I don’t need an absolute budget for income and spending. I have layers and layers of buffers. First would be my checking account, then savings, then money market, then credit cards, HELOC, reducing mortgage payment, reducing investments, refinancing for a lower payment, selling my car and buying a cheaper one… I’m not suggesting that I would incur a bunch or debt or do things in this order but there is a potential for decades of monthly clues telling me I’m spending to much money and need to spend less. I don’t need to know the exact amount.
I always knew exactly what I earned and what my mortgage cost.
But that’s about it for budgeting.
Apart from the mortgage, I never borrowed money.
I bought essentials first (like groceries.)
If I wanted anything else, I looked at my bank balance to see if I could afford it.
If I wanted something expensive, I saved up and bought it for cash.
(Of course I never paid any money to a church.)
I spent a lifetime being extremely thrifty about the food I bought. Now that I’m old, if I want cut up watermelon or grapes in the middle of the winter, the heck with the budget, I’ll buy it.
But a lifetime of cheap eats means that I’ve got a lot of cheap meals to cook and can’t break the habit.
I think preparing and following a budget is fun for some people. It would drive me nuts.
A certain amount goes into retirement accounts automatically. Then some goes into more liquid savings that we may use for a new car or major work on our house.
The rest is just in our checking to use for day to day living, a vacation or whatever. We are lucky in that we are not struggling, but we aren’t rich.
We have made some good choices like paying off our mortgage early and investing in retirement like clockwork for 25 years. We know our ‘means’ by looking at our various accounts.
We are lucky in that my wife and I have never had a disagreement about money(I guess a lot of married folks fight about that), so no budget needed.
I don’t know what my means are, but I must be living below them if the money keeps piling up. If it piles up high enough, invest it somewhere. That’s how it’s always worked for me, whether I was making $7.50/h or $50/h.
Well, for starters my income changes constantly, so fuck percents. My budget is:
- this much goes to the Treasury,
- this much goes to the retirement fund,
- this much goes to the mortgage,
- about yay much (which changes depending on location and I figure it out any time I change location) goes to housing and transportation,
- the rest is spend or save.
We are sort of the opposite. I mean, we do make a list of staples we are out of or low on and need to replace, but we don’t stick strictly to buying just those things. We know how much those cost (or more accurately, my wife does: I’m always impressed by how well she remembers, even though we go together and I see the prices too), so we then also know how much we have left in the budget to buy things we may only periodically buy, or even things we have never tried before. Ultimately, it’s just about not going over on money, not about being regimented as to what food we purchase.
This article seems to argue otherwise, from the author’s personal experience as well as various statistics he provides. He’s a little vague about how he got in this predicament, but it’s hard for me to believe setting a strict budget years ago wouldn’t have prevented it.
$80 a month, wow. Our family spends $630 a month, and we have two adults and two small children full time, as well as a couple teenagers who are here some of the time (less than half, so call it a family of 4.5). And I feel like our budget is pretty tight. If we were just putting whatever we wanted to in the cart, I guarantee it would be a lot more–even though we waste very little food (I think we throw away less than anyone I’ve ever observed in terms of staying with friends or relatives, and we certainly waste less than the average per capita numbers I’ve seen thrown around).
We have borrowed from other envelopes (keeping careful record to be able to pay it back over time) a few times when there was some kind of bulk deal. But we don’t have a Costco or Sam’s Club around here (I wish), so there’s not as much of an opportunity to do that sort of thing.
But beyond that, there’s only so far we can go with borrowing from other envelopes. We don’t use credit cards and don’t have any savings other than what is built up in some of the envelopes (like the one that saves up for property taxes at the end of the year, or the one that’s for car repairs).
What are you envisioning the “time” being spent on? For us it’s pretty quick: once a month, we divide $630 into four envelopes. Then when we shop (on four predetermined dates per month, although we can go a day earlier or later if convenient), we just take one of those envelopes with us. I suppose while we’re at the store, it takes some amount of time to enter each price into the calculator, but it doesn’t seem like much.
