August 2010 119 comments

Everyone claims to know about budgeting. Many more will say that they have one, and just as many will swear that they follow it. But do they really? Does following a budget involve more than just not overspending on your budgetary categories? Or is it enough to just stay within a general framework so you can pay your bills and not incur any debt?

What do you think it takes to "budget" effectively? And do you do so yourself? (Be honest...not everyone feels like they have to budget to be financially savvy — and that's OK!) Who has taught you the meaning of a budget or has inspired you to follow one? Let us know your thoughts in order to be entered to win one of three $20 Amazon gift cards! Feel free to link to a blog post, if you've written on this topic! We'll include it in our post upon the conclusion of our giveaway!

Win one of three $20 Amazon gift cards:

We're doing three giveaways — one for random comments, one for random Facebook "Likes", and another one for random tweets.

How to Enter:

  1. Post your answer in the comments below, or
  2. Go to our Facebook page, "Like" us, then "Like" the update mentioning this giveaway (you can comment, as well -- but you don't have to for entry.)
  3. Tweet your answer. Include both "@wisebread" and "#WBAsk" in your tweet so we'll see it and count it.

If you're inspired to write a whole blog post OR you have a photo on flickr to share, please link to it in the comments or tweet it.

Giveaway Rules:

  • Contest ends Monday, Aug 30th at 11:59 pm CST. Winners will be announced after Aug 24th on the original post and via Twitter. Winners will also be contacted via email and Twitter Direct Message.
  • You can enter all three drawings — once by leaving a comment, once by liking our Facebook update, and once by tweeting.
  • Only tweets that contain both "@wisebread" and "#WBAsk" will be entered. (Otherwise, we won't see it.)
  • Only those who have "Liked" both our Facebook page and the contest update will be entered.

Good Luck!

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Guest's picture
Amy A

We are TRYING to get to a working budget. We have honestly slipped this summer, though. September is back-on-track with the cash envelopes and TRYING to control the insane pregnancy cravings that are not good on the "eating out" department! Here's to developing the strength to get it under control! Communication with your spouse is super-crucial to a working budget, and I'm blessed that my hubby understands that this too will pass.

Guest's picture
Holly

For me a budget is a general guideline of how I plan to spend my money. It's a best guess and sometimes it can be off or some unforseen event pops up. No, we don't always follow our budget exactly, but if we make the conscious decision to take $x from one fund to spend it on something else, then I am ok with that.

Really, a budget is a way for hubby and I to work to together to make conscious decisions of how to spend our money.

Guest's picture
ryan

I don't really have to budget per say, I know all of my monthly expenses in my head (there aren't that many). The only thing I try to keep track of is spending about $75 a weekend max. I know that this number, which will encompass most of my "soft expenses" will allow me to save 50% of my net.

So I kind of budget, by being conscious of all expenses and making decisions to meet my goal.

Is a budget just trying not to overspend in your categories? yes, in basic Level 1 budgeting. Becoming conscious that all the dollars in and out are related, not just relative to their category, comes in Level 2. Keeping expenses minimal to increase free cash flow is the ultimate goal, where you go from there is your choice.

Guest's picture
Betty

I don't have a budget! I seem to manage my money okay, but I'm sure I could be doing better. Every time I've tried to put a budget together, I wound up adding catagories everytime I wanted to spend money! I've gotten my best financial tips reading sites like this.

Guest's picture

My husband and I have living very loosely off of a budget for quite a few years. But just in the last few months, we have really cracked down. We're both on the same page now and working through Dave Ramsey's Total Money Makeover. We're working on a cash envelope system and still working out the kinks, but I'm loving it!

Guest's picture
Darci

I try really hard to follow my budget and not go over the general categories every month. I've made it into a "frugal/necessity" game so it's fun and not drudgery.

Thanks for the opportunity to win the gift card!

Guest's picture
Trisha

We keep our budget on a simple spreadsheet and try to stick with it. But frankly, even when we veer off, having the budget makes it harder to justify those extra tiny purchases and keeps our spending in check.

Guest's picture
lostAnnfound

We don't have a budget, which is probably why our finances are in the state they are in. We are working on paying off unsecured debt and just about everything we have extra goes toward that, and we will have a working budget in place so we can keep track of what we are spending and where exactly we are spending our money.

We also are involving our kids (teens) in the process so they do not run into the situation we have now and are better educated about personal finances.

Guest's picture
Jason

My wife and I absolutely have a budget -- and have done so for the last five years. Not only do we budget, but we do an annual "kick off" weekend where we discuss financial goals for the coming year such as how much to put in the girls' college plans, what type of vacations we want to take and how many (week-long, weekends, staycations), home projects we want to take on, how much we want to give away above tithing, and how much extra we can contribute to pay down the mortgage. In addition, we do quarterly reviews to determine where we stand based on our plan.

Does following a budget involve more than just not overspending on your budgetary categories? Yes...and no. A budget is a plan to stay within your budget categories, but it also has an overall income number that is not to be exceeded to avoid debt. The budget allows you to know that you are ahead YTD by 6 weeks in the food/toiletries category so that you are OK to go over in the automotive category to get that alternator replaced -- without hitting savings.

Before budgeting, we were always "OK" but had a lot of leakage in our spending. With budgets, we are amazed at the surplus we seem to have every year that allows for extra saving, giving or spending on something special.

