I’ll come right out and say it; I’m a huge fan of budgeting. I have been a serious budgeter ever since I got went to college. I was somewhat financially independent then (I had to pay for my general living expenses) and worked in the summer but not during the school year. I therefore needed to have a good way to make sure I wouldn’t run out of money. Moving past college, I got my first real job (healthcare IT consultant) and found myself in need of a tool to make sure I was not spending more than I was making. Ever since then I’ve kept a detailed monthly budget, tracking my income and expenses, along with my goals. I was curious if there were others like me, or how others handled their budgeting. So, I reached out to a few friends and asked! Here’s what I learned: 

All see value in budgeting

Granted, the folks I reached out to I know because they’re readers and fans of the site. So, I suppose that perhaps the answers I got aren’t a great sample, as readers of a personal finance blog are more likely to be somewhat inclined to manage their finances. But, that’s neither here nor there.

What I learned from each of my respondents was the fact that they see value in budgeting, and how important it is as one person put it; [a budget is]  “a way to help ensure that I both spend and save reasonable amounts, knowing where my money goes throughout the year in order to make informed decisions”. I love that, and totally agree. If you don’t know how much you’re making and how much you’re spending, you’ll certainly not be making much progress! All of the respondents interestingly enough didn’t report spending time on their budget more than twice a month. One of the big myths of budgeting is that it takes a lot of time – it doesn’t have to! 

All use some sort of a tool

Realizing that a budget is a good idea is only half the battle. It’s actually finding a budget system, and continuing to use it. So many folks will start a budget but will stop using it a few months in after it becomes cumbersome, a bother or they lose interest. I always say that a good budgeting tool is the one that works for you. I saw a number of tools that folks are using, which I think reinforces that point. The budgeting tools I heard were: Mint.com (probably one of the most popular tools out there), YNAB (You Need a Budget, an online tool similar to Mint) and Excel. I personally am a fan of the Excel method, as I find that by forcing myself to manually input my spending, I’m more inclined to ‘feel’ when I go over, and it’s a helpful deterrent. Mint and YNAB are great – super easy with lots of features to help you set and achieve goals – just make sure you stick with them! Some also use a tool like Personal Capital, which pulls everything in one place to give you an overview of your personal net worth. 

Each of the budgeters used their budgeting tool to put their income into buckets. Some were more rigid (I have $X this month to spend on eating out) and others were less rigid (after the fixed expenses like rent/mortgage, phone bill, utilities etc, everything else was just ‘spending money’). Buckets are important because they help you map out your spending plan for your income. Your paycheck will only go so far, so it’s important to make sure you don’t spend more than it! 

No matter which tool you use, find one that works for you, and stick with it! 

All set (or wish they did) goals

It’s important to have goals and a plan to achieve those goals in life, and the same holds true for personal finances. Money has a strange tendency of finding ways for it to be spent unless you have another plan for it. Whether it’s going out to eat with friends, shopping, traveling or just a night out, spending money can be very tempting. By having a goal (i.e. save $X this year, or put aside 15% to retirement), you’ll then formulate a plan to achieve said goal and then are more likely to achieve it!

Some examples of goals were: 

• Have enough passive income to cover basic monthly expenses
• Long term income increases, debt reduction, and retirement goals.
• To invest what I have set aside in savings
• To tithe and give first, not last

I was surprised to find a lack of very focused and tangible goals. One person had specific 2020 goals: Increase household income by $50k and put about $80k or more towards student loan debt and retirement, but nothing outside of that. I was reflecting and realized that I actually don’t either. I track both my spending and net worth but don’t really have specific number goals for myself. Some good food for thought – maybe I should! 

We often overspend on food

The one commonality that I saw and that I think we can all agree on is that we all spend too much on food and eating out! One respondent said that as a couple they spent $1,000/month on eating out – together on dates, with friends as a couple and with friends individually. That seems like a lot but honestly I applaud that reader – they’re being honest and realistic! Eating out, ordering in, grabbing take-out on the way home, lunch, it all adds up! Mrs. Money and I even (in my opinion) do a good job balancing eating out vs in and find our grocery bill to be astronomical! 

Mrs. Money and I try to solve the overspending on food problems by firstly meal planning. We have each dinner planned night and try to only eat out on the weekends, once or twice. We also are strategic on where we shop – we belong to Costco, and head to a slightly further away but cheaper grocery store for most groceries and use the local neighborhood one (which is more expensive) for quick trips for things we need forgot. We used to clip coupons but found that sadly the coupons weren’t as helpful as they were mostly for new items, not things we regularly use. However, we do eat out, often on weekends, and have recently started using DoorDash (I got a perk through a credit card I have) more often.

A big thanks to those respondents for helping me put this article together! The big takeaways hopefully are: 1) Budgeting is important 2) Find a tool that works for you and stick with it and 3) Spend your money in a way that makes you happy but still sticks to your budget.

How about you? What’s your budgeting style?