Microbudgeting?

[lurkyloo]

Hi former YMers! I'm a years-long lurker, stepping up to infuse a bit of the requested fresh blood (do I get a cookie or an orange or something? How about a sticker?) Anyway, my topic is this: I have trouble concentrating on or sticking to a monthly line-item budget. So, I basically have a three-line budget:
mortgage contribution 750/biweekly paycheck;
after-tax savings ~ 1000/month;
everything else 1200/month.

This works primarily because I break it down to $40/day. That covers groceries, gas, vet bills, haircuts, gifts, unscheduled bookstore visits, car registration, etc. If I have to spend more than I have in my mental reserve, then it bugs me until I compensate for it on the following day(s).

Other relevant details: I am married; our money is sort of shared but separate (we married in our 30s when we were both financially established, merging everything seemed like a lot of trouble for uncertain advantage). I max my 401(k) and HSA as well, but those are pre-tax and pre-paycheck, so I follow the set-it-and-forget-it rule with those.

One rationale for this $40/day approach is that it keeps me from going overboard unless there's a good reason. It also acknowledges that there's some flexibility in necessary expenses like groceries, and forces me to consider the current local economic weather on purchases. I like it because it gives me flexibility to consider good deals that pop up, but also some safeguard against going totally nuts and buying 400 cans of peanuts because they were such a good deal.

Good idea? Totally irresponsible? Discuss!

[The J]

It's fine -- it's pretty much the system I use: savings, fixed bills, everything else. As long as you stay within the budget and you're meeting your goals, it's fine.

[The J]

And I don't have a cookie, but I gave you some karma. Welcome aboard.

[lurkyloo]

Thanks, The J! (Sorry about the wedding-that-wasn't; it does sound like things worked out for the best, though.)

[resolution]

It sounds fine, as long as it is working for you. The most important thing is you have your savings already built in. I would have a hard time following it becuase I tend to spend money in larger, less frequent amounts. For example I spend $90-$100 once a week on groceries and tend to stay in most other nights. Do you shop on a daily basis or find yourself combining days a lot?

[The J]

Thanks -- I'm realizing it more each and every day.

[Gardening Grandma]

While it would not work for me, the important thing is that it works for you. That's the thing about managing finances - there is no "one size fits all" method. The best method is the one that suits your temperament and helps you meet your goals. It sounds like yours does both.

[sp08]

Wouldn't work for me either. I have a spreadsheet that I've been keeping for 5 years now. I list income at the top, and then subtract all monthly fixed expenses. Then for the variable expenses, I list what I anticipate the amount will be for that month. My ending balance is then my discretionary income that I can carry over or add additional to savings or extra on bills, or whatever. But for me, I need to carry it out to that detail. Also, I set my budget up, by month, for the whole year in advance. That way if I want to deviate from the budget for some reason, I can see how it will impact the rest of the "planned" year, and then make adjustments as necessary (including maybe not making the purchase). Like Gardening grandma said, it's all in what works for you.

[lurkyloo]

Kari: Actually, that does get a little annoying sometimes, but I can either "save" a day or two in advance or "borrow" from my future self and then gnash my teeth for a couple of days. Also, it's just two of us that I shop for, and I cherry-pick the good grocery sales, so I shop at several different stores and rarely spend more than $40 at any one. I also don't have a fixed grocery-shopping day.

GG: Hm, I don't think this thread is controversial enough! Too late to switch it to a SAH vs working mom thread?

[❤ mollymouser ❤]

As long as this system lets you have sufficient savings for larger occasional expenses (insurance premiums, property taxes, car repairs, medical copays, deductibles) ~ I'd say that it's fine: if it works for you, it works for you. I know that for us, we get hit really hard in some months with larger expenses (April and December, especially, mostly due to property taxes and insurance premiums) ... that we really try to account for that during the entire year.

[❤ mollymouser ❤]

And this is for you!

Attachments:

[whoisjohngalt]

You like it - that's second the most important thing. The first - you are saving and not over-spending.

Me? Could never ever do it. I set up an annual budget, can't even think of $xx per month,. much less per day. Wouldn't make any sense to me.

Lena

[lurkyloo]

Aw, thanks MM! These are delicious!

I totally agree that this wouldn't work for a lot of people; it just happens to suit my ADD/control freak tendencies well. I'm much better at micromanaging details than doing the larger-picture thing; this is a way of making the details match the bigger goals! Also our situation happens to fit well in that we don't have a lot of irregular major expenses: property taxes and insurance are rolled into the mortgage, health expenses (we're lucky, these have been relatively few) are either pre-tax or covered by HSA (also belonging to the pre-tax category). Even car insurance/registration fit in well; my yearly expenses for two cars are something like $900 total and they come in well-spaced chunks of $200 or less. I will admit that this year I've been really bad and taken some travel/emergency expenses out of general savings; covering an $800 trip to go visit my dad in the hospital was something I had no interest in covering out of daily cash flow!