Guest's picture
Guest

Our family actually follows our budget. We're not tied to it like it's set in stone, but we use it to know when we've overdone it on a category (oops, spent too much on groceries must cut back or what, we spent what on electricity last month) and it helps us to know, hm... can we really afford this at this time. It's crucial we use our budget as money is tight and it's too easy to let our expenses bleed out without watching it closely. So I guess we use our budget more for planning, designating funds to certain expenses and then as a indicator on how we're doing. Of course, our current financial situation is very tight, so this is absolutely necessary. If we had a little extra, I could see some loosening on sticking to the budget just a little (or maybe just a larger "Fun" category).

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Guest

We have a general budget that we do follow, but we don't consider it something that must be "followed". Things like entertainment we do try to stick pretty close to the number in our budget, but other things, like utility bills, vary and it's no big deal. As long as we meet our savings goals, we don't worry about it much.

Guest's picture
Michelle

I do budget, but for me it's more about tracking my spending. I dont follow my budget exactly, but at the end of every week I tally up my spending in "grocery", "dining out", and "entertainment" because those are the categories that vary most and it keeps me aware of where my money is going. At the end of every month I enter everything into a budget spreadsheet with a "projected" and an "actual spending" column.

I was in pretty deep credit card debt, and at the beginning of the year I turned it all around and enrolled in a DMP and started my strict budgeting. It's been tough, but rewarding as well. Along with making automatic contributions to different savings accounts, it has changed the way I value my money.

Guest's picture
Chris m

I live on SSI because I’m disabled, so I live on a very tight budget. I try to spend only about 35 dollars a week on food max and don’t go to movies or out to eat. Even with all the cost cutting measures I use, I usually have about 5 dollars left in my account at the end of the month!

Guest's picture
Emily

I've got a budget, and I try to stick to it (the online program I use allows me to keep track of my status). Sometimes though I'll be super low in one category but really high or over in another. My mom taught me the importance of a budget, and she's who inspired me to make one. I think now that I'm moving and in a transition period, I might need to tweak my budget though.

Guest's picture
Josh

I created a spreadsheet at the beginning of the year with multiple spending categories (gas, food, shop, entertainment, etc) and put a threshold values for each. I recorded my transactions diligently and found out that I'm over the budget for some categories but under on others. Then I look at why and how I went over the budget for certain categories and try to cut down the costs for next months and so on. So far, it has worked out nicely but I still spend more than I anticipated at the beginning of the year. I hope to keep up with this and make changes for next year to save up more so I can travel more!

Guest's picture
Lisa

I budget using Mvelopes. It is a little difficult to use at times, but I'm getting used to it. I do love building up my accounts and then paying my bills, rather than just paying them as they come in. I can definitely see where my money is going to. It also keeps me in check.

Guest's picture
Elizabeth

I track my expenses in GnuCash, then plot my monthly income and expenses (similar to the methods in Your Money or Your Life). As long as the average difference between those two, i.e. my savings, is "enough", I don't worry about budgeting. However, if my expenses start to creep up or my income changes, I have this tracked data that I can use to inform adjustments to my spending.

Guest's picture
Therese

Just knowing that we have a budget keeps my spending down, because I don't want to keep track of too much information!

Guest's picture

I do budget - and I think I do it effectively, to partially answer your question. I track my spending against set amounts for the month (on GoogleDocs) and when I go over in any category, I have to take it out of the amount I earmark each month for savings. Budgeting, to me, is making sure all my bills are paid and I'm saving towards goals. While there might be some thoughtless use of monies, most of it is thoughtful (even if it's automatedly thoughtful!).

Most months there's some taking from Peter's sub-account to pay Paul's sub-account...but the benefit is that I can see where I'm overspending consciously whereas if I *weren't* tracking/budgeting, I'd never be able to examine why such chunks of change go missing. Now I know I overshop on groceries and throw out (aka compost) a lot of food. And now I can correct that when I'm standing at the food coop, vs not knowing at all. No, I don't need anything not on my list.

My budget consists of monthly "operational budget" stuff (eating out, groceries, cat supplies, laundry, house stuff, entertainment, misc.) and then I have rolling subaccounts for clothes, gifts, donations, annual fees/taxes/CSA/record fair, vacation, hair salon, cats' vetting and regular ol' savings that I take from as I need it.

Generally I'm about $100 off (in the red! of course!) off my "operational budget", so I save $100 less than I'd planned. This month is the first month it's looking like I'm going to break even! Woo!

And in fact, I recently posted about how I don't think I'll ever be able to be "budget-free". http://jesseanneo.blogspot.com/2010/08/i-am-not-to-be-trusted.html

Guest's picture
Thankful

Most important for good budgeting: Be realistic when you set up your categories and amounts. If you set yourself up to fail, it does no good. Tracking spending over a month or two is best for knowing how much you're spending. Make sure to account for car insurance and other non-monthly expenses -- I divide these type of expenses out and save a little each month in ING. It took us about 3 years to actually budget 100%. Three things that have made us successful in budgeting are assigning bills to specific paychecks so the money is there when the bill arrives, using ING Direct subaccounts for car insurance, pest control, etc., and having a second budget, so to speak, after all of our bills and regular savings are subtracted. Gas, food money and entertainment are much easier to budget when you don't have to track all the other bills quite so closely.

Guest's picture
Leslie

This year I quit my job and my husband and I opened our own shop. As of late, we stick much more closely to spending guidelines. I won't say we have a budget, as specific amounts aren't allocated to specific things. We do know how much money is available for work expenses, food, clothing, recreation, and so on. Our loose budget guides us on planning our spending, and allows us to splurge or tighten the reigns on spending as needed.

