Is creating a budget really that confusing?

[FQLover]

That sounds like a good idea! She might never have considered that you would be interested in that exchange as a way to pay off her debt.
If she says "no," she is really choosing to let you see that she is a mooch and a user. I would think she would relish the chance to be "in the clear."

 

[Jason_V]

Now we're seeing the curse of student loans all because some people don't consider the time and how much it will cost them to pay the loans back when they choose a school or a field of study. People will graduate without the ability to pay off their loans and suffer the consequences for many years. This will impact their ability to afford to buy homes, cars, raise children, etc. and that in turn will be a drag on the economy.

It is a vicious cycle. If you have the student loan debt, you're paying on that for years and that's money you could either be saving or putting toward something else. Which then means if you lose a job or something like that, your world gets a whole lot worse because of all the payments. The fewer payments, the better you always will be. This then perpetuates the myth that certain groups can't afford a house since the house is so expensive. Well, yes, that's true...but it you didn't have that loan debt or car debt or whatever, you'd have that cash.

See, when I was growing up (I'm 39, FWIW), my mother balanced the checkbook every month with the statement. I do the same with each other my accounts today every single week. I learned from her and through some basic classes in high school how to do it. A lot of people don't do it today and, therefore, have no idea where their money goes. The $4 a day on coffee adds up over a week, let alone a year - as an example. I work in a financial field with a lot of people younger than me. We reconcile accounts all day long and I see the issue with my own eyes: matching transactions and looking for patterns or differences isn't a skill they have. Again, I'm horrible at math and I'm a journalism major. If I, of all people, can do it, anyone can. Our schools, in part, are failing the younger generations in this regard.

 

[abcboys]

We'll sometimes those people are family members, such as parents or inlaws and unfortunately it affects your life. Bad financial decision lead to a life lived on social security and an extremely small and depleting saving account. The human in me will not allow them to loose the roof over their head or allow them to go hungry. It's frustrating, period.

Same! And this is why it bothers me. My in-laws have always been horrible with money. They haven't asked in a while but we had to bail them out multiple times because of their lack of budgeting. And when they worked they made more money than we did. Now, they live on social security because they never bothered to save for retirement and are always complaining about having no money.

My oldest is 20 with a full time job and just moved out a couple of months ago with a few roommates. I always used to "nag" him about starting a savings account. We had to help him out about a year ago with a major car expense because he never bothered to save and he is still paying us back. He is a spender. Goes out to eat and buys whatever he wants. I try not to bug him anymore, he'll need to learn his own lesson. Although, when he was home at Christmas I did gently remind him it was a good idea to start a savings account even just $10/week or more on weeks he worked overtime. He doesn't seem to worried about it. My DH tells me not to say anything and I say ok I won't, but if he ever has an emergency we will not bail him out. But you know how that goes. You start to feel guilty and want to help.

 

[kymom99]

Have you considered asking her outright to let you use the timeshare in exchange for what she still owes you?

No I haven’t. At first she made comments about paying us back but it’s been a long time since she’s mentioned it. I’m at the point now where I’m over it. It’s one of those situations where you just think Lordy she’s a mess. I feel bad for her mostly and try not to dwell on it.

It’s not a bad idea though. I could casually ask her where it’s located just to see if she would offer it. I think she takes friends and I’m figuring they pay her some for staying there. She is widowed. Her husband committed suicide. They owned several rental properties and one tenant didn’t tell her water was leaking until the ceiling fell in on the kitchen. I think she evicted them. She couldn’t afford the repairs and the mortgage and they were going to forclose on her. She said she couldn’t ask my MIL because she would just get stressed out but I’m guessing she has probably already asked her for money before.

 

[FQLover]

Oh my gosh. Widowed because of a suicide. Left to manage and maintain the rental properties by herself amidst the grief and stress. I feel bad for her, too! I hope that through a work benefit or something like Employee Assistance, she has been able to get some counseling for herself. :-(

 

[kymom99]

Oh my gosh. Widowed because of a suicide. Left to manage and maintain the rental properties by herself amidst the grief and stress. I feel bad for her, too! I hope that through a work benefit or something like Employee Assistance, she has been able to get some counseling for herself. :-(

She’s really a wonderful person. It does go to show you why some people can’t seem to budget. Once you look closer it’s not so surprising.