Our grocery budget has dropped drastically since my husband’s job moved to a neighboring state. He comes home on the weekends. We usually eat out then – kind of like an extended weekly date night 
I’m very frugal, I work for a supermarket chain but I don’t regularly shop it unless something’s on sale. The only exception are dog treats – for some reason my boys love the house brand, LOL. I go to our lower-priced competitor for my weekly stock up of breakfast items, yogurt, frozen food (they usually have a sale of some sort), and, occasionally, deli meat.
Some weeks I get a Hello Fresh box It’s $69 a pop but I get six meals out of it, thereby nixing the “what do I want for dinner?” dilemma. I also think, for me, it saves money in the long run since I’m not wasting any food.
I don’t budget my groceries per se, but I tend to keep my eye on everything I spend. If there’s not enough money in my checking account at the beginning of the month after paying my bills (including always paying off my credit cards), then I adjust the following month. Not specific figures, but I’ll buy some cheap box wine instead of more bottles of wine, or I’ll make it a point to pick up more chicken instead of ribeye. Maybe I’ll delay a project until I have a bit more cash on hand.
Even when not in “cutback mode,” my choices are generally frugal (other than the ribeye). We generally make things at home from ingredients, rather than buy stuff in boxes or frozen. Don’t get me wrong, I don’t make my own mayo or catsup, and sometimes I’ll buy a jar of Prego, but meals are generally assembled at home, and this is dirt cheap compared to eating out all the time or buying convenient meals from the freezer section.
At the same time, I’m not afraid to spend money to save money. I invested in Insteon and LED lighting, and the ROI is several years, but I always see the impact to my energy bill. Speaking of energy I made it a point to request a Fusion Energi – during warm weather my electricity is cheaper than gasoline, plus I get free electricity at work (although my wife wants a Mustang and it looks like it was built yesterday, so now I need to figure out where to trim $200 a month elsewhere).
I’m lucky now, but I wasn’t always so lucky, so I can’t just spend blindly, but I don’t have to nickel and dime everything, either (although other than for groceries, that’s my general tendency).
It’s what I do, though again a lot of the categories are more monitoring that budgeting in the sense of a hard limit. My wife won’t tolerate that and it’s really not necessary for us. Functionally we don’t spend ourselves into oblivion because we just don’t, my detailed record of our spending in consistent categories going back almost 30 yrs is probably as much a symptom as cause of the mentality that prevents over spending.
And I’ve struggled to get my grown kids to do it. But as other posts have suggested, you can rough this out in the big picture. Earned X, paid Y in taxes, accounts changed Z. Then a slightly more detailed pass, here’s the big expenditures like rent. I agree that doesn’t allow you to focus on needless excess in particular areas (like bar and restaurant spending for people their age that most would be more likely to cut back if they added up how much it really was) but it’s possible to control it on a big picture level without getting into the weeds.
And again depending on income and needs (family or not, how big) grocery spending might or might not be significant enough to track to control your overall financial position.
You’re probably right - people who budget tend to be people who don’t overspend, if for no other reason than that they are aware of what they are spending.
Regards,
Shodan
There’s a difference between having an understanding of how much money is coming into the house and how much is left after set bills, and “having a strict grocery budget” and shopping on scheduled days.
My husband and I shop when and where we want/need to, and have a certain amount of regular items we always keep in the house. We compare prices, make good decisions about when it’s worth it to splurge on treats and to what extent, and stock up on sale items when it makes sense to. We have managed to stay within our means for 15 years without having a strict policy of “Shop only on the third Wednesday of the month and if you’re three cents over the predetermined $84.52 then put back an orange”. I absolutely recognize that we’re very fortunate to have that kind of flexibility, and I have nothing whatsoever against people who choose to have a strict budget, but I find it puzzling that it would be so surprising that people have the ability to spend sensibly and fairly consistently without a specific dollar amount allotted.
I look at our bank account each month. Since the numbers continue to go up I guess we’re doing a good enough job. The particulars don’t really matter.
A “strict” budget to me is if I go over on one category, I have to go under on another. Thus if I buy a lot of something because it is on sale, I expect to go less next week or next month because I draw on the stockpile. I buy three turkeys around Thanksgiving, and put two in the freezer. Then for the next month or so I spend less on groceries. f I have to borrow from one category, like investments, to pay for another, like groceries, then I have to re-evaluate how I am spending.
