Why do you budget?

[blanq]

We have quite a bit of discretionary income, so have not felt the need to budget to the penny. Our mortgage is our only debt. We have good retirement savings and emergency savings plans. That said, every once in awhile we make a decision "go on a strict budget". In fact, beginning 9/1 we are beginning a one year budget with a goal to save a large sum of money during that period. We have our sights set on a three week vacation to Hawaii next summer, a good down payment on a new vehicle, and some landscaping work. It is going to take some discpline to get there, so budget here we come!

 

[Silent1CB]

We budget because every successful business, organization, group or family follows a budget. Not knowing how much money you make and where it is spent is just setting yourself up for failure. Eventually.

Its how I was taught. DH, not so much. You can see the differences in our families, how they live, and what they have, who they owe and the stress they have over money.

Budgeting is a calmer way of life. I like calm.

 

[AmberHeartsDisney]

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.

I budget because i am doing the Davy Ramsey plan, and i want to live like no one else, so later on i can live like no one else (that's his moto kinda)

I budget and save because things happen and i want to have $$ for the future. I'm 24 and i really cant rely on Social Security for any kind of income when i get to retirement age. Now I'm not saying save it all, i like to have fun too

 

[minnie1928]

We budget because every successful business, organization, group or family follows a budget. Not knowing how much money you make and where it is spent is just setting yourself up for failure. Eventually.

This reminds me of a saying my DH says "Failure to plan is the same as planning to fail".

We budget for several reasons:
1. I'm an accountant and it seems the natural thing to do.
2. I grew up in a home where my parents did not plan/budget and they have nothing left for retirement.
3. I don't want the stress associated with unexpected bills.
4. I want to retire comfortably and not be a burden on my kids.

 

[crisi]

This reminds me of a saying my DH says "Failure to plan is the same as planning to fail".

We budget for several reasons:
1. I'm an accountant and it seems the natural thing to do.
2. I grew up in a home where my parents did not plan/budget and they have nothing left for retirement.
3. I don't want the stress associated with unexpected bills.
4. I want to retire comfortably and not be a burden on my kids.

I like the Eisenhower quote "plans are useless, but planning is essential."

Planning on what you will (and won't) do, buy, save and earn is important. But just as important is recognizing that you need the flexibility to move from those plans. Sometimes you lose your job, or get a raise, or find an incredible sale on spaghetti sauce, or get ill, or need to take in your nephew, or inherit money unexpectedly. You can't plan for everything, and you need room in your plans to react.

 

[charming23]

When I was really young I thought we were "millionaires" because we could afford the everyday basics and then some. We have a nice house, we were always well fed, bills we paid on time, we took a family vacation once a year and I took dance classes each school year. As I got older I realized how much of a struggle it was and why we did not have much in savings.

Now that I am older and can see what not budgeting does to a family, like when my mom lost her job and we had to go live penny by penny, I realized that I did not want to make those misktakes.

Now at 24 I budget our families income as well as my own personal, which now a days since my dad passed is one account that we use to pay for everything.

To me making a budget is planning for the future. I want the security to now that when I am ready to "leave the nest" I will have aenough in savings to do so and that my mother will be well taken care of after I do.

 

[Kickapoo Joie Juice]

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.

I think some people are "natural budgeters", like Crisi, who can "see" what the money balance is flowing in and out without having to track it and write it down. If I don't track and write down my spending, I literally have no idea how much I've spent.

You can't beat me in trivial pursuit because I can remember the name of a dangerous IUD made in the 80's (when I was a little kid), but I can't remember how much I blew on the curtains at JC Penney's last week unless I write it down somewhere. I swear it's either a mental defect with me or a subconscious desire NOT to remember how much I spent, only to enjoy what I bought.

So, I track it like a maniac, and it keeps my DH happy and us debt free except the house. I recognize that my, uh, "tendencies" can be destructive to us as a family, so I am disciplined about them.

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.