 

[piccolopat]

No I haven’t. At first she made comments about paying us back but it’s been a long time since she’s mentioned it. I’m at the point now where I’m over it. It’s one of those situations where you just think Lordy she’s a mess. I feel bad for her mostly and try not to dwell on it.

It’s not a bad idea though. I could casually ask her where it’s located just to see if she would offer it. I think she takes friends and I’m figuring they pay her some for staying there. She is widowed. Her husband committed suicide. They owned several rental properties and one tenant didn’t tell her water was leaking until the ceiling fell in on the kitchen. I think she evicted them. She couldn’t afford the repairs and the mortgage and they were going to forclose on her. She said she couldn’t ask my MIL because she would just get stressed out but I’m guessing she has probably already asked her for money before.

I'm sorry to hear about her circumstances. She might welcome a suggestion to erase her debt to you by simply allowing you to use the timeshare. I know some people don't care if they borrow money and never pay it back but I get the feeling from what you wrote about her that she is not one of those people.

 

[usnuzuloose]

If you are concerned which it sounds like you are, there is nothing wrong with getting help to get you on a budget and help you so you can put money away.. Don't be afraid to get help you may surprise yourself

 

[tex1989]

While the initial concept posted should be easy to understand and follow I think the real issue lies in peoples expectations. We as Americans are told from day one that we can have it all! We deserve it all! We are practically guareenteed it all if you listen to the advertising.

I say this because on Friday my wife and I went to the Boat Show. It is an annual event in the Houston area that kicks off the new year. Now mind you I recently got rid of my boat that I had owned since 1989. Paid $8,400 for it brand new. The equivilant boat in 2018 would cost about $28,000. There were boats that I see routinely in the area where I live and they were selling for about $35k to $50k. The trucks pulling those boats sell new fo about $50k. So literally I am seeing rigs running down the road that cost more that my house cost me! Yeah, inflation, etc., but really $100k on a truck and boat? I am older (60 this year) and know my mindset on what things should cost or what they are worth is still set in the year 2000 so I understand that part, but if you spend that on a boat and truck, plus your house, your kids, and all the other more important things in life, then I can very easily see why people don't have any money.

People are convinced that they need these things, but don't understand that in many cases they cannot afford these things, hence people go into debt and expenses exceed income and that when the problems start.

 

[kathy884]

OP - I don't think budgeting is nearly as simplistic as you have stated even for those fortunate enough to be able to cover basic expenses.

There are lots of guesses, tough choices. You want to be conservative and not outlive your money in retirement; you don't want to be overly conservative though -- not do things that give you joy and make your life easier when you really can do these things, not help others when you really can, not give to charity if really you can. It's a balancing act for sure. Also, when you go from one phase of life to a new one (DH just retired), but I think I'll be working for about eight more years, the budget that worked so great for years has just changed. We may be doing some living off of our savings. It's a strange feeling and a whole new budget to work out. Do we try to live off of just one income and continue to fund my 401K (it will be a year before DH starts collecting social security too)? Do we keep closer to our same standard of living and take qualified money out of DH's retirement (within guidelines most financial planners recommend)? What do we cut back on? What don't we cut back on? I'm looking at all of this right now. Till I figure out my new budget, I've cut down charitable contributions, how much I help a wonderful/delightful/hard working grown child who doesn't make much, how much I contribute monthly to my HSA, the amount I put into my vacation fund monthly, and I started giving my large dog his own bath instead of taking him to the groomers -- takes two of us to lift him into the tub. lol

I haven't figured out my new budget yet, and I'm even a bean counter personality and someone who loves spreadsheets and crunching numbers.

 

[crisi]

So there are two types of people for whom budgets aren't really necessary or helpful

1. The person who is living pretty much hand to mouth. If you are going to end up barely making it each month without any emergencies, budgeting is actually not very helpful. There isn't money to move around, one unanticipated expense is going to take you back three steps, and budgeting can actually end up being psychologically counterproductive and a waste of time and energy (which you don't have a lot of when you are working hand to mouth). There are too many things you can't control - the price of gas or eggs, getting fewer hours at your minimum wage job than you expected. This is really counterintuitive to people who have enough - not more than enough - but enough - where budgets are helpful and work who tend to judge the working poor as simply bad money managers - but you can't manage yourself out of "not enough money to live on."