Guest's picture
Jennifer

I follow an extremely tight budget that is kept on an Excel spreadsheet. There are line items showing the dollar amount dedicated to every single thing I spend each month: mortgage, car payment, insurance, groceries, gas, etc. Then there are separate tabs to track what I actually spend on a weekly basis. For instance, my monthly grocery budget is $400. Each week, I enter what I actually spend at the grocery. At the end of the month, whatever total is below $400 goes to savings, in addition to the regularly scheduled monthly amount. No matter, I never go over the dollar amounts budgeted for each category, because I simply can’t afford to.

It took a tragedy for me to get to the point where I follow a budget religiously. I am thankful for that tragedy, because I have gained a multitude of financial knowledge from it.

Guest's picture

For me it works better to work within a loosely-structured budget. I don't like to be bossed around—even by myself. That said, the parts of my budget that ARE structured (bills, rent, gas) are constant. Everything else falls under "spending money." I give myself an allowance every week. I pay for everything in cash, including groceries, eating out, gifts, and any other variable expenditure. It works well. I have been sticking to this budget for almost five years. Paying for things in cash makes me hold myself accountable. If I decide to splurge on something, that means I have to cut back in other areas. So, if I go out to dinner one night, I have to eat at home the next. It's fair.

Guest's picture
Patrick

More important than setting up a budget is the monitoring of your performance against your budget month to month. What it takes to be most successful in budgeting is diligent monitoring, before the end of the month if possible (credit cards, ATM withdrawals, cell phone minutes) or soon after the end of a billing cycle (water, phone, electricity). When you know your variance and you know where to change planned values or where to add buffer (or when for cyclical patterns) you'll have much more success in directing your money and knowing how much money you have left over for wants or more strategic goals.

Guest's picture
Kari

My husband and I were inspired to create a budget spreadsheet after reading the book 'Your Money or Your Life'. We had an informal budget before that, but a few years ago we created comprehensive budget spreadsheet from scratch, and track every penny we spend. We have numerous specific categories for all spending areas and even have gauge widgets for each category. As we track throughout each month, the gauges read green, yellow or red to let us know if we are getting close to our maximum for the month. It's been our most important tool to help trim the fat from our budget, and a real eye opener.

It has been a work in progress, and it took a lot of time to set up. But now it only takes about an hour a month to update. In addition to the spreadsheet, we have a monthly meeting we affectionately call our 'financial summit' to review our budget and how we are tracking to meet our financial goals. I would consider this our most important step towards financial independence.

Guest's picture
Tracy

All honestly not many people do follow a budget. Budgets are a good tool but its hard to include in a budget expenses that come up. Like a car repair, someone going to the hospital, things of that nature.

Guest's picture
Jessica

General framework! I sat down a few months ago and worked out in a spreadsheet the percentages of my income I'm spending on:
+housing (rent, electric, water, cable)
+transportation (bus pass)
+retirement savings (403b, Roth IRA)
+other - this category is huge!

And I was happy with the numbers. Should redo it since I just opened a savings account this weekend and set up automated savings!

Guest's picture
Guest

Setting up a budget really helps you see where your money is going, and where you can save money. I do keep a budget, but will be flexible with it from month to month depending on expenses.

Do I NEED this or do I WANT this is always a question I ask myself. If it's a want, make a plan, and then buy it LATER.

Using the cash envelope system helps, food, entertainment, gas. I tend to be more mindful on what I buy when using cash vs. credit/debit card. When the cash is gone, it's gone.

Guest's picture
Carrie

i do have a blog post written about it http://www.carrieactually.com/interest-personal-data-collection-check-mi...

i keep my budget very flexible. basically as long as i spend no more than 75% of my take home pay i'm in good shape.

one day i realized that when i hang out with my friends sometimes we go see movies, sometimes we eat out, and sometimes we shop. in a strict budget those would all come out of different budgeted categories, but for me they're all spending on the same thing (socializing with friends) so that made me decide that the categories don't matter as much as the total

Guest's picture
Lamb

Yes! My spreadsheet software helps me work out my overall monthly totals: how much discretionary money I have each week, how much I'm saving to invest, how much I'm saving for emergencies, how much I'm saving for those bigger wants like a flatscreen TV, etc. In the same spreadsheet, I have my weekly discretionary purchases worked out. I put everything on a rewards card and keep my receipts so that I can keep a running total and know where I stand.

Not every purchase is explicitly planned, but every dollar is apportioned to some purpose through the magic of spreadsheets.

Guest's picture
Laura H

To budget effectively I think you need to create a very realistic list of expenses. That way you don't feel deprived. That's a mistake that causes people to not even attempt a budget I think. They feel like there's no room for fun but it just needs to be accounted for so that you don't over spend. I use mint which alerts me when I went over my allotted budget.

Guest's picture
Kevin

I don't follow a budget- I don't feel its necessary. I am already very frugal, and I live well below my means, especially on the big ticket items like housing and cars (in fact, I don't even have a car).

When I tried to use a budget, because that's what PF types say is good, I found myself sitting there frustrated that I couldn't buy a shirt until Tuesday because I had already spent my clothing allowance for the month. Or I couldn't get my brother what he wanted for his birthday, because it was $15 out of the budget amount. It was stupid to me, and all it did was end up making me feel like I was wasting my time because most of the time I was well under budget without even trying, and the other times I ended up feeling bad about myself for going over.

I tend spend money in relatively large amounts opportunistically, not on some sort of schedule. If I see a 40% off sale at a clothing store I like, I may spend a $100-$200 there and be done clothing shopping for the next 6 months- 1 year.

