Why do you budget?

[metime]

We have always been careful with our money.

We started with nothing and have experienced a lot of things that would be financially devastaing to most families but we are fine because we are always spending less and saving more.

I am getting the impression that most people think budgetting is something for people who are severely in debt or living paycheck to paycheck.

I am wondering why you budget? When do you plan to stop? Are you waiting to pay something off, saving for a big item, or are you like me and just do it because there is no reason to spend more than you must?

Also what is your idea of financially secure? Is it having 6 months of savings, a 401K , a paid off house, or winning the lottery?

I am looking forward to the responses.

 

[minnie_michelle]

We budget so that we do not buy things that we do not absolutely need. I have a very extensive budget sheet that even shows are debt paydown schedule, savings accounts with interest, future plans etc.

The whole reason we got into debt was because we weren't keeping track of what we were putting on the credit card. Our budget sheet allows us to still use the credit card and get the benefits from that, but stops us from spending more than what's in the account.

It has helped us immensely and I can see us using the budget sheet even if we get better jobs and start living very comfortably.

 

[AntePrincess]

I am wondering why you budget? When do you plan to stop? Are you waiting to pay something off, saving for a big item, or are you like me and just do it because there is no reason to spend more than you must?

Well, we budget for every possible reason: savings, a house, a wedding, schooling for our children, health savings account, investments, a cabin in Maine, retirement...

I can't imagine there will ever be a time when we won't be living on a budget.

Also what is your idea of financially secure? Is it having 6 months of savings, a 401K , a paid off house, or winning the lottery?

We have managed to sock away a solid six months of earnings into savings. Our next goal is to have a year's worth of what it costs to keep our household running, in the bank. I don't think of either as financially secure. I guess I don't think there is such a thing as financial security, life is uncertain, but I'd say it would be having enough to live on for at least a year, a paid off house, a fat retirement account (whether a 401k or something else), and no foreseeable needs on the horizon unpaid for.

Since you're always spending something, you must either bring money in or you're losing money.

 

[Janice B]

We have been married for 19 years and have had a budget since then. The main reason we budget is so we know when our bills are due an how much I need to keep in our chequing account to cover those expenses. We only keep what we have to in our cheqing account and the rest goes into savings. We keep a yearly budget going and in June I start the following years using this years as an example of what my bills cost and then I increase it by around 5%.
For us Finacially secure is having enough money to pay all of our bills and if something comes up not having to worry how we are going to pay for it. We do save for retirement. Have about 3 months in an emergency account and have 4 years left on our mortgage.

 

[SeansMom]

Security, maybe? As a root issue, that is. I've always saved a certain amount of money, even as a kid. It's served me well. My sister says I can make a penny spend like a dollar. I dunno, but if I want something, I've learned to save for it. So, now I budget for several things: Vacation, college, unexpected expenses, home repairs (chimney is next), etc.
I've never had credit card debt (my Dad taught me about money) and we were blessed with circumstances that had DH and I in a house by ages 25 and 27.

We have six months of saving. However, when my unemployment runs out that may be an issue. We'll see. I've always thought my angels and the universe have kept me provided for, whether it was food, rent, or a new pair of shoes. (But I budget just in case!)

When will I stop budgeting: That's a good question and brings me hope that there will be a day when I don't have to budget!

 

[BridgetBordeaux]

We "budget" so when an unusual expense comes up (broken car, new roof, doctor bill) the stress of the surprise crisis is not made worse by having to scrounge to find the funds to pay the bill.

We live beneath our means. Our house, cars etc are a step or two below what the banks said we qualified for.

Our monthly cushion allows for those ugly surprises and as well as vacations.

If we anticipate a large expense on the horizon, we try to set aside money in advance to pay the bill.

This allows us a lower level of stress.

 

[aka-mad4themouse]

I think budgets are like diets. The successful ones change with your situation and they last your entire life.

We've always had a budget from the time we got married 24 years ago. I don't see us ever NOT having a budget. We've lived with one for so long that it's second nature. There's security in knowing that we have our bases covered. I'm a worrier by nature and having our finances under control gives me a major sense of relief.

I think the term "financially secure" is nebulous. So many people equate the phrase with independent wealth. I prefer to think of it as having a plan for your money.

 

[Jennifer in MI]

I feel so blessed. My dh makes a good income. Much more than we actually need to survive. And, yes, I am VERY grateful for it!!!

We have a budget and always will. We budget for every single penny we spend. Not to say we don't occasionally splurge. But for the most part, we are very careful how we spend money. I use coupons whenever I can. I shop weekly at CVS and Rite Aid to get most of those items for free. We find if we're careful, we can travel more!!! And, we love to travel!