2. The person who is in the opposite situation - their income - along with their spending habits - means they don't need a budget. At the end of every month, they usually have more than they started with. Again, budgets are a waste of time and energy.

And yes, if people are being irresponsible and going into bankruptcy, it affects you. Just like people who are overweight impact my skinny person's health care costs. Or people who have a large carbon footprint impact my children's future. So unless you are living a zero footprint life where your bad decisions aren't affecting me, you are living in a glass house. But if someone is just constantly complaining the you get to go to Disney World and they can't because they choose to spend their money elsewhere, then that is not your problem nor really your place to judge. Yes, they are trying to make it your problem and make it your place to judge - but don't take that burden. Smile and nod.

I currently have a friend who is "bad with money" and trying to get me involved in helping him out because I am "good with money." But I'm not touching it with a ten foot pole. Nothing in our 30 year friendship has indicated he will listen or actually make a change - and I don't need the emotional investment in his financial issues. I know enough to know that if exposed in detail, I will judge - and he will have invited me to judge. And any advice I give him will be rewarded with an excuse on why it isn't possible.

(And never LOAN money to friends or relatives....if you can't afford to give it and not resent it when it doesn't come back (financially AND emotionally) - don't do it. If you tell them its a loan and they actually pay it back, look at that as a gift.)

 

[tzolkin]

2. The person who is in the opposite situation - their income - along with their spending habits - means they don't need a budget. At the end of every month, they usually have more than they started with. Again, budgets are a waste of time and energy.

Perhaps we have different definitions of “budget” but to me this person absolutely needs a budget. There’s no way it would be a waste of time in this scenario because the minimal effort involved would have a huge financial impact.

There’s a tendency for people who have more to spend more just because they can without worry. Having a budget would help curb unnecessary spending and provide a plan for how to allocate the extra money that is left over each month.

 

[barkley]

So there are two types of people for whom budgets aren't really necessary or helpful

i cant say that i agree with this b/c i think having a budget works in both situations.

1. The person who is living pretty much hand to mouth. If you are going to end up barely making it each month without any emergencies, budgeting is actually not very helpful. There isn't money to move around, one unanticipated expense is going to take you back three steps, and budgeting can actually end up being psychologically counterproductive and a waste of time and energy (which you don't have a lot of when you are working hand to mouth). There are too many things you can't control - the price of gas or eggs, getting fewer hours at your minimum wage job than you expected. This is really counterintuitive to people who have enough - not more than enough - but enough - where budgets are helpful and work who tend to judge the working poor as simply bad money managers - but you can't manage yourself out of "not enough money to live on."

dd makes minimum and every penny of her earnings are earmarked through a budget. no, at this point in time she doesn't make enough to put money aside for emergencies and she doesn't have any wiggle room but it doesn't mean she should bury her head in the sand and not watch her spending. she has a set amount budgeted for 'household' so food, cleaning products, toiletries, gas, clothing, med/scrip co-pays, entertainment...everything other than rent/utilities (heat/water/phone/internet only) and car insurance comes from that. if gas prices go up her budget keeps her on track w/how much she's got in the 'household' so she cuts back on the other areas within that budget item (no redbox rental this week for example), if eggs go up in price then she looks at her budget and decides if gas prices have been low enough to justify buying eggs or she must forgo or opt for another lower priced food option.

it's not easy, it is stressful but it's less stressful than constantly running at a deficit and turning to credit cards and getting into the cycle of beating herself up b/c she feels like she'll never be able to dig herself out of debt so 'why try?' she has co-workers and peers in the same financial boat who repeatedly turn down overtime opportunities b/c 'why bother, it's just a drop in the bucket of my debt/it's only an extra $50 or so on my check'-well that extra $50 is about 40% of dd's weekly household budget so it CAN make a big difference if it's budgeted wisely.