Budgets just don't take life into account either. I got a job last year that required me to wear suits every day (which came w/ a 40%+ pay raise). I had one suit. So I had to go out and spend almost $1000 on a few suits, ties, shirts and a pair of shoes that aren't from payless. Budget's don't take things like that into account. How do they take into account your friend is in town and wants to meet you for dinner? Are you going to say no to your friend because it will put you over budget or feel guilt for going out?

I do much better by living below my means. I lived w/ roommates in the not so nice part of town until I met my fiancee. We now live in a modest apartment close to transportation and don't have cars, saving us thousands a year. When we buy, we are going to buy a cheaper place and get a 15 year mortgage. I max out my 401k, get the best returns available on my free cash, and save about half of my take-home paycheck each month.

Do the big things right and then you don't have to worry about the little things so much.

Guest's picture
Jennifer

We do have a budget and we do stick to it!

It's fairly specific and every receipt is tediously entered (by my husband, I swear he doesn't miss one!) into the program we bought for it. He had a budget in high school when he was working a part-time job so I can't take credit for our system or it's success.

Guest's picture
jimmy37

Not anymore. Thankfully, we make enough money not to have to follow one to the letter. We know what we can afford on a monthly basis. We have our savings taken right out of checks. Any single-item purchase more than $100 dollar is discussed. We don't go crazy buying everything and anything we see.

Guest's picture
Veronique H

We follow our budget to a "T" but that is because we pay over $1400 a month to our debt. We have to make every penny count after that big chuck of change is gone and our bills go out. It's kind of fun though, because we have limits and we make a game out of seeing how far our few dollars can go.

Guest's picture
Eri

To your question (What do you think it takes to "budget" effectively? And do you do so yourself?), I think the key is simplicity so that you can keep records everyday quickly without any hassle and examine your data. Fine-grained records would be nice, but more important is to track it daily and get the big picture/pattern based on which you can plan/improve your budgeting.

I use a simple set of spreadsheets to budget (12 monthly sheets, and two sheets where I can see the summary info from the 12 sheets at a glance). Works just fine -- even if for some reason I have to spend a bit above the plan in one month, it is easy to adjust the next month based on the spreadsheet info, and on balance I stay within the budget at the end of the year.

Guest's picture
Bobbi

I use YNAB. I am recently unemployed and have cut way back on expenses because of this and am doing quite well. Probably better than when I was employed. :) I like budgeting and am very aware of where my money is going. :)
Thanks,

Guest's picture
Kristine

I made an excel doc, and it divide the take into categories: Basic, medical, cars, debt (student loan only), professional, extras, consumer comfort (food out and entertainment), and savings. We stick to it. In the extras area I have an amount that is for all gifts and trips. I have a separate break out for that excel doc- listing gifts by month with an amount for each. Every year I make more and more of them, and this budget area goes down. It really works for us. I am a teacher, and when I get paid in June, I pay all the bills in advance till my next paycheck, and take out the budgeted amounts for other expenses, and put them into envelopes, with a date for each week that gets crossed off as I use that money. We never run out of money, or are late on bills.

Guest's picture
Jesse

I don't have a set budget, but follow the "pay yourself first" principle. I have a set amount I save every month, and I know exactly how much I should have at the end of the month. Anything more gets moved into savings. This makes it simple and easy to track my spending by just checking bank statements online.

Guest's picture
TP

So I have three budgets, one on Mint, one on MS Money, and one on excel. Unfortunately, I don't follow any of them. :-( I'm working on something that is easier for me to think about proactively instead of at the end of the month.

Guest's picture
cwaltz

I'm still tweaking my budgeting skills at 41. It's not been easy when I came from a household that robbed Peter to pay Paul and my spouse came from 2 households; one that indulged him with a car and access to luxuries and the other a household that scraped by to pay the electric. I'm very proud though. I've not only learned to budget for necessities but also to budget for Christmas and vacations(new to our budget). It helps that my husband is fortunate enough to make a living wage though. I do remember struggling when we were making close to minimum wage. It seemed everytime we were caught up something would happen to set us back.

Christine
dazed1821@aol.com

Guest's picture
W. Ly

We're on fixed incomes, so strict budgeting is CRITICAL. We use the envelope method. At the beginning of the month we fill each envelope: 1) Rent and Utilities, 2) Food, 3) Non food & meds, 3) Insurance, 4) Gasoline, 5) Auto Repair and Replacement fund, 6) Rainy Day fund. No borrowing from other envelopes is allowed, if an envelope is empty before the end of the month then we just tough it out till next month. Any money left over at the end of the month goes into #5 because that our largest potential unforeseen expense.
We've been doing this for several years now, and so far so good.

Guest's picture
amanda

My opinion that 90% people don't plan budget.i really plan budget but many times i forgot the budget plans and over spend the money and broke! i learned my lesson from life at financially hard times so i always try to fallow budget plan to have peaceful life.i hope it is good to fallow plan but do not take it serious.The purpose of money is to spend.

Guest's picture
drmomof2

We always budget our money for food--when it's gone, it's gone! No cheating on that. But as far as the other parts of our budget, we are a bit looser

Guest's picture
Laura

Yes, my husband eased me into a budget a few years ago with a very generalized one. In time I realized we needed to be more specific and detailed even though I had rebelled at first. When I lost my job, and we nearly lost our car and home, if we had not been debt free and on that budget we would have been in huge trouble. Now my husband even has an online program where I can quickly glance to see how much, during the month, I have spent on groceries (my biggest expense) and so forth.