Financially secure? Well, we have at least 6 months of living expenses in the bank right now. We're saving for retirement and should be comfortable provided dh's pension doesn't go under! So, I think I should be financially secure. But, I'm not blind to everything that's going on around me. People are losing their jobs left and right here in the Detroit area. I know it could be us next. So, for the time being, we'll continue to be very careful with what we spend!!

 

[secretpantssam]

I budget because it makes me feel comfortable to have money set aside. I never like feeling like if something were to go wrong I would have no way to pay for it. But I have always been like that. One of my monthly 'expenses' is a certain amount going to savings.

I also really like getting deals on stuff, it's something I'm proud of. So I may be a bit of a budget nerd!

 

[Karenj2]

It's funny - we budget so that we don't waste our hard earned money on nickel and dime stuff we don't need, AND to "give us permission" to buy the big-ticket items we want on occasion (like our Disney trips, and new furniture eventually, etc.).

About 5 years ago we made close to $200k a year, and yet we didn't have any money to show for it... Now we make much less than that, yet we have more saved up and can actually do/buy what we want, 'cause we've saved for it.

 

[DawnM]

Darn.....the budget I have been sucessful with....the diet, I have not!

Dawn

I think budgets are like diets. The successful ones change with your situation and they last your entire life.

We've always had a budget from the time we got married 24 years ago. I don't see us ever NOT having a budget. We've lived with one for so long that it's second nature. There's security in knowing that we have our bases covered. I'm a worrier by nature and having our finances under control gives me a major sense of relief.

I think the term "financially secure" is nebulous. So many people equate the phrase with independent wealth. I prefer to think of it as having a plan for your money.

 

[DawnM]

I budget so that when we fall on hard times as many of our friends have done, we have at least a year's savings in the bank to cover it.

Then there is college for the kids, trips to Disney, paying off the house (we have now paid off everything else! ), saving for retirement, and on and on it goes.

Dawn

 

[dreamin_disney]

I budget because i want to get out of debt. A few years back it was paycheck to paycheck plus credit cards. Our cards were basically almost maxout. Dh works full time and i work partime. Now I see things differently and i'm tried of debt. I'm ready to live life. I want to payoff all cards, save money for emergencies, dd college fund and reward ourself with vacation once a year. Those vacation memories will last forever....junk spending will not. I'm also ready for another child. Our dd is going to be 11 and dh and I are close to 40. We are finacially better now compare to when we had dd.

I'm just ready to enjoy life

ps just trade in his cluncker for cash but to me thats good spending things that will benefit us in the future. His truck didnt have air and about to die soon. Now if we have another child or he needs to have dd in his car its reliable and has air ,living in ca air is important

 

[Colleen27]

I am wondering why you budget? When do you plan to stop? Are you waiting to pay something off, saving for a big item, or are you like me and just do it because there is no reason to spend more than you must?

Also what is your idea of financially secure? Is it having 6 months of savings, a 401K , a paid off house, or winning the lottery?

We budget for peace of mind, pure and simple. When DH started his own business, we both committed to looking at every way possible to reduce our must-pays so that he wouldn't have to go back to the long hours that came with working for someone else. Over the years, it sort of fell into place with other ideas we had about what we wanted from our lifestyle - budget dovetails with becoming more environmentally responsible, which meshes perfectly with my growing focus on decluttering/accumulating less stuff.

We took the big step this year - we spent most of our flexible savings (not the emergency, college or retirement savings, but the money we'd socked away for vacations and a new van) on buying a larger home free & clear while the market is weak. It isn't my total definition of financially secure, but a paid off house is a measure of security that I seriously underestimated until we achieved it. I'm not really sure where I'd set the bar for truly financially secure - I know that I won't feel we've reached it until the retirement account looks a little fatter, the college cushion a little more comfortable, and the discretionary fund restored to something resembling its pre-house-purchase state, but I do feel like we're on the right path and have a good start on our way to financial security.

 

[hoosiergirl7]

Will we ever stop budgeting - no. It helps us keep track of every penny we spend and prevents us from making stupid and unnecessary purchases. We bought a 46 inch flat-screen HDTV that we budgeted for and I still feel guilty for buying it. We really needed a new TV but still it was a lot of money.

We were young and stupid once spending left and right and racking up huge amounts of debt in our 20's. However now that I'm in my mid 30's and DH is in his early 40's, we got rid of every cent of debt we had almost 3 yrs ago and never regret it. If anything we kick ourselves for being young and stupid because we'd have one heck of a nest egg had we saved instead.