2. The person who is in the opposite situation - their income - along with their spending habits - means they don't need a budget. At the end of every month, they usually have more than they started with. Again, budgets are a waste of time and energy.

i'm one of these people and the only reason i am is because i started on a budget back when i was a minimum wage worker. tried and failed, recommitted w/ more trials and errors along the way to learn that even a few dollars a month extra thrown at the credit cards pays them off faster when we had those few extra dollars, and when we didn't and were running at a deficit (unpaid medical leave/long term job losses) what our exact basic expenses were in every area of our finances so we could make drastic cuts and slashes. the same few dollars principle worked with our mortgage lowering it tremendously over time enabling us to pay it off over 2 decades early which is the only reason i'm in this category now. i'm still on a budget b/c it keeps me on track. some expenses go down as you age up but many go up. i have to keep a sharper eye on my budget now b/c i'm not in a situation where i have control over increasing my income but i can control how i spend it.


just my opinion.

 

[_19disnA]

Perhaps we have different definitions of “budget” but to me this person absolutely needs a budget.

I agree. Looking at the long-term, how long do they plan to work before retiring, when do they expect to start collecting Social Security, do they plan to seek any other work after retiring, will you have a company paid pension and/or 401k? Additionally, you need to evaluate if your are saving/investing enough for the future when you eventually retire. Even if both husband/wife work, how secure are their jobs? Companies can get bought out by another company or there might be cutbacks and consolidations, which can impact job security. Medical costs will likely increase as you age. What if an unexpected medical issue prevents them from continuing to work? All of these are reasons to have a budget, regardless of your current income.

 

[crisi]

Perhaps we have different definitions of “budget” but to me this person absolutely needs a budget. There’s no way it would be a waste of time in this scenario because the minimal effort involved would have a huge financial impact.

There’s a tendency for people who have more to spend more just because they can without worry. Having a budget would help curb unnecessary spending and provide a plan for how to allocate the extra money that is left over each month.

I'm in that situation and I am worth a few million dollars which I have saved being a working stiff for my whole life - I really don't need to waste the time coming up with a budget and it wouldn't have any sort of material financial impact at all - and it would create additional stress in my life and on my marriage. So, from my own personal experience - you are wrong, no absolute about it.

(A budget is a list of what is planned to come in and what is planned to go out every month categorized)

BTW, I started at the other end - a budget did no good because rent was X (utilities included except phone), the bus pass for the month was Y, the phone was $15 a month (I remember that) and groceries were ramen and the off brand mac and cheese made with water and not milk and pasta and potatoes, and there wasn't any money to budget. I didn't have an entertainment budget - it meant I wouldn't eat. And I just didn't buy clothes for the year plus I lived like that.

But a budget was helpful - although not necessary - in the middle. Being naturally frugal and having come from a place where rice and beans made a complete meal, I would have saved plenty without a budget. Once I married and combined finances with my husband, a budget would have sunk us - he isn't a budget guy and would have rebelled at the constraints - budgets are like diets for some people - sometimes you spend more because you feel restricted. My husband is one of those. Since our combined income was always sufficient for our needs - we did fine as a couple with me handling the finances and him getting an allowance for the first few years until he had a good spending baseline to work from for his discretionaries.

 

[crisi]

I agree. Looking at the long-term, how long do they plan to work before retiring, when do they expect to start collecting Social Security, do they plan to seek any other work after retiring, will you have a company paid pension and/or 401k? Additionally, you need to evaluate if your are saving/investing enough for the future when you eventually retire. Even if both husband/wife work, how secure are their jobs? Companies can get bought out by another company or there might be cutbacks and consolidations, which can impact job security. Medical costs will likely increase as you age. What if an unexpected medical issue prevents them from continuing to work? All of these are reasons to have a budget, regardless of your current income.

Semi retired in my 40s - I'm 52 now. I can live off my investment income. I already had unexpected medical issues preventing me from working - fortunately, I was already basically financially independent by then. My husband still works because he is in a job he loves and wants to spend more money than our investments would permit hm to spend.