Guest's picture
E Rick

I have a very detailed budget. I enjoy tracking it. Do I follow it? I guess it depends on who you talk to. I believe that I don't follow it as well as I'd like. My husband feels like I am the budget police. We agree at the 50,000 foot level about saving and spending but when it comes to individual things especially for the kids, DH is more apt to say 'spend' when I would say 'we don't have the money for it.' DH counts on his passive income/extra income (he is full commission) to get us through the shortfalls whereas I believe that his passive income should go directly to savings and if we have to use it, we've definitely failed our budget. We haven't fallen yet but I know I need to get a new job in the next 12 months and I am concerned I might have to take a pay cut and have increased commute.

Guest's picture
Heather

One of the first things we did after saying our vows three years ago was draw up a budget, and we've kept one ever since (in varying degrees of strictness). We're in a lean time now, with my husband pursuing his doctorate and us living on my (meager) reporter's salary.
I think the most important thing in budgeting is to be realistic. We tried to budget just $15 a month for "entertainment," - eating out, watching movies, going to coffee shops, etc. And we routinely went over that amount because it's not realistic for two people and because I knew we could get away with it (I think I'm the weak link in this chain!).
Also important is to work together if you're a couple; If one person makes the budget, the other might be less likely to stick with it or more likely to be frustrated. If you work together, it's a lot easier.
And keep an updated record of what you've actually spent each month. Then at the end of the month you can tell if you can splurge (ice cream dates!).
Budgeting has really paid off for us. We bought a (somewhat rundown) house debt free, largely because of careful budgeting even when we didn't need to.

Guest's picture
Molly

We're not great at following our budget to the penny, but having it and keeping track of where, exactly, our money goes is very helpful. Because we plan to spend so much less than our income, we're able to consistently invest and save a good portion of it. But we don't sweat it if, for instance, we make a conscious decision to buy organic milk every week. And while we may not have an earmarked emergency fund or car-replacement budget, we do ok.

Guest's picture
Cathy C

We just started this month with a written budget and use mint.com to help us track our money. So far so good except I didn't allow enough for transportation and school also started. It's a work in progress, but it keeps us motivated to try better.

Guest's picture
jamie g

I don't follow a budget! I just started working a year ago and started out being too thrifty and conservative with money. Now I moved to a cheaper rent place and have been too spendy. A budget (where I budget for fun things and wants, too) might help me balance with less worry.

Guest's picture
Raina

My "budget" is just a total monthly expenditure that I aim to stay below. At 22 years old, I'm single with no kids and living by myself, so it's probably easier for me than others. I earn about $3500 in post-tax and post-401k income every month and usually don't spend more than $1200-1300. Since I pay for everything with my rewards credit card, I'm able to track the sum of my expenses on a regular basis. I'm frugal as it is, so I usually don't need much oversight, but I like that I found an amount that allows for comfortable living and exciting savings.

Guest's picture

My husband and I have completely different philosophies. I have a spreadsheet with all our expenses mapped out a year in advance so I can see if we've got any huge bills coming up that we need to be prepared for. He just can't wrap his head around that concept and figures if he doesn't wildly overspend everything will somehow work out. Umm, yeah, because I periodically show him my projections and tell him we've got to seriously cut back on nonessentials for a while.

Guest's picture

At my worst, I was about $30K in debt. Took me a few years to get out of it. Through all of that and then some, I never once was on a budget.

To me, it isn't a requirement.
What is, is....

Eliminate all unnecessary spending.

Save money wherever and whenever you can.

Simple as that

Guest's picture
roechelle

Thrift store shopping, garage sales, coupons and deals has helped me stay within my budget. We do stray from time to time, but hey we work hard and deserve it

Guest's picture
Michelle

The best way we have found to budget and stay on it is Dave Ramsey's plan of the envelope system. We put our budget on paper, take out the allotted amount of cash for each category, put it in that category's envelope. When the cash is gone, it is gone until next pay period. It has helped us realize how much we are spending on frivolous things when we have to reach into our cash envelope. It is easy to have mindless spending when you whip out the credit card for everything.

Guest's picture
Olivia

Yes, indeedy. If we didn't budget, we'd be sunk. We started by tracking expenses for a month and set up the categories from there. It morphed into an on paper envelope system. Food and mad money comes out of actual cash. When we encountered a couple whack-yourself-in-the-head unexpected expenses we added an "emergency" category. It's been working fairly well. We're not in debt, and have something in savings.

Guest's picture
Diane

I try... all of my fixed monthly expenses are in a spreadsheet to be paid on the 1st and 15th of the month and these are paid immediately. The problem is the other expenses... I'm working on those.

Guest's picture
Ernest S.

I also use YNAB, and have found that it really works well with me. I've tried so many different types of budgeting systems, but have found that I prefer a system that is 1) simple (just want my budget, not my investments, net worth, etc.), 2) manual (it helps me to actually enter the data myself rather than importing it AFTER I spent it), and 3) accessible on multiple devices / places (web-based or Dropbox is key).

Also, it really helps to be realistic when budgeting. I struggled with budgeting for years since I tried to penny pinch too much. If you keep it realistic, you have a much better chance of staying within or below your budget.

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nucof

I've setup a GoogleDoc outlining our bills each month - it is broken in two, to coincide with my paychecks (mid and end of month). All bills are automatically setup to auto pay through my bank online.

