It’s not a “budget,” it’s a “spending plan,” and here’s how to make one. [WSJ] (Photo: Jeff Keen)
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lol, I can see someone going to buy something, seeing that note to themselves, tearing it off and sliding that credit card anyways.
We have used a spending plan for the last two years and it works great. I thought this article did a super job explaining how to set up a plan.
After we pay our fixed expenses, we fund our savings/investing we each have the same amount of discretionary money to spend (pretty much as we see fit, anything over $300 has to be discussed and agreed). So, if I want a $200 pair of boots, I’ll bring my lunch every day for a couple of weeks and then I’ve got my boot money. We do track how we spend our “allowances” (our discretionary money) so that we can keep track of our spending habits. Seeing how much I spend on eating out reflected in red on my Quicken chart totally motivates me to do better.
I just spent an hour making a spread sheet for savings, expenses etc…
I feel much better now – I was stressing!
We just started doing our on a big whiteboard on the wall in the back computer room. (We’ll take it down if there’s ever company). I like that method.
@Fist-oâ„¢: Great idea. We have an unused whiteboard in the cellar and you’ve just provided a redeeming use for it. Thanks!
I follow the spending plan idea, with a slight twist – automatic deposits into two different savings accounts. Here’s the breakdown:
checking account: monthly basic survivial needs, plus minimal budgeted entertainment $ (~$20/wk)
savings for short-term irregular expenses: automatic deposit. This $ covers eating out, presents, vacation, car insurance, doctors appointments, hair salon… ie the stuff that’s bound to come up but doesn’t fit on the standard monthly expense account. Also, it’s discretionary, and I’m forced to think about the expenses because I need to make a transfer into my checking account to cover it.
Long-term savings: automatic deduction each month to cover the emergency account, IRA, house downpayment, possible grad school… ie the huge, long-term goals.
Since I’m useless at itemized budgeting, this automated savings and spending plan keeps me on track.
Who doesn’t look at their finances this way?
My budget is nothing but a “spending plan.” I add the line items of fixed expenses: rent, groceries (I shop once a week and never spend more than X dollars), utilities, and the car. Subtract those expenses from my monthly income, and I see exactly what my discretionary spending is for the month.
I do mini-budget projection for 6 months so I can map expenditures for special times when more money will be spent. Plus I can manipulate the data to see what the discretionary fund will look like if I make double payments on my student loan for two or three months.
The spending plan: no cash, no buy.