How do you budget for all your living expenses? I recently watched Cash Envelope Budgeting System on YouTube and was shocked because I never saw anything like that before. So I ask for us to share- if you Budget- how do you Budget? And were you ever taught to Budget?
How Do You Budget?
Debt Free on 24/02/2023 - 15:25
Comments
Me, I was never taught to budget. I just put all I could spare into paying off as much debt as I could, but it was not most effective way cos it still took a long time- one step forward, 2 steps back.
My monthly split looks like the below;
90% ozbargain deals
10% living expensesthen you are spending too much on stuff you don’t need
You mean the 10% portion?
you must still live at home with the bank of Mum and Dad
@KaTst3R: you mean school of Wasting other people’s time which is Very Selfish of you to waste everyone else’s time
@Debt Free: I gave you a serious answer. Forecasting is taught in the School of Finance. There is where all finance professional first learn the art. You refine the art when you work in a financial institution. And I gave you insights to how professionals do it below. I know there are many people who tend to troll a little on OZB (including myself) but you have read in between the lines and apply some logic.
@KaTst3R: Excuse me for never having heard of the School of Finance- just thought here we go again- another off tracker, time waster. I see you did indeed give a fast and fab answer below- I just didn’t notice it was your same User name. Thankyou for clarifying and I’m sincerely very sorry.
@Debt Free: When I said School of Finance, it just refers to a general education institution for finance be it TAFE or University. I wasnt going to put the University that I attended here. Dont worry about it, all good.
@filmer: @filmer - it’s a Serious question so please don’t respond when you have nothing to contribute - go play somewhere else please
I don't.
Pay bills first.. food can come later
Do you set some money aside for bills every pay day, or do you just wait until you get the Bill?
pay the bills when they arrive, but i do put a little away for car service/rego each payday
have you ever watched those sinking funds cash envelopes on you tube- Amazing how some people allocate cash for everything- I would love your opinion
@Debt Free: I set up periodical payments that deduct money automatically on paydays to different accounts (interest bearing/discretionary spending etc).. so i suppose it's similar to sinking funds. I use envelopes also so not as colourful. I suppose involving myself in the budget helps me save/keep track/view money positively than begrudge it
I agree, but zinger box is life and always is priority above all.
@ Jimothy Wongingtons :
R U Okay ?
You budget like a Commercial Business.
Top Priority:
1) Interest and repayment
2) What keeps the lights on
3) What keeps the partner happy
4) What keeps you happy
5) Whatever left over is reinvested in yourselfIf you want to go to the next level, do a monthly financial forecast model with all in and out cashflows in Excel. Just remember to add inflation for the next few years as expenses will increase for sure.
Love this- so do you Budget for it weekly or how?
I have a spreadsheet that has high level cashflow for in and out on a monthly basis, but if you want more control then a weekly calculation will be better.
You do a weekly forecast for the next 6 months for example, then as time goes by, you have another section which you fill in using actual expenditure and you compare both and see if you are under or over budget across time.
Fantastic Tips- Thankyou very much.
Budgets work to pay everyone else first, that's why they are best avoided, if you want financial freedom pay yourself first - every time.
so how do you do this?
Take say 10% of your income & bank/invest that amount if you no longer have it you can't spend it, make it a habit. Notice how the funds are always available to pay the income tax bill at the end of the financial year? That's because it's taken out of your pay first. Another optiuon is salary sacrifice into super & Salary packaging.
You just have to add a line to pay yourself first in your budget.
Excel spreadsheet with every expense for a full 12mths broken down into a weekly cost for about 15 diff expense areas (house, transport, food, entertainment, etc, etc)
I then record every expense I make and compare the 2.by using this average by wk, by mth by yr. Remember Trend is you Friend :-)
If something starts going over constantly i adjust, so take some of the allocated bdgt from another area, but the total amt I can spend never changesLooks like you took the long road to get there- and great advice Thankyou. What do you recommend for someone just starting out- is there a ball park bottom line amount they should budget for in various categories?
Eg. Gas Monthly Budget - $100 a month
Electricity Monthly - $ 200Im sure my expenses are totally diff to yours and yours are totally diff to the person across the road. If you dont know your expenses Id suggest going through your credit & debit card statements as te place to start
so there is no ball park for young people to start at. Just when they have spent all their money, suddenly they get a huge bill.
spent all their money, suddenly they get a huge bill.
Don't spend all your money.
I recommend to first be over-conservative.
Ask friends and family what their share of electricity is each quarter, and think about what an average could be for you.
Services like subscriptions (netflix, spotify, etc) are easy because you have a dollar amount that you pay each month.If you have a car, registration, mandatory insurance, comprehensive (if you have it), and costs for repairs/maintenence (servicing), and the registration check are a really good one to put some money away each pay for.