 

[barkley]

Perhaps we have different definitions of “budget”

(A budget is a list of what is planned to come in and what is planned to go out every month categorized)

i think this demonstrates tzolkin's point-different people have different definitions of budgets.

in my case the month to month aspect of budgeting is just a small piece of a larger financial plan. i have various expenses that are quarterly, biannual, annual and in some cases only every few years/once or twice in a decade. on the other hand i have investments that greatly benefit from remaining at a monthly and yearly fixed contribution rate such that if i were not to plan ahead and earmark monies for the expenses and then in order to pay them forgo contributions (or worse to my way of thinking-pull from the principal of income generating investments/savings) i would be literally throwing money away.

my minimum wage dd-she operates on a monthly/yearly/3 year budget.


we don't find it stressful because we control it, it doesn't control us.

 

[tzolkin]

I'm in that situation and I am worth a few million dollars which I have saved being a working stiff for my whole life - I really don't need to waste the time coming up with a budget and it wouldn't have any sort of material financial impact at all - and it would create additional stress in my life and on my marriage. So, from my own personal experience - you are wrong, no absolute about it.

(A budget is a list of what is planned to come in and what is planned to go out every month categorized)

BTW, I started at the other end - a budget did no good because rent was X (utilities included except phone), the bus pass for the month was Y, the phone was $15 a month (I remember that) and groceries were ramen and the off brand mac and cheese made with water and not milk and pasta and potatoes, and there wasn't any money to budget. I didn't have an entertainment budget - it meant I wouldn't eat. And I just didn't buy clothes for the year plus I lived like that.

But a budget was helpful - although not necessary - in the middle. Being naturally frugal and having come from a place where rice and beans made a complete meal, I would have saved plenty without a budget. Once I married and combined finances with my husband, a budget would have sunk us - he isn't a budget guy and would have rebelled at the constraints - budgets are like diets for some people - sometimes you spend more because you feel restricted. My husband is one of those. Since our combined income was always sufficient for our needs - we did fine as a couple with me handling the finances and him getting an allowance for the first few years until he had a good spending baseline to work from for his discretionaries.

The #2 type you mentioned in your previous post was “At the end of every month they usually have more than they started with.” That seems like a different category than “financially independent with several million dollars saved”.

And, yes, we definitely have different definitions of “budget”. I think of it more along the lines of a financial plan, but you’re referring to it as something ”constraining” and like going on a diet. While that can be what a budget is for some, to me that doesn’t encompass the entirety.

I think everyone, especially those who have extra money left over each month, would benefit from having financial goals and a strategic plan for achieving them.

I really can’t see how having a plan would have absolutely no financial impact at all. Planning how much you will save and how to allocate those dollars in your investments will certainly impact how your money grows over time. Calculating the withdrawal of your money (how much, when, etc.) will determine how long your money will last in retirement and what type of lifestyle is sustainable with your current or projected savings.

 

[_19disnA]

^^ I agree. Apparently some define budgeting as 'penny pinching'. But having a financial plan is also a type of budget.

 

[Mackenzie Click-Mickelson]

I would agree that there are differences in what people define and utilize said budget.

For some a budget may simply entail future savings such as retirement funds or college savings, etc, for others it may entail specific numbers spent towards xyz, for others it may entail not spending what they don't feel comfortable spending on xyz.

For us there's a difference in having and allotting funds towards utilties, life insurance policies, cell phone bills, student loans, streaming services, cable and internet, retirement savings, mortgage, etc and saying "this month we only want to spend $X on groceries". Honestly a lot of our purchases are just a "I don't really want to spend $X on that".

I think the most helpful to my husband and I was going over how much each of our bills and then joint bills amounted to. If you're finding that you've got a lot of known, stable expenditures each month that would certaintly help out knowing if you truly have the additional funds to put towards that new tv or whatever. It can also help knowing if some things are worth getting rid of to free up money to re-allocate that money elsewhere. For instance my husband and I each had a Netflix account, somewhere along the line Netflix added the option to have 2 accounts under 1 for the same price as 1 account. So I cancelled my streaming portion of Netflix (while keeping the DVD..yeah I'm one of those people still) and just added myself onto my husband's. My bill was cut in half while his stayed the same. Even though it was only like $9-$10 saved per month (at that point after multiple price increases) it was something we could do that had no true negative impact to us.