This GoogleDoc auto tallies our planned expenditures for the month (I update it regularly as we have irregular outgoing payments). Included in these expenditures, is the 'cash' that we have budgeted for various things that we expect to need money for each month - groceries, kids clothing, date night, family fun are the main categories. (We review family fun money with our kids each week and decide how we'd like to spend it. My wife plans weekly meals and home needs based on our 'grocery' budget. Our date nights - as many with kids will relate - don't always happen bi-weekly, or even monthly, so we generally have a nice amount saved up to treat ourselves when the opportunity arises.)

The total outgoing is tallied at the bottom, beneath which is a calculation to determine how much we'll have left over for savings or what have you. (some months result in addition income from commissions or odd jobs, so this number is usually changing as well.)

So while we budget the majority of our expenditures, we still have the occasional night where we say - 'let's just go out' - and that just comes from the 'left over' pot of gold...

It's not perfect, but we've been sticking to it pretty well for the better part of a year, and we're finding that there's a lot more money to go around at the end of our financial obligations, when we track it a little more closely.

Oh, and using Mint.com's trends feature was a large part of what helped us to initially set our budgets. It's a great too, and you can't beat free!

Guest's picture

Ahhh, the budget. We have a love/hate relationship with ours. I first understood the idea of a budget as a "spending plan" via the book Debt Proof Living. Since then we use our budget as the basic safety bumpers to not fall over the edge back into debt. That's the part of it we love. We also try to use it to track our spending & decide how we'll spend. That's the part we tend to hate because we can never quite get keep track or plan as much as we want to.

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Elizabeth

I always have wanted to. But, I have no idea how to seriously sit down and work out a budget and then how to follow it. As my life is undergoing MAJOR changes, this is a life-skill that I could use some real help with!

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Guest

Since I get paid once a month, a budget is key in my house!! Since I am salary I know how much each month and how to plan my spending accordingly. Summer tends to be more expensive for us ~ higher electric bills since its hot and the kids are at home and back to school time. I use an excell spreadsheet with a tab for every month. I can put on yearly expenses (vehicle tags, car/house insurance, etc) so that I can put a little extra money away the months before to be able to pay them!!

Getting my kids involved helps alot also. They see that when the electric bill is $200, that we don't have money for say, the movies. And they help more with turning the lights out or lowering the thermostate (we are at 110 today!!).

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Arthur Fox

Yes, in fact we budget so precisely that our Financial Adviser has told other clients to see us for an example of how to do it! My wife is a budgeting genius!!

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Carmen

We really need to start following a budget as we'll be going to one income in January.

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gt0163c

I don't really have a budget. I earn a good living, have a reasonable amount in easy to access savings/emergency account, put a significant portion away for retirement, give a significant portion to charity and live below my means. My only debs is the mortgage on my house (30 year note, will be payed off in a total of about 17 years). I have a good idea of my recurring monthly expenses as well as what I generally spend on day-to-day living. But, other than that, I don't worry about money too much.

I probably should have a more planned out financial plan/budget. But I've found that when I get too detailed in tracking my money I get mildly obsessed with it and that never goes anywhere good. I probably should figure out a way to lean more towards "real budget" but I'm lacking the motivation to do so.

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Gabrielle

I recently devised a budget, but following it has been a struggle. It leaves me only $200 at the end of all the monthly bills for gas, groceries, things I need and possibly eating out (which is off the books right now)! So I've been "borrowing" from other categories. I'm hoping things even off soon.

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Greg

I have 20 years worth of proof of budgeting. It takes a passion to be in control in order to monitor your spending.

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HollyP

Sadly, I have never been able to keep to a strict budget. My solution is to use "pay myself first." I do 401k auto-deposits, auto-deposit to my long term savings, and auto deposits to my slush fund for periodic big ticket items. Could I save more than this? Maybe, but time is scarce for me. I'd rather have the few extra hours per month of leisure.

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liggygirl

I budget and only recently started to. I have a fairly strict budget. I've tried this before but always fought it. I am taking the Financial Peace University by Dave Ramsey and it teaches you how to make and follow a successful budget. :) It's so worth it and makes a difference.

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Lynda

I think it takes a lot of willpower and stamina and motivation (all more or less the same things) to keep at it and to make it a habit. You definitely have to WANT it bad enough. I do it on and off - I think I am getting really good at being frugal out of habit, but sometimes I just get tired and want to let go.

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cherie

Interesting question!
I have had several budgeting incarnations over the years.

When I first learned to budget and become fiscally responsible and aware I had a budget that tracked everything to the penny in a big looseleaf with a zillion categories - it worked well for a number of years until I felt comfortable enough with my 'evolution' to drop it.

We did fine for a long time - periodically I'd rework a budget but not be too specific - to give myself some framework - but eventually we started getting into trouble again - nothing awful - but building some debt - eliminating the cushion we'd kept in the past - it happened during a stressful challenging time in our lives and it's what you'd expect if you had no plan on target to keep you on track.

I just decided to start a new budget and try doing all cash for 'flexible' categories like groceries, clothing, gifts etc. The budget is very specific and based on no leftovers [savings is a category as is debt repayment]. I've spent the month of August just spending cash and keeping a really close eye on my credit cards online to find the things that I've been forgetting to add - for example today searching reminded me of hubby's skype expense, our ezpass [toll] charges and the newspaper. By next month I feel confident that the budget will really be all inclusive. I've worked out a plan to move longer term money [for savings but also for things like our property taxes] into a separate fund so it doesn't get compromised, and money 'for cash' accounts will also be transferred into a local bank so I can make the [I'm hoping] consciousness raising trek to get exactly the cash denominations and amounts I need to fill my envelopes.