Here's my breakdown for my car for example:Rego - $390 per year =$7.50 per week
CTP - $385 per year = $7.40 per week
Comprehensive Ins - $771 per year = $14.85 per week
Rego Check+ yearly service - $400 per year = $7.69 per week
Total: $37.44 per weekI put this in it's own account and it cumulates over the year, so when rego time comes I can just pay it immediately without having to worry.
As for gas, go through your bank accounts and write down the past 5 times you got gas and write the dates and how much you spent. Determine how long in between each fill-up and how much you spent and make a guess as to how much that comes to per week. You'll get the hang of it!
If your bills come around and you've under-budgeted, you'll just have to adjust it for next time. Not to worry about not having anywhere to start, you'll already be in a better position than you were before - because you'll have some money put away.
@taradavey: Have been doing it for almost 3 years, and I am sure I will continue this practice for long.
I also add another column to tag each of these expenses whether I need them in emergency (like going out of workforce). For example, Netflix - Not needed, Internet Bill - Needed, etc. This helped me in determining what should my emergency fund look like.
@NoPetNoKid: Once I know how much to block for expenses, the remaining amount goes into investments and sometimes in that unnecessary spending
Just when they have spent all their money, suddenly they get a huge bill.
You don't only have the 2 extreme choices. What Jug123 is saying is that everyone's situation is different. As per your example, there is no point having a monthly budget of $100 if you live in a place that doesn't have gas, and only uses electric devices to cook and heat water, what's the point of having that budget?
The simplest budget, is just one that is equal to what you make. Take a note of how much you make, start subtracting all the regular bills you have, and every time to sign up to something, reduce the available budget. Hopefully your budget never goes negative.
Once you have that worked out and it settled, you can then go into more details and break it into smaller sub budgets, eg essentials such as rent/mortgage, utilities, groceries, car rego, insurance, etc…. then with what ever you have left over, you can just spend it on whatever you want, which can also include savings and investments.Saving will give you a buffer and breathing room if your income ever stops or reduces for whatever reason. it also allows you to build up cash to buy more expensive items that you wouldn't be able to buy from a single pay cycle. Investments is using your money now to grow to a large amount for the future.
I just track my expenses on an iOS app called Daily Budget and try to spend no more than $40 a day.
does that include setting money aside for future bills and expenses?
Anything I don’t spend goes into a surplus that I can use later on (like mobile data rollover) so yes, e.g. if I don’t spend anything for two days then on day three I’ll have $120 I can spend.
But compared to my salary and what I can spend it’s a very restrictive amount which I dont always end up sticking to, but in the end I end up saving a lot more than I would if I was budgeting $80 or $100 a day.
I wasn’t really taught to budget growing up. When I started investing that’s when I really started to track where my money goes and stick to a certain budget.
So cool. Love This.
this is so Unique. Love it, after your explanation below.
I don't budget, I just pay money into my investments and extra money into my offset account when I get paid and then live off the rest for the month.
that’s good that you have an offset account
You've got the right idea! Same as mine, love it.
I don't budget at all. I just spend what I need and draw from my SMSF once a month
If I have any spare cash in my pocket when I get in the front door (coins, mainly), I'll put those in an envelope and attach them to an email and email it to my Gmail account with the subject line "BUDGET".
When I get to 100 emails, I put them in a zip file, convert to a .wav file (NOT mp3) and print it out and post it to myself (but I date the envelope a week in the future to make sure I'm home when it arrives).
Married a project manager who makes excel spreadsheets for fun.
Budgeting is not hard, just don't buy shit you don't need if money is an issue for you. If you're an adult and can't manage your spending then maybe you shouldn't be in control of your finances.
Barefoot investor accolyte here. Read the book, follow steps, change your life.
I find the Excel Spreadsheet version of this budget calculator works well for me, editing the rows where appropriate:
https://moneysmart.gov.au/budgeting/budget-plannerI've saved it as an .xlsx, then uploaded to my OneDrive so I can access it on any device.
Hard to budget when prices, rates and inflation keep rising - all the money is going towards necessities and regular mortgage repayments and other bills.
I feel many on Ozbargain are on far superior wages and can freely mobilise cash when impulse kicks in.
I do think superannuation concessions need to be hard capped at $600,000 and the concessions completely removed by one million dollars sitting in the account.
It’s clear there are many looking down from their ivory towers in the clouds wondering why others struggle to budget through no fault of their own. Most probably because they’ve obviously never experienced such hardships to themselves as a single “professional” or financial elite or government crony.
