I think budgeting and practical finances should be taught at multiple stages throughout a student’s life. I thought I knew the general idea but didn’t appreciate how much neglecting it would set me back.
What is your process for budgeting? As a starting point this article lists a few methods.
I use zero based budgeting where every dollar is assigned a purpose. I don’t end up sticking exactly to the plan, but I do keep a spreadsheet which lists my current balances and all expected expenses, so I can see my future balance and avoid going in the red. A couple times a month I cross off expenses which have been paid and update the balance. This is especially helpful to me because a big portion of my income is irregular month to month.
winging it.
I don’t really budget, I live alone, and make enough money to support myself and live a decent life.
But I do have a few rules:
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I will never set up any kind of subscription, be it media (HBO, Netflix, Disney+, Spotify, Apple Music, Tidal), apps (Flightradar24, Vesselfinder), games (Geoguessr). What I will do is buy prepaid cards with credit for those services, and activate them for a set period of time, but I will never buy into a recurring charge for a service, I have seen too many people ruining their economy with subscriptions being a big contributer.
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I seldom give into impulse buying expensive stuff, but if I have the money and can afford it I am not against buying quallity even if it more expensive at first.
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I don’t accept a seller or sales system stressing me out to buy as fast as possible, I can and have just walked away when I felt uncomfortable with how fast the sale if being pushed, I want to have time to think about if this thing is worth it for that price and if I need it now before I buy it.
You may want to see if your bank will let you create disposable cards. I have two credit cards where I can create temporary or reloadable cards at no charge for transactions.
So if I wanted to trial something, I would create a card with $1 on it. The trial starts and does the test transaction. I forget to cancel before the trial is over, but the card has no money so it automatically cancels.
If I wanted a subscription to HBO, I could create an HBO card and load the amount for it every month. When I cancel, I don’t have to worry that they’ll try to keep charging me because I just don’t add anything else to the card. It also makes me think about whether I’m using a service every month.
It saved me a few hundred bucks not terribly long ago. I tried a clothing subscription box that was absolutely terrible. So I contacted their customer service to cancel because they don’t have a real way to do it on their site. They didn’t get back to me in time and attempted to charge my card for another box. Luckily it was on the temp card and there was no cash on it so I just got a rejected charge on my card.
They used to allow that, but removed it in favour if having a switch to turn on and off internet access for the card, it is crap.
That’s just garbage.
Yep, it was an old system, I think it was flash based, which makes it understandable that they shut it off, but not that they didn’t replace it with an updated system.
What bank is it that lets you create temporary cards?
Capital One lets you do unlimited virtual cards for each service. X1 gives you the ones like I described. There are others.
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I haven’t been following any specific method, just a budgeting spreadsheet that has evolved over time - though my own method works out similar to the “Pay yourself first” method mentioned in that link. Basically a spreadsheet with columns for each month & the rows document required expenses/bills, then savings goals, then slightly less-required expenses & discretionary spending. Some people do similar using “buckets” of spending goals & that works too.
Been doing it for a while so at this point already know my expected monthly/yearly costs & even have a year out projection of where the savings goals will land at the end of 2024. Of course keep in mind life happens, no amount of budgeting will get you out of surprises. It’s always best to have emergency savings.
For what it’s worth spending flowchart from the Personal Finance communities helps out a ton when planning things out e.g. https://lemmy.ml/post/1161162 from !personalfinance@lemmy.ml
EDIT: Speaking of the other communities you may want to visit !personalfinance@lemmy.ml / !personalfinance@lemmy.world while you’re on this topic :)
I always found it easier to basically automate the process as much as possible. “spend” every recurring expenditure and also set aside the most aggressive savings/investments possible using separate bill pay and savings accounts or buckets. Everything is taken out of the main account as soon as your paycheck hits, so it means everything you see on your spending account is a free dollar that you can use for fun or food.
Some people might operate better with a set amount for groceries too, but I personally found that too restrictive.
A good budget is one that you stick to, helps you achieve your goals, and crucially, allows you to enjoy your life to at least some extent. Whatever method works for you, it’s important to give yourself permission to spend some money on fun. However small.