So I've done different things but I'm learning that, for ME at least, flexibility is not really working. But being TOO complex, needing to keep track of every purchase and find where it belongs - is self-defeating for my nature. I'm hoping the zero based budget with cash envelopes for flexible spending will be the best of both worlds -I don't need to write down every purchase from the fruit stand - just pay for it out of the correct envelope and stop spending when it's empty!

Wish me luck ;)

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Meghan

I think a budget is very helpful in getting some more money, however, more importantly I think is actual discipline. You really can't reach any financial goals if you don't have the discipline to stick with the set budget.

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Kandace

We just started a real budget this month and it's been quite a test. We were good until about the 20th and then everything started to slip. I've made some adjustments for next month and we've written out our savings goals as motivation to stick with it.

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Christine

I think the most succinct explanation for the type of budget I have was something I read on my favorite budgeting board. I'm not sure if I'm allowed to mention the name here.

Budgeting is telling your spouse that while there may be several thousand dollars in the bank, you can't afford that $2 cup of coffee because that budget category has been used up for this month.

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Amy

I don't really have a budget.. but I put a certain percentage of my check into checking and the rest into savings & I only allow myself to spend the available balance in checking.

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Tom

I don't think that most people understand what a budget is. A budget is simply a financial "plan." All plans are subject to the situation that reality presents, and therefore must be flexible and subject to revision as reality dictates. I make a budget each year, and examine how I am doing at the end of each month. At that point in time my budget gets revised for the realities of variations in income and expenses. At this point in time I adjust the budget (or plan) for what the reality dictates. I have never been disapointed, and I have never overexpended the original plan.

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Bryan

I have a budget laid out monthly that I have followed very strictly for a few years. I allow money for a savings account, emergency account, investment account. If I have any left over then I use that to purchase something I like or want. It's always good to have a budget and stick to it and by doing that rewarding yourself as well! Keep up the great site, this is absolutely the best personal finance site on the net!

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Jasers

The best way to keep a budget is to write down everything that you "need" to spend money on each month. The write down how much you want to save each month. If the two add up to more than you make, you either have to cut down on your "needs" or get another job. Easier to cut your "needs" though as you will then discover that you didn't really need them after all. I find that when I see it in writing in front of me, it makes it more real and makes you realize the realities.

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Chara

I don't have a written budget, but I have a general idea of what I can spend and on what. For things other than necessities (rent, utilities, groceries), I use only one credit card and only charge what I can pay off at the end of the month. This helps keep my spending in control for things like entertainment, travel, clothing, etc.

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Kelsey

I try to budget. Really I do. As a master's student in graduate school, I am living off loans. My loan refunds come in at the beginning of the semester and that amount is what I have to live off of for the next three or four months. So, when I started graduate school I set up an Excel spreadsheet where I kept track of all my expenses. I have a general amount I try and stay under for each category (especially the variables such as food and gas). But I do have a set amount each month that I cannot go over. This is so my refund lasts me until the next semester.

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Carrie

My budget is constantly a Work-in-Progress. Of course we know what our fixed expenses are, but I make a budget for Everything Else every two weeks because that's when my husband gets paid.

I'm constantly having to think ahead so I won't be surprised when things pop up (because I'm not going to dig into savings for pop-ups). For example, school pictures are in two weeks so I know I need to allocate at least $40 of our miscellaneous money for those.

It's a CONSTANT work in progress. When my husband sees me scribbling in a notebook, he knows I'm "figuring". It drives me bonkers sometimes but it also works really well for us.

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LJ

I'm a newbie to budgeting. I had almost 9K in credit card/random debt when I started..and I'm at 4K now. I'm excited to see that amount going down..down...GONE SOON! I have my amazing boyfriend to credit for the change. I'd always had what I thought was a 'budget', it was called 'pay the bills, and anything left-spend!' Savings? who needs it. It's been a process to re-learn how to really value the money I have, to save for emergencies and the future, and to see where my money was going. It's actually VERY freeing to have a budget.

Good luck everyone!

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Bryan

I don't budget in a strict sense of the word. I DO track monthly spending on a spreadsheet modeled after business P&L reports. I spend no more than an hour every month entering in data from paystubs, bank account, and the single credit card I used to use (for six months only to have some history with it, now it sits in a drawer).

There are columbs for each month, as well as an annual (year-to-date) total, and YTD percentage of gross income for each expense. Expenses, even including payroll taxes, deductions, and IRA contributions go downward under each month. And the bottom two rows are total cash flow, in dollars and as a percentage. It's not always a posative number(I've have two negative cash flow months this year), but every negative cash flow month is followed by a much more posative cash flow month.

The simple act of tracking spending affects how I spend. I think it tends to work better for me than a budget because it doesn't neglect those periodic expenses that don't occur every month. I think it's difficult, psychologicly, for most of us to cram a semiannual auto insurance payment into a monthly budget. It's way too easy to borrow from that "car insurance envelope" one month and then forget to double up next month. It's also a more goal-oriented approach rather than a list of dos and don'ts.

I think tracking, especially when you do it month to month, and for the year in total, is the key to getting off the paycheck-to-paycheck cycle. It forces you to look at the big picture and make lasting adjustments to your financial habits. Rather than looking for places to sacrifice to make ends meet, you look at how much something is actually costing and decide that it's not worth it. Giving it up becomes a good thing rather than a sacrifice.

