how do you figure your budget?

[jennnk]

I've never had a "budget," per se. When I was living with my best friend sophomore year of college, she had an excel spreadsheet that she used to keep track of expenses and exact amounts allotted to specific categories like clothing, entertainment, and toiletries. I've seen some budget threads here that are similar and I feel like I'm doing something wrong by not having that. Don't get me wrong, we know what we pay for certain things like rent, cell phone bills, student loan payments, etc., our income is enough to cover all the necessities, and all the bills get paid before we do "fun" stuff like eating lunch out or buying birthday presents, but we don't have categories for the leftover money. We don't have a "presents" category and a "car maintenance" category and a "clothing" category. We just take whatever's left after rent, bills, savings, and a bit of charitable giving, and spend as wisely as we can. We don't buy clothes unless we're replacing an item that's worn out and can't be repaired, for instance, and for that we shop clearance racks and thrift stores. We have 2 credit cards, both are store cards that were used for big-ticket items & have no interest for at least 12 months, so everything is essentially paid for with cash. Are we doing something wrong by doing it this way? We've never gone over what we bring in each month, and usually have something left at the end of the month (as evidenced by the checking account balance rising slowly), so is it bad to do it this way?

[BetsyS]

I think if it works for you, then it works.

I like categories. I like the neat lines and the rising balances, and not having to choose each month between getting the oil changed and a new sweater. I like to see, hey, there's $20 in the clothing category. If I wait, there will be more next month, and I can buy that sweater then. It is just how my brain works.

[normajean]

I think the first step is writing down every penny you spend for a couple of months so you get a good idea of what things are costing you. Then make a list of where you can cut back and subtract a resonable amount from categories where you are overspending. With that, you then create a budget for each area of what your goals are to spend each month.

I don't have a budget per se, but I do track expenses, and cut back. For instance, my goal right now is driving 10% less and using 10% less of everything consumable-cleaners, soaps, shampoo, toilet paper, etc. Eating less food would help my waistline too...

[mamamilkers]

Jen, I budget the same way you do. I just can't wrap my head around a million categories. I also feel like I have a good enough handle on our money that I always know what is there for what.

IMO, make it as simple as possible, but still workable.

[Toady]

Don't knock what is working.

[mumkenna&lucas]

I agree, if it's working then no need to change it!

[Benji'sMom]

edit because I just realized that you do have a savings. Just wanted to say that DH and I use catagories and the reason is that any leftover money would go into savings. Like if we budget $400 for food but only spend $200, the other $200 would get saved. For us, catagories are meant to help us put as much money as possible into savings. Our spending is strictly controlled but our savings is not, we save as much as possible.

We don't have a million catagories, though, not "clothes" and "presents" but we have a catch-all "allowance" catagory for buying clothes and presents.

[jennnk]

Originally Posted by Benji'sMom

edit because I just realized that you do have a savings. Just wanted to say that DH and I use catagories and the reason is that any leftover money would go into savings. Like if we budget $400 for food but only spend $200, the other $200 would get saved. For us, catagories are meant to help us put as much money as possible into savings. Our spending is strictly controlled but our savings is not, we save as much as possible.

We don't have a million catagories, though, not "clothes" and "presents" but we have a catch-all "allowance" catagory for buying clothes and presents.

Yeah, we do have a savings, and we opened our first CD the day before interest rates dropped *throws confetti* The plan is to take whatever we get when that matures & open another one, and to keep rolling it like that. The savings account is with ING Direct, so our interest rate is really high, which is nice since we can't put much into savings right now (10% of our income would be $180, which is higher than our food stamps gives us for a month!).

[Sharlla]

Originally Posted by jennnk

We don't have a "presents" category and a "car maintenance" category and a "clothing" category. We just take whatever's left after rent, bills, savings, and spend as wisely as we can.

Same here. These are my bills (we don't have a mortgage or rent)

Cell phone $80
internet/cable $60
medical bills $37
electricity $57 (averaged)
Water/sewer $27
trash $10
car/motorcycle ins. $44
Online gaming $15
kenpo karate $40 (my MIL pays the other $40)

I then spend about $240 on food and $200/month on gas.

Our net income is roughly $1900/month. Although to be honest it doesn't seem that we have $100 left a month. I don't know where it all goes.