Yes, I definitely rely on all automatic payments. When I first moved out on my own thought I had a grip on things but too many bills ended up paid a couple days late, even though I had the money.
We also have recurring transfers to savings and to individual accounts for “fluff” spending.
At the very basic level, I predict how much money i expect to make in a month. Then subtract all bills and expenses that will definitely occur in the month. The difference is what i have to play with. Most times that extra goes into getting more groceries. Sometimes I can put that extra into my emergency savings which gets drained out more often than i’d like.
Ultimately, the best approach is the one that works best psychologically for you.
As long as you’re quantatively tracking the in/out of your dollars, yoiu’re doing it right.
From there, if your goal is to save money, its about rewiring your brain to gain pleasure from things other than consumption. In my life experience I’ve found the most sustainable way to feel good without spending money is through personal improvement and achievement. Skills, athletics, creativity, doesn’t matter. If you’re regularly getting better at making or doing stuff you’re proud of, you’ll feel good for free or cheap.
I don’t really budget. If I notice my credit card amount seems super high, I chill out on spending for a while.
Would you be willing to share how old you are? When I was younger I was a little more blase about it, but now I’m about 40 and thinking damn I wish I had savings and more in my 401k
I have savings and a 401k. I’m your age. $1k per month is auto deposited into savings and 12% per paycheck into retirement.
Husband has irregular income. Like you I do a spreadsheet with the dollars all allocated for my income plus what he tells me he expects on average.
Then each month I compare to actual results, and use that information to get a better estimate for the next year.
The black hole is credit card repayment because it was spent on something but goes in as debt repayment but we are working on that.
ETA: also do forecasting bank balance by day in months when things are tight. We do have savings but most of it in retirement accounts.
I started with zero-based budgeting via YNAB ages ago when ynab was a local-only app. Over time though I’ve adjusted and focus on tracking my expenses rather than budgeting. I’ve found that for me, budgeting is hard to stick to because I can never predict well enough. Ynab helped back when I used it but even then I always had a “rollover” fund I had to steal from almost arbitrarily to make things balanced.
I do keep a rough spreadsheet budget of my fixed expenses though (rent, internet, phone, electricity, etc) that I use to understand how much of my money is “locked-in” and what is discretionary.
For tracking, I have a spreadsheet I input all my expenses into every month or two that I use to see how Ive been spending my money, and I use that to decide if I’m happy with where I am.
just a spreadsheet, every paycheck gets a row. I write in how much to savings, spending, etc. then how much I spent of last paycheck. make sure everything lines up with what bank acct is at. works pretty okay for me
We pay bills, rent, get food (all generic and heavy sales) then the money is gone. Its a good month if we have 20$ at the end of the month, thats how we budget, by having no money. Donated a decent amount to medical aid for Ukraine and ate plain rice most of that month, priorities
I use the “barefoot investor” method (basically various buckets with percentages). It’s the only method that’s stuck for me.
There’s an app called MoneyStats which does balance forecasting. Forecasting is necessary for me because I need feedback about how my decisions or plans affect the big picture and to be able to see whatever timeframe that I choose
Its the only thing that keeps one foot out of the financial aby$$. I just program in all my recurring and correct any imbalances every few days and review whenever I start losing the plot or just to make sure my model is representative of my reality and how I need to comport to ensure things stay tight
I have most bills automated, everything that can go on a credit card does. I manually pay down the cards unless there’s a good reason not to, like currently I’m getting ~1% interest on one of them so it can carry a balance for a few months. In the past any excess cash would get moved into a brokerage account about once a month but that’s on hold for now because there’s been a lot of big expenses recently and I need to hopefully pile up more cash for another big expense later in the year. I don’t actually track anything very closely beyond looking at the accounts regularly and doing some rough math. I round things as conservatively as possible when doing the rough math so there’s always some leeway built in to my assumptions that err on the side of me spending more than I probably will.
Every month, I put some money into a savings account for future apartment, and a fund. I try to buy the essentials and little extra. My income is regular as long as I’m employed…