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GuestPam McCormick

Our version of a budget means sitting down every saturday to review a calender with bills that are monthly plotted in.We also have envelopes that hold money for the week to be used as the holder sees fit(lunch-Starbucks-any splurge).This is when we strategize for future goals and where the money will come from, months with 3 checks or tax return,rebate money etc.can be planned for these future goals.We roll change,take back bottles to fill an envelope.We both are paid every 2weeks on opposite weeks so the budget is run on 2 checks per person each month after deductions have come out for 401K/insurances so we live on that money for gas/electric,groceries,water,cell phones when what we deamed necessities are paid first.

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Laura

No. But I do track all my spending. I don't budget in savings either -- I save whatever is leftover at the end of the month. I save more that way instead of budgeting away all my money.

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Derek

I'm working my best to follow one now, 1 month is so far so good!

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freebis

I started using the old "envelop method" when I started college because I had a small amount of money that needed to last the entire semester. It evolved from there to a spreadsheet system, but is still just "money in a bunch of buckets".

To be successful, you have to be determined, committed and willing to make sacrifices. Don't worry about keeping up with the Joneses and don't get sucked into rampant consumerism, unless, of course, you've budgeted for it! :-)

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Audrey H.

I do a written budget for every pay period, adding items that are anticipated in ahead of time also. I started doing a budget after many years of $ just slipping through our fingers with little to show for it. It gives me a sense of control and calm that is so much better than the chaos of not planning ahead. As to where I learned to budget, It was the Dave Ramsey show that finally got the concept to make sense to me.

Thanks for all the great articles and inspiration you provide here, I learn a lot from WiseBread.

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hillarie

I budget and track spending on a monthly basis. My budget allows me to plan for my savings (403(b), Roths, and personal saving accounts) and expected expenses (mortgage, phone, Netflix, gym, etc.). I also set up "buckets" for grocery and gas. The rest of the money leftover is a "free for all" bucket that is used to buy everything else - clothes, household goods, restaurants, gifts.

I track my spending so that I know when I am over or under budget. When I'm under at the end of the month, I move that amount from checkings to savings of some kind. And the reverse if I'm over -- so I always have enough in my checking either way.

I think this could be called zero-sum budgeting, but I am not sure.

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Jennifer P

I try to budget and do ok with one, but it is not set in stone. We have had to get creative with job lay offs and health probs, but we are making it and we have a good outlook for the future. All will be ok.

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Merrily

I try to follow a budget but it seems a little too obsessive and strict for me. I mostly just pay myself in savings first, allocate money to fixed expenses and throw money in several "irregular" spending accounts. I find that it works well for me, but I find myself beating myself up for not "saving" enough...kind of like the reverse of how I am with being on a diet.

So instead of being hard on myself, I just look at what I do ultimately save every year and that I have zero credit card debt. That's enough! I want to enjoy my money as well, since that is the purpose of it, to be spent.

As far as being taught, I kind of taught myself with a lot of online reading and blogs which I use the tips that seem to work into my lifestyle. I learned by my parents in that I should NOT do what they did.

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Tara

I tried using Mint.com for a couple of months, religiously adding every tiny little daily expense into the site. I live outside the country and can't have a bank account here so I pay cash for everything. So the site couldn't track my expenses because I hardly ever pay with plastic. So it got really, really time consuming to categorize every expense I was entering and it got to be way too time-consuming. I kind of fell off the wagon and now I'm just trying to be extra mindful of what I buy, but as we all know, that doesn't always work. It'd be interesting to hear about cash-only spenders and how they set up a budget for themselves....

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Eric

I save money where I can of course, but I don't have an actual budget that I follow. I guess it would be a good idea at some point!

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BRB

No, I don't. I keep track of my money and know how much I have for things, but nothing has a set amount set aside for it.

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Laura

We do have a budget, but we don't always stay under in all categories. Some months we are under, some months we are over. But we use the budget as a guide for where we should be.

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Frugal student

Because I am relatively young and will be in school for the foreseeable future, budgeting is critical--and I make sure to budget every day. 25% of my income goes to savings; 7% to paying off student loans; 30% to rent; 10% to other fixed costs (utilities, internet, cell phone). Subtracting all these from my paychecks at the beginning of each pay period allows me to divide and spend the rest on food, books, leisure without having to worry about setting anything aside (but sometimes I do!).

I learned how to budget--or rather, *why* to budget from my father. He did not budget wisely, and as a result, I saw my college savings depleted, his retirement emptied, and much of my family's financial security jeopardized. Watching my father exit the upper-upper middle class and join so many without secure retirement --or savings--impressed upon me the necessity of saving.

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Kathryn

My husband would love to have a budget for ME! It is not anything we have ever actually had or plan to have. We have good jobs, have invested wisely, and are debt free. If our income was less and we were in debt, I would maybe consider a budget.

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Stephanie

We have a LOOSE budget. In other words we have our bills. We have X amount of dollars that goes into savings every week, no matter what, and then we have guidelines for gas, groceries, and fun. Anything left over gets applied to a future goal like vacation.

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Andi A

I truly try to budget, setting a spending limit each month for discretionary choices and not spend more once I hit that limit. But I have problems sticking even to that and don't do much more in the way of a formal budget. Somehow I've managed to save some money despite myself.

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Angela

We have never sat down and put together a real budget. I keep track of how much I spend on food, and every couple of weeks, I look at the CC statements and online activity. If it looks like we're out of whack, we talk about where we can cut back. So far, it works out okay for us. We could save more if we followed a strict budget, but we're not quite ready yet.