I do think superannuation concessions need to be hard capped at $600,000 and the concessions completely removed by one million dollars sitting in the account.
Do you believe that removing money from others will make it magically available to you?
How does taking it away from someone else directly help you unless you are assuming politicians will redirect the cash straight into your account?How did you come up with those exact dollar figures? Are they based on some indepth calculation or just a gut feel for what a lot of money is?
Trying to not 'have a go' at you (even though it probably sounds that way) - just saying it's not as simple as you indicate.
Super was added to alleviate the burden of the pension system. Super now costs the government (the taxpayer) about the same as the pension, and super has helped very few so far to not need a pension yet as those that were near retirement didn't have time to build a balance.
If you don't believe the tax rate on super funds and contributions needs to be increased for the wealthy you are crazy.
Not sure exactly where you get the fact that "super has helped very few so far to not need a pension yet as those that were near retirement didn't have time to build a balance."
According to an article in the AFR from early 2019 (https://www.afr.com/policy/tax-and-super/the-average-retiree…)
Australia has reached a major milestone, with most new retirees having enough savings to be self-funded rather than reliant on the age pension, new research shows.
More than half of 66-year-olds were not accessing the age pension at December 2018 because their assets and income were too high, while 20 per cent were on a part pension.
Only 25 per cent were drawing a full age pension.No idea if there is any more current information but I'm sure you would like to seek this out to help with advising your opinion.
This is from just the first result found when searching.If you don't believe the tax rate on super funds and contributions needs to be increased for the wealthy you are crazy.
BTW just because an opinion or fact does not align with yours does not make anyone necessarily 'crazy'.
@Grunntt: Half of 66 year olds, means half of the people coming onto the pension now. Given the average life expectancy of 80, this still equates to very few.
If the solution to the pension costs more than the pension then it's obviously not a solution. Especially when the 'cost' is going to the most wealthy, where as the previous pension was going mostly to the least wealthy.
It's just another case of the rich getting richer.
@filmer: OMG are you saying that I am only going to live until I’m 80 ????
That’s it - I need some serious retail therapy NOW.
Rubbish! Spoken and posted with what appears pure envy.
Some people have indeed experienced hardships and learnt their lessons as to how to plan for the "unknown" future.
Most of these people are not "single “professional” or financial elite or government crony." Rather just your average hard working Aussie.
Yep - I do look down form an "ivory tower", but by Christ I worked long and hard to get here. Making many family sacrifices along the way.
You can’t be an “average” hard working Aussie and also be looking down from an ivory tower. It’s a contradiction on its face.
The comment you were responding to was a crude generalisation, but the classic fallacy of “I got what I have because I work hard” is increasingly annoying when it’s well established in most cases a big reason for success is luck, advantages, connections etc.
Hard work is a must, but many people who struggle are working bloody hard. Making sacrifices suggests you had a choice. Many people don’t.
This year, I’m making a conscious effort not to buy unnecessary stuff. Like, i used to buy a lot of shoes, clothes, video games, stuff like that.
So far, haven’t bought anything… even though I’ve been tempted a few times !
With an iron fist.
All of my pay goes into one account. I work out my yearly expenses, based on previous year + 5%, divide by 26 (fortnightly pay) then allocate money accordingly via a spreadsheet eg columns for regular bills (rates, electricity, subscriptions etc), groceries, pet expenses, discretionary spending etc. Each payday I update the spreadsheet. All spending done on credit card, and when statement comes in it's easy to allocate the expenses to the different columns.
All except for discretionary spending - the amount allocated for this is transferred each pay to a separate account, so that I can't spend more than what's allocated.Many years ago I remember my son watching me updating the columns by hand in a physical ledger, and he asked if this was what adulting was all about. No, I told him - I just like to complicate things. Nowadays his system is even more complicated than mine, with cash flow forecasts etc….
I resonate so deeply with the "No - I just like to complicate things" haha!
I’m lucky enough to never really needed to budget with my job in software engineering, but I like to see where my money is going because I’m a bit of a tight wad 😅.
I use Frollo now and track a few categories cycle to cycle like coffee, takeaway and alcohol. it’s ok for week to week or month to month but it can’t really predict the future
So I also have a cash flow spreadsheet that has income at the top, monthly columns, then groupings of expenses by living, lifestyle, automotive, health, property. Each subsection has totals and the bottom was the difference between income and expenses, showing the ratio of how much I spend/save each month.
I could see future months and see where my savings would be at, or where I would be saving nothing due to heaps of expenses eg insurance, rates, mortgage fees etc all coming due at once. That helped me avoid overspending in that month on other things, but now I’ve decided to try and split those fees out over the year to make it easier on me… over 10k of expenses in one month isn’t fun.
