I’ve just spent a long time on the phone with several insurance companies getting paperwork straightened out (why, oh why did our insurance company have to be in the midst of a pre-existing condition audit when we had a claim??). Happily, I did get things worked out and this should save us about $268, so it was totally worth the effort. However, I’m sort of behind today as a result, so I’m just answering one question today.
Do you keep track of how much you spend monthly on gas (or transportation in general)? how much you spend on clothing? on nick nacks? on coffee out? Or do you have a certain amount per month assigned to your variable spending and don’t necessarily track every single penny?
For example: Each, after paying your fixed expense, you have $700 for food, transportation, clothing/gifts and entertainment. Or do you divide that $700 up into categories. (I hope this is making sense for you!).
-Stephanie
For the most part, we have budgeted amounts for our expenses. To take your example, we have a $400/month budget for food, a $50/month budget for clothes (which usually ends up being more than we need), and a $40/month gift budget (this most gets saved for Christmas expenses).
We don’t really have a budget for transportation costs…we do what we can to spend as little on gas as possible, but the gas budget is not as under our control as say, the food budget. Our car insurance is predictable, though ($107/month for both vehicles), and we set aside $130/month for car repairs and maintenance.
We don’t have an official entertainment budget at the moment, mostly because we spend very little in that category. Since we are now at a point where we routinely spend less each month than we make, I think we could afford to set some aside each month for a date night. After my husband and I chat about it, we’ll probably set up an entertainment category.
I think that the precision level that’s necessary in a person’s budget will depend greatly on their financial situation and also their personality. A person who is barely making ends meet will probably need to be very particular about calculating expenses and allocating money (it would be terrible spend a bunch of money on coffee and then find out you didn’t have enough left to pay your electric bill). Also, a person who tends to spend recklessly when they don’t have a plan might find it helpful to have a really exact budget.
I’m not the sort of person who would spend money nilly-willy without a plan, but even I find that a somewhat specific plan is a really helpful way for my husband and me to get on the same page with our spending and our financial goals (I also find our monthly money emails to be incredibly useful as well).
If you’re using a not-very-precise method right now and you’re getting less than optimal results, you could always try setting up a really exact budget for a month or two to see if it works out well for you. If your current plan is working really well, though, I’m not sure I’d recommend messing with perfection!
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Readers, does a very detailed budget work for you, or do you have more general spending guidelines?
Kristin @ klingtocash
Tuesday 6th of October 2009
We have a very detailed budget. I use the Dave Ramsey plan so every dollar has a name at the beginning of the month. I like this because whatever is left on paper gets applied against the debt snowball. At the end of the month, whatever we have left because we didn't use up all the funds we budgeted gets donated to charity and applied to the snowball (in addition to what we already gave to charity and applied to the snowball).
jen b
Tuesday 6th of October 2009
@Terri Young I know this does not work for everyone, but we use our Discover card for gas, and only gas. I budget $100 for gas every two weeks (every paycheck) and send it straight to the Discover card. Of course, if I check the balance and we only spent $80 on gas since the last payment, I can send less. We rack up "cash back" until we have $50 worth and then we apply that towards the balance to get $50 of free gas. This only works for us because it is only one thing to keep track of on this card. Keep receipts, it is the only way to see how much you are spending on gas so you can adjust your budget and make sure you have enough (or budget a certain amount per fill-up, say $30, and then count the number of fill-ups)
Terri Young
Tuesday 6th of October 2009
I feel like gas is really killing us. I keep track of all the same things you do Kristen- $400 for groceries, $50 for clothes, etc. But, gas is about the only thing we don't keep track of, and it's all I can figure that's eating away all of our money. Makes me sad.... :( I guess I'd better start figuring it out, can't ignore it.
Frugal Dreamer
Monday 5th of October 2009
Great post!
I can see how $50 could last your family, I know I don't buy clothing ever single month! And shopping second hand really helps! :)
Your way of life is inspiring!
Kristen
Monday 5th of October 2009
Susan-yep, that's for our whole family. Usually it ends up being more than we need, and the money in that account kind of piles up. lol We're going to take some money from there soon, actually, to replace our chest freezer, which is dying.
I know $50 doesn't seem like a lot, but fear not....we're all well-dressed, in nice, stylish clothing. I'm pretty picky about what I will dress my family in!