But I am used to doing things that way - my folks showed me how to do it (they call it the “envelope system”) and it is how I have been doing it all my life.
Regards,
Shodan
That’s a good article, it’s been linked in other discussions and worth a read.
However, he is not rich except relatively (which in the limit the great majority of rich world people are expanding the comparison to poor countries). Small time author and TV personality (I’d seen him on TV and heard of his books, still not any kind of first tier earner). And the original quote was rich people getting poor or only middle class by overspending. Of course there are some, but the mass problem is people within the fat part of the income distribution curve who can’t bring themselves to live within their means rather than some level they ‘should’ be at. And the problem is generally spending on big stuff (like Neil Gabler in article, second houses, expensive schools for kids) except for poor people.
Again, I have a detailed record of our grocery (and a dozen or so other categories adding up to the total) spending since 1990. But there’s a big chicken/egg issue between ‘cash in the envelope at the beginning of the month’ people and those who spend too much. Which causes which? And, it really doesn’t make sense for some responsible people to pass up sales on items because of cash in this month’s envelope, or for that matter to leave 2% on the table (5% for the card we use for groceries ex-Costco) by spending cash rather than using a CC. Same token we spend around $1000/month at supermarkets plus Costco supermarket items only, nominally empty nest couple though two grown single kids live nearby and my wife often buys expensive stuff for Sunday dinner for them and loads them up with leftovers. We could spend less, but there’s no reason to.
If it works for you, good for you. I am more obsessive about it, because I want/need the numbers to go up at a given rate, because I know how much I want to spend both now, and after we retire. So we need the house to be paid off, plus $X invested at an expected ROI of Y% so we can have a budget of $Z in seven years.
Plus, this month I was under-budget for groceries by $50, so I took my wife out for Valentine’s Day. And I felt like a rich person.
Regards,
Shodan
Sure, that’s exactly what I’m talking about. Maybe I buy a bunch of chicken because it’s a great price and then throw it in the freezer – this naturally leads to spending a little less over the next little while since I don’t have to buy the chicken I would normally buy. It also means that if I splurge somewhere else – maybe I go out for lunch or treat myself to a massage – then when I’m in the grocery store maybe I choose ground beef over prime rib that time.
Don’t get me wrong – I grew up in an envelope system house too and I do see the merits of it, but for some people (like my husband and me) spending within our means comes naturally enough that we have never found ourselves needing to be guided or reined in by a stated dollar limit, which is what I think of as a “strict budget”.
I may have misunderstood your earlier quotes
and
as meaning that you didn’t understand that there can be an area between “meting out and strictly adhering to a specific amount of money for something” and “blindly spending with reckless abandon”, and that area can work out just fine for many people.
We don’t have an explicit grocery budget (I just checked, and food accounts for about 10% of our spending).
The vast majority of our grocery spending isn’t really on things that go on sale or are shelf stable, anyway. We buy mostly staple foods like milk and eggs and bread and fresh vegetables and grains/beans out of the bulk bins. The prices on those never really change, and even if they were on sale, most of them don’t keep, so buying more than we can use in the near future doesn’t make a difference.
The prices on vegetables changes somewhat seasonally, but a lot less than it used to. And we tend to buy vegetables in season because they taste better then, rather than because they’re cheaper.
We buy Organic/free range meat for ethical reasons, which is also rarely if ever on sale. Bacon is the one thing where prices seem to vary, and I will buy like 10 pounds and freeze most of it when I see a good price.
If we wanted to spend less on food, cutting out restaurants would make the biggest difference. After that, eating less meat (which we’re already trying to do for health reasons).
When I was in grad school, I was living on a very low, fixed income. I budgeted everything. Had to. Fortunately, those days are long gone. Well, fortunately for that one thing!
Of all the items I buy, though, food is probably the cheapest overall. I buy whatever I want at the store, and it’s never a problem.
Huh. For us, food is our biggest budget item by far.