Please tell me about your method of budgeting

[NY Pirate Princess]

OP update!

I am not going with YNAB for now. I am starting simple and at the very bottom. This month I am tracking every single penny that I spend. I have done it the other way, setting up categories for different types of expenses, and it just doesn't work for me. I get to the store and I buy stuff. I get a fundraiser from school and I participate. I can't decide if Scholastic Book Orders should be in my School Fundraiser category or my child's entertainment budget or my "blow" fund. Therefore, without trying to curb or change my spending at all, I am just tracking. At the end of January I will gasp in horror at where I've spent my money and start to develop categories that work for me and assign monthly limits with my old budget notebook.

I've negotiated down what fixed expenses I can. I divide all the fixed annual expenses into 26 and stash the required money away for when the bills come. For example our car insurance is due twice a year, so I divide the total by 26 and move that money into another account so the bill doesn't surprises me. We carry no debt other than a 15 year mortgage that I am making extra payments on monthly. I'm funding my 401k at 10% and funding a 529 for my daughter. I am starting to save for a replacement vehicle, as our cars are 8 and 11. I learned about money from my mom while I grew up, but honestly it was easier to budget when I was dirt poor! No money, can't have it. Now I am fortunate to have a good job in a low cost of living area. I want to get tight control of my finances so that I enjoy everything I purchase. I don't want to come across another book, art project, cooking utensil, or shirt still in the bag and say "Oh, right. I bought that and wanted to try it."

Thank you everyone for your responses. I love this board!!!!

 

[Karenj2]

Another YNAB user! I found out about it through here, and started with it back when it was an excel spreadsheet! It's changed ALOT over the years - I downloaded the newest "cloud" version although I LOVED the YNAB4, mostly because I love that you can add financial goals to the categories, and it suggests how much you'd need to budget each month to reach that goal (great for me when I have a Christmas category, but don't faithfully put money into it). I'm still testing the new version out, but so far I LOVE it!

 

[BSwest]

I love mint! I have heard good things about YNAB but I cant use the software at work and personal capital can't upload the information from credit union properly.

 

[damskipi13]

I am starting simple and at the very bottom. This month I am tracking every single penny that I spend....I can't decide if Scholastic Book Orders should be in my School Fundraiser category or my child's entertainment budget or my "blow" fund.

OP, when I first saw this board I started a veryyyyy long post about what I do and when I saw everybody leaning towards YNAB I decided not to post it, but what I do is Excel based and started similarly to what you are planning to do. If you'd like I can still explain it, but I warn you I tend to get long winded so you get every detail

Anyway, something I've developed over the years that may help you now is that I have some "firm" categories where I know exactly what I am paying for out of that money (like recurring bills) and I have flexible categories. The flexible categories don't have firm rules about what expenses to pay for from them, instead I just decide which category to apply the expense to based on the situation at that moment. So for instance, if you buy the Scholastic books in March and you haven't had a fundraiser in a few months, maybe you take the money from there. If you have been on vacation for two weeks and haven't spent entertainment money during that time (because it was vacation money) then maybe you take it from the entertainment money.

It might make more sense if I explain a very common way this occurs in my budget. In December, for instance, I go out to eat a lot and don't need as many groceries. So once I have depleted my "going out" money, restaurant bills can be subtracted from the "groceries" category. It's all food, right? And I have a "books" category (I read a lot) but if that's depleted my next paperback might go against my "entertainment" category. Make sense? Hope that helps with your process!

 

[MomToOne]

I am not going with YNAB for now. I am starting simple and at the very bottom. This month I am tracking every single penny that I spend. I have done it the other way, setting up categories for different types of expenses, and it just doesn't work for me. I get to the store and I buy stuff. I get a fundraiser from school and I participate. I can't decide if Scholastic Book Orders should be in my School Fundraiser category or my child's entertainment budget or my "blow" fund. Therefore, without trying to curb or change my spending at all, I am just tracking. At the end of January I will gasp in horror at where I've spent my money and start to develop categories that work for me and assign monthly limits with my old budget notebook.

You might be trying to define too many categories. I found what works for me is to define categories for the easily identifiable things: each bill, gas, grocery shopping (I keep this to the big grocery store shopping trips, I don't try and track the random item grabbed at Target or wherever along with other items), etc. then I use just a couple of larger catch-all buckets like DD15 school expenses (in my case that covers school supplies, pictures, yearbook, bus passes, test fees, etc.) and medical/dental expenses. I also have a "miscellaneous" category where I basically give myself a weekly allowance that covers my Target-type runs for random stuff, eating out, entertainment, etc. 90% of my daily expense tracking goes into that misc. category - I personally don't get any value out of subdividing my spending more than that, it makes it quick to record my spending, and the weekly allowance number keeps my spending in check - once it's gone, it's gone and I have to stop shopping for the week!

In total, I have less than 20 categories for expenses.