We did something very similar last October; we plundered our savings and put it into this house. Not owned free and clear, but comfortable. It's still a terrifying prospect having that much of your money tied up in property that could, potentially, continue to devalue. But what we're hoping is in ten years we will be able to sell it at a 5%/year profit and have that money to contribute to the DDs' college fund (we'd buy a smaller house, owie with the capital gains tax, though).

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.

I think you're a natural at saving...

We budget because every successful business, organization, group or family follows a budget. Not knowing how much money you make and where it is spent is just setting yourself up for failure. Eventually.

Its how I was taught. DH, not so much. You can see the differences in our families, how they live, and what they have, who they owe and the stress they have over money.

Budgeting is a calmer way of life. I like calm.

Yeah, I agree. I was raised to be very excited about Wednesdays because that's the day my dad was paid, and that's the day we could go and get groceries. As an adult, I don't want that lifestyle or that lifestyle for my kids.

 

[Colleen27]

We did something very similar last October; we plundered our savings and put it into this house. Not owned free and clear, but comfortable. It's still a terrifying prospect having that much of your money tied up in property that could, potentially, continue to devalue. But what we're hoping is in ten years we will be able to sell it at a 5%/year profit and have that money to contribute to the DDs' college fund (we'd buy a smaller house, owie with the capital gains tax, though).

It is scary in a way. I try not to think about the value of the house in the day-to-day or year-or-year sense right now, because it really doesn't matter. We plan to stay here until our 1yo graduates from high school, so there's plenty of time for the real estate market to rebound before we're thinking about selling, and that's a lot of mortgage-free years to save and enjoy in the meantime. And it is a wonderful sense of freedom, to know that we don't owe anyone anything and that we can get by on very, very little should the need arise. Given the job market here in Michigan, that peace of mind really is priceless.

 

[hsmamato2]

because we don't have an unlimited flow of money,therefore we have a limited amount we can spend!
Just simple logic,we make a certain amount,so we need to know how much that is. Take credit out of the equation- and there you have it- we spend what we have. Or usually,less. Because when things happen,and they do happen, we have to have something for lifes small emergencies.
Plus, if we save money in some areas of life,it gives us the freedom to spend it in others that give us real enjoyment,like,say,trips to Disney!

 

[crisi]

I think some people are "natural budgeters", like Crisi, who can "see" what the money balance is flowing in and out without having to track it and write it down. If I don't track and write down my spending, I literally have no idea how much I've spent.

I couldn't do it on a tight budget. Everyone has an amount of money that they don't worry about - for some people, they should be worrying about $.75 in the candy machine. When you are at that point, you'd have to be a genius to be able to track money flowing in and out without writing it down. For us, we are fortunate that we don't have to worry about $50 or $100 here or there (can't do it every day) and so the benefits of budgeting the "small expenses" isn't worth the hassle. And the large expenses are infrequent enough that I can keep it in my head.

I'm also naturally cheap, my mother cuts my hair, I buy my shoes at Marshalls, my clothes are almost never bought full price, I drive a modest car, I grocery shop sales - I keep my husband on more of a budget, because without one, he'll spent $2000 at Nordstrom on shoes and clothes.

 

[LuvOrlando]

I budget because I don't like the unsettling feeling of not knowing where I stand. I created my own spreadsheet for all bills and household expenses and the files go back to 1993 so I can see exactly what went where as far back as I had money. I got my household system from my MIL who ran a home with it for 40 years.

After I pay or bills I divide what is left between the number of weeks until our next paycheck, usually it's 4 full weeks starting every Friday with a small allowance for the final partial 5th week. From my MIL, I have 2 accordion style letter size envelopes. The cash to run my house day to day goes in there. I have weekly partitions for:
Food
Family (spending money)
Gas
DH work/lunch
In the back I have extra spots titled:
Gifts, savings, miscellaneous for stuff I know will come up during the month.