Budgeting and paying off all our debts (except the mortgage) are the best things that happened to us next to our kids. I love the fact that I don't have to worry about money because I've saved it. I just hope more people realize there's more to life than being materialistic and having expensive things.

 

[eyeheartgoofy]

We initially started budgeting (13 years ago as newlyweds) b/c I was having a hard time keeping track of all of our payments. We had 5 or 6 debt payments with different due dates and most of them were those little coupon books. That first budget was pretty basic - we needed "x" on "x" date, so we set that aside to make sure we could pay the debts and the rent. We didn't really specify that we had "X" for clothing, entertainment, etc.

A couple of years later, I saw Dave Ramsey on the Gayle King show. That lit a fire and we really started budgeting in order to get rid of all those darn payment booklets (studen loans, mainly).

Now, I see the fruits of our labor and don't want to stop with the budget. Over the years, we've been able to swap the monthly coupon book payments for monthly automatic investments. It's nice to have a solid financial footing and a plan for the future.

 

[All American]

Growing up, my parents taught me two things:

1. Money is a stewardship. No matter how little or much you have, you have a responsibility to take good care of it for the sake of yourself and your family.

2. "A rich man lives within his means." My dad ALWAYS said this to us, and it has stuck.

That's why we budget.

 

[crisi]

I actually don't budget. I watch my money, I don't pay more for things than I need to and I don't buy everything I want - or even most things I want. But we don't budget - as in "$200 a week for groceries." I know what I have from day to day, what expenses I anticipate. And since our income is greater than our lifestyle, I still manage to save enough to keep me comfortable.

Right now, we are saving for the kid's college and our retirement. Our house is paid off and there is no debt. I'll also need another car in the next year or so. We have, ignoring the kids 529s (which we could pull out if we needed to) about a year worth of 'reduced' living expenses (i.e. no vacations, cut cable, limit dining out) in the bank - but its malliable money - i.e. when I buy a car then that will get cut down, but not below six months unless we are both unemployed.

I think you are financially stable when you reach a point where - barring an exceptional situation - an acceptable reduced standard of living can be maintained until you can reasonably expect to regain your income without relying on credit - and where you are not paying for yesterday (i.e. no consumer debt - but you can call yourself stable when you have a mortgage or student loans, that's paying for tomorrow - and - in some cases a car loan is appropriate). Acceptable is going to vary from person to person. Some people can get out of an expensive month by month lease and move in with Mom and Dad very quickly - and find that acceptable. Also, how long its going to take to regain your former income varies a lot from person to person - an RN may never be out of work for longer than a few months - someone who is a Marketing VP might want to plan on being out of work for a year.

 

[dvcgirl]

I budget so that we can meet all of our financial goals. Simple as that. I can't imagine living without a budget and financial plan.

We, like 80% of Americans, have no pension and so whatever we're able to save in our 401Ks and taxable accounts is all that we will have to live on when we retire. While I do think Social Security will exist in some form when we retire, I do believe it will be very different from what we see today (and what we've been promised). As a result, we don't factor it in at all in our retirement planning.

Each January we sit down for our "annual budget meeting". We set our savings goals first, then figure out our monthly bills (we have no debt at all, so this is just utilities, insurance, groceries, etc...). We take whatever is left and decide what kind of vacation, large purchase or big project we'd like to take on (or combination of those). The final amount is broken down into a monthly amount and that is our discretionary income/grocery spending for the year.

I only need to track our discretionary and grocery spending. I don't go crazy budgeting every last little item, like BDs, Christmas or oil changes. That all just comes out of discretionary spending. Since we'll spend about 800=$1,000 on Christmas, that just means that around October that I'll mention to my husband that I'm pulling a few hundred from discretionary spending each month for the rest of the year to cover that.

We keep a few grand extra in checking for any minor emergencies around the house and a year's worth of basic expenses in our regular emergency fund.

 

[bookgirl]

I went into debt during Grad school and was budgeting until I got a full time job and paid off my debt. I have paid off all my CC's and am finishing up my small student loans now.

I still wanted a certain amount of discretion to buy some stuff I really wanted while paying off everything so budgeting and having money envelopes helped me still save for extras while making steady progress on the debt.

I will probably always have a budget (I no longer use cash envelopes but I still have savings and emergency funds held seperate), I don't see budget as a only when you're broke kinda life style, I see budget as a philosophy to mangage your money no matter how much you have.