I set up a budget for each category in a separate sheet, and used that as the average monthly spend, which I then added to the cash flow sheet, but went in the future and added one offs like council rates, body corporate, mortgage fees, holidays etc.
Just the act of doing this regularly helps, because I know spending $500/mo to feed myself is what I can do if I try, and if I hit $1000 it means I’ve eaten way too much takeaway or restaurants lol
University of Life, school of Finance!
I use an app for budgeting called goodbudget. , it’s basically a digital envelope system. If you can manage with 10 monthly and 10 yearly categories and 1 income stream it’s free to use. Has got a website interface as well as app interface. Works for me.
Budgeting? First step eliminate things you dont need streaming services, gym memberships, other subscription services.
Stop smoking, reduce/stop drinking stop gambling.
Take your lunch to work, make your own coffee (themos or make at work) reduce number of takeaways dont eat out as much.
Dont impulse buy and shop around.
Every time you look at something you want but dont need ask yourself how many hours of your actual time will it take to pay for that item. If it costs $200 how long do you have to work for that item.
Look at wants versus needs.
And then you get a sick old dog needing $$$$ care… and you want to euthanise the poor thing but everyone decides you are cruel…. others even offer to pay… and of course you don't want that either, … more expensive than any other unexpected expense i tell you!!!!! But i also want the much loved dog to live another year of course…
I’m so sorry - so much tearing away at your heart from all sides. Whatever you decide, know that you know best. Hugs ++++
I kind of dont have a strict routine to budgeting. Every week after my pay comes through, I put $2000 straight into savings, any excess pays the bills and luxuries (eating out mostly)
I pay myself first then I pay for everything else after that, never run out of money paying yourself first
How much do you pay yourself ?
start out 5%, then 10%, then 15%, then 20% and so on probably 40-50% now depending how generous I want to pay myself
I love this- so helpful. Thankyou very much.
No Budget, but i do have some rules i follow
Money in > Money out
- Pay Tax / BAS bills first
- Essentials (food, phone bills, electricity, etc.
- Non essentials / life luxuries
- Care free spending last.
My minor budget is $15 lunch Mon to fri.
$40 weekly spending money.
I only buy future electronics and toys from my spending money or saved up left over lunch money. Or gifts from birthday or Christmas or other gifts. Or by selling my old electronics and toys.
I bought many secondhand electronics which saves a lot of money.
We buy and stock up half price house items like soap, shampoo etc
I ran out of things to buy for my own products, because after a while, there isn’t much worth spending on and even though stores like jb hifi, Harvey Norman sells lots of things, I only need one nice working old phone, one old good working computer. One good old working hifi speakers and tv Etc old working stuff still works like the day it was new.
We eat out like crazy, $15-$30 a person some nights and weekend, most great foods are only about $20 max. I think that costs the most in our budget.
I bought a pile of nice clothes I love, that lasts a long time and wear them everyday. So I hardly ever spend on clothes besides shoes every 6 months or so.
We have no broadband at home, just use our mobile and it’s internet.
We just stay home and triple R. Rest, Relax and Recover. Most of the times.
So there isn’t much expenses for non bills/maintenance related.
I saved up more than 6 months living costs. So bills and stuff just comes out of those saved up money. Because I have a pile of money, I just pay the bills when they come and not saving bits here and there for it.
By doing above, I have left over money to save every year.
I don’t have to worry about not having money because of being fugal (spending on what matters to me) and living with in my means.$75 for 5 lunches for one person? What ever happened to Vegemite and cheese sandwiches, followed by an apple? But I like that you save it up if you don’t spend it all. And you like nice dinners too. Maybe you should have been a Chef, or married a good cook. I just hope you never get so fat that you have to swallow one of those pump up balloons as featured on the news tonight- it costs $6,000 only to self disolve after 12 weeks.
I like that you save up 6 months expenses in advance and that you appreciate all your nice clothes, and functional technology without wanting the latest- that is Cool. Did you hear that corded earphones are top fashion now— really, they really are the In thing now, everyone wants them. I wonder how much the price of those Apple wireless ear pods will drop by now.Sometimes I eat vegetables only, food provided by work, soup only or skip lunch. So it balances savings and diet.
For headphones, wired ones can sometimes do losses audio, that wireless can’t. Is that what you mean? AirPods won’t go down much unless it’s old, like AirPods 2.
For buying, if it’s worth spending on something and it’s within means. I would buy it. I saved up from lunches to buy half of my AirPods max.
For me, things get easier when I saved up more money by living more fugal.
For any personal budget, you gotta know what is worth it for you.
by not spending on something I dont have to
Living pay check to pay check gang