It works and I always give my MIL credit for it

 

[mikehn]

I dont 'budget' per se but I do use Microsoft Money to manage and track our family's entire financial activities. There is a dashboard that gives me a snapshot of our current financial position, all the cash I have on hand versus all our spending. I can pull this up on any given day and see whether or not I'll have the resources for a family vacation or any other big ticket item.

 

[Soben]

I budget to keep my DH and I involved in the decision-making together. Otherwise, it's all me for good and bad.

Financially secure means that the interest/dividends on my money is equal to or greater than my monthly expenses. It seems almost impossible to get there, but maybe someday.

 

[crisi]

Financially secure means that the interest/dividends on my money is equal to or greater than my monthly expenses. It seems almost impossible to get there, but maybe someday.

I figure that is "financially independent." Financially secure happens before that.

 

[eyor44]

I save and am careful with what I spend and buy because one time I tried not to for a few months and it was a disaster. Plus I remember what it is like to be poor. I will never stop being careful with my money.

 

[MScott1851]

OP, don't feel bad.

We don't 'budget' either. We have an idea of what our bills are, and we know about how much we have coming in, and we have different 'comfort levels' on expenditures.

We have separate checking and separate savings accounts, plus a joint savings account for our daughter, and we split bills. Both of us are financially responsible, have no debt, and it works for us.

I've never actually sat down and thought, "Okay, I only have $800 to spend on groceries this month," or "If we go out to eat this weekend, then I'll have to give something up this week." We save first, then spend what we need, then what's left over adds to the 'cushion.'

 

[FoundMyPrince]

We budget because we want to be good stewards of our money.

 

[metime]

OP, don't feel bad.

We don't 'budget' either. We have an idea of what our bills are, and we know about how much we have coming in, and we have different 'comfort levels' on expenditures.

We have separate checking and separate savings accounts, plus a joint savings account for our daughter, and we split bills. Both of us are financially responsible, have no debt, and it works for us.

I've never actually sat down and thought, "Okay, I only have $800 to spend on groceries this month," or "If we go out to eat this weekend, then I'll have to give something up this week." We save first, then spend what we need, then what's left over adds to the 'cushion.'

I don't feel bad I was just curious as to what others think of budgetting.

I am just fascinated by the responses and enjoy reading them. Thank you to everyone who has responded.

I don't feel bad for budgetting or saving, it has served my family well. I just get a little confused by some of the posts in the BB and this thread is helping me to see all the differnet perspectives.

I think our idea of a cushion is much different than everyone elses which often makes me feel like the odd man out when people talk about spending and saving.

Dh and I worked hard stuffing those cushions and both of our names are on every single one.

 

[HLDisney]

Well, I don't exactly budget but I do have a spreadsheet where I keep track of my monthly expenses. I'm fortunate enough that at this point in my life, I have a decent salary and can afford to save some money each month and buy more than just the basics for my DD and I. However, if I don't keep an eye on my expenditures, I tend to overspend on trivial and unnecessary things. So I keep a budget and keep track of my spending. It's easy to buy one little unnecessary thing here or there but when I look back on the month and realize I spent $78 on books for my DD and I, I'm reminded to be more careful with my spending. Or if I'm thinking of buying a pair of pants for my DD on sale online, I can check my spreadsheet and realize I bought 2 pairs of pants for my DD earlier in the month so I should pass on this pair, no matter how much of a bargain it is. Or if I've already eaten out several times in the month, then I know I should go home and cook instead of eating out again.

So I don't know if I'll ever really stop tracking my expenses.....

Helen

 

[PollyannaMom]

Why do I budget?

Simply put, to avoid worrying. - If I don't spend too much now, I won't have to panic when things come up.

I'm really not a strict to-the-penny budgeter, but I definitely believe in not over-extending. (For instance, having a lower mortage than we could have qualified for.)

And DH and I have always kind of categorized things as needs, comforts, and luxuries. - Comforts being those specific "luxuries" (like Disney) that are worth it to us.