[pushingit]

I'm with Lena. I make an annual budget, divide it by # of paychecks, and direct deposit that amount in checking. The rest gets split between savings and my separate checking which is where I buy all gifts, clothes as well as going out etc.

Once the bills are covered, which I know they will be because I've included everything and am funding it monthly, and money is saved, I don't care what happens to the rest. I know that's my account though, that I have to let build up when I want to make a larger purchase.

I don't worry about whether the bill checking account is getting fat and that I could be earning on it, etc. It gets fat then a bill tax bill or insurance bill comes along and the money is there.

[ummboutthat]

one question lurkyloo: do you keep wine or beer in the frige or around stocked every week?

[mnsharon]

Me too, lurkyloo - $50.00 per day after everything else. I work at home unless traveling - need dinner out to feel sane. Savings, bills, etc.... all covered - after that, $50.00/day.

[ummboutthat]

I ask about the alcohol because - I'm not one to keep stock. I make purchase very seldom - like few times per year. But from what I see on TV that people have a drink with dinner every night! Wine is expensive and if you're making purchases like buying soda and keeping it stocked you're spending too much and should rethink your spending budget.

[mnsharon]

Hampton1120 - really? Yep, a glass of wine pretty much every night. Does not affect my budget. Wine is CHEAP - $14.97 for a 5-liter of Franzia Chardonnay. Which could last for 3 weeks. Geez.

[lurkyloo]

Personally I'm not a big wine/beer drinker, although I pick up some extra for my father's extended visits. He mostly funds his own bad habits, though! I like cocktails and keep several bottles of hard liquor on hand; buy the mixers as needed. I'm a sucker for sidecars, particularly with fresh-squeezed Meyer lemon juice from the tree in the yard

DH is a big soda drinker (yeah, ok, I like it too), so I stock up when it goes on sale. With tax and CRV (can deposit) I generally pay around $3/12-pack. It fits in the budget just fine. As it is, we're lazy and leave way too much in checking paying 0.01% interest or something; I'm not about to worry about lost interest from $100 worth of beverages sitting in the cabinet. Why would you think I need to rework my budget based solely on whether or not I buy soda or wine?

sharon: very cool to find someone else with the same approach! I used to allot $50/day, then we bought the house.

[mnsharon]

Lurkyloo, yep, I agree with you... Not worried about a bit of wine... or other minor crimes!

I'm an old person - or $50/day would have traumatized me....

[cronewitch]

I did a budget something like this when I first got divorced. I took money from the ATM each Friday and it had to last and cover all spending for food, gas, clothing, gifts and anything else that wasn't a real bill. Bills like rent were paid from checking anything left in checking was saved.

That worked great for me if I wanted clothes I had to save from the week before, I couldn't borrow on the next week. I lost 80lbs and was working out a lot so did a lot of clothes shopping and had an empty apartment so could have bought household stuff but didn't. I didn't even buy a TV or pots and pans or a table and chairs they weren't in the budget but I was able to pay for a IRA the week the divorce was final and was on my way to saving for a balloon payment to my ex.

[hawkeyes2001]

We do the same thing. $1200/month for variable living expenses like groceries, household needs, gas and clothes. I used to microbudget those things but what I found was those things fluctuate too much and it was time consuming.

[ummboutthat]

Feb 1, 2011 0:20:44 GMT -5 @mnsharon said:

Hampton1120 - really? Yep, a glass of wine pretty much every night. Does not affect my budget. Wine is CHEAP - $14.97 for a 5-liter of Franzia Chardonnay. Which could last for 3 weeks. Geez.

I KEEP forgetting about price in different areas. But the way I was thinking people go through bottles of wine per week. not so much a bottle per night between two people. but between two people having a glass with dinner every night. I'm thinking liquor is a part of the weekly grocery shopping. then having to keep stock of the $15 bottles per week is expensive.
I;m not into the drinking, and using a wine glass and pouring only a sip into the glass. that's what my dad and GF does. I'll get a cup fill it half way and drink it! I don't need to taste, and gargle
LOL
so your way of drinking I can see a bottle lasting 3 weeks

[lurkyloo]

cronewitch: I always enjoy your point of view!

[spartan7886]

Hampton, she's talking about a box of wine, not a bottle. There are 4 glasses or so in a standard 750ml bottle, so a 5L box would contain approximately 27 glasses.