How do you manage your monthly spending?

Long-time readers of the blog will know that #1 hates hates hates budgeting.  So she doesn’t do it.

While DH was employed, what I had been doing was funneling his take-home pay to checking and mine to savings.  Back when we were still paying the mortgage, I’d move 1 or 2K from savings to checking each month if the checkbook register became negative.  If I had to move more than 2K, I would re-examine our spending habits (though usually such expenditures were reimbursable and would be reimbursed).  Since we’ve finished the mortgage I haven’t been having to do any moving from savings to checking.  We pretty much just spend DH’s take-home pay each month, give or take.

(It’s actually a little more complicated than that since we funnel DH’s reimbursement checks and my freelance checks to Wells Fargo and I take most of the children’s lesson costs out of that account.  But we can ignore that oddity.  Also 529 money comes out of my take-home pay and gets pulled directly from savings.)

Of course, DH is unemployed for the full month of June, likely employed in July (but without a firm start date meaning not drawing unemployment this month, by state law), and then we don’t know what will happen after that.

We saved up for this so there’s plenty in savings.  The question is how to allocate it.

My two thoughts are to either:  1.  transfer the equivalent of DH’s former take-home pay to checking at the beginning of checking each month or 2.  only transfer the amount necessary to keep checking in the black above our minimum requirement for the bank after bills have been figured out for the previous month.

I’m leaning towards the second option so long as the amount I’m transferring is smaller than DH’s former take-home pay because I’m hoping that will decrease the amount we spend each month.  However, if it turns out we’re spending more, then I will do the first option instead and make sure we don’t have to transfer more without a really good reason.  I foresee a lot of eating down our pantry in this scenario.

I honestly can’t remember what we did the last time he was unemployed.

Sigh, once again I am reminded how the way I know we’re going to have an income setback is when I think to myself, “Gosh what are we going to do with all this money?”  The answer always comes.  Kind of like how new referee reports know when you’ve finished the last one in your queue.

But we’ll be ok.  This is why we paid off debt and have saved so much.  And it helps that I’m still driving my grad school car, we don’t really vacation, and we never did get around to renovating the kitchen.  A large emergency fund and low expenses mean that a potentially long-term unemployment spell doesn’t come with frightening money worries.  And we will still be able to buy whatever we want at the grocery store (which is how I feel rich).

Do you budget?  How do you make sure your spending doesn’t outstrip your income while still allowing for savings?

28 Responses to “How do you manage your monthly spending?”

  1. Taylor Lee @ Yuppie Millennial Says:

    I don’t budget, but that’s because the delta between my income and my typical spending is wide enough that I don’t have to. I tend to pay myself last, transferring excess funds in my checking to savings and investments. In the event that my income precipitously dropped, I think I’d do your #2, maybe with an additional $1-2k buffer to keep as a minimum in my checking account in case of emergency (my savings/checking are with different providers and ACH transfer is slow).

  2. Solitary Diner Says:

    I budgeted before medical school and in my last year of fellowship/first year of work when I was trying to get out of debt quickly. When I budget, I typically figure out what my savings target is (minimum of 10% of income), figure out my regular expenses, and then take whatever is left and allocate it to myself in daily or weekly increments. Most recently, I used Visual Budget on my iPhone to track all of my spending, and I would simply “transfer” a small amount of money to my budget every day and then make sure that my budget was always in the black.

    Now that I’ve been working for almost two years and I have a nice healthy net worth, I’ve stopped budgeting. I have a sense of what expenditures are “worth it” to me, and I try not to buy things that don’t meet that criteria. I also try not to inflate my lifestyle by upgrading from $15 to $30 bottles of wine or by giving up the cheap dive restaurants for fancier establishments. I check my net worth regularly to make sure that I’m saving at a reasonable rate, but I don’t obsess about saving every penny I possibly can. So far it’s working. We’re looking at buying a house soon, though, in which case I may have to start being more conscious about my spending.

  3. Revanche @ A Gai Shan Life Says:

    I used to budget fiercely, and obsessively. Now I’m willing to rely on more organic spending tracking: so long as I don’t have to transfer money from savings for regular spending, then we’re ok. And I’ll routinely see if I can transfer money from spending to savings instead, but that’s been pretty rare in the last couple of years with the big non-routine expenses. I’m doing my best to keep 2017 expenses in check and hope that 2018 will bring a measure of stability.

    • nicoleandmaggie Says:

      How does money get into regular spending? Is it direct deposited from pay after retirement etc. is taken out? Do you take other things out before it shows up in the regular spending account?

  4. Beth Says:

    I don’t budget, but I do bucket.
    – Retirement comes out first, of course, and then my net income goes into Account A.
    – I immediately transfer a fixed amount into Account B, which is what I use to pay my mortgage and bills.
    – I have Accounts C, D, E and F for travel, house maintenance, car maintenance, and activism spending & saving, and transfer a fixed amount into each account (or use the money to pay my credit card if I spent money in that area).
    – I have an emergency fund that equals at least 8 months of living expenses, so I’m not actively saving more there
    – By the time I have transferred money around, paid off any credit card charges, and submitted my every-payday mortgage prepayment, I’m left with about $250 in Account A, which I use with my debit card for groceries & cash.

    It’s a rather manual process (as is my spending tracking, which is in a notebook) but I feel like it helps keep me connected to my income and my plans.

    I’ve noticed that this year I’ve gotten closer and closer to spending everything I bring home, so I’ve got to figure out what I want to do differently. Fortunately most of it’s fritter spending, not ongoing committed spending, so a little self-control should help in a big way.

    • nicoleandmaggie Says:

      I like the term “bucket”. Sounds like your system is working well for you!

    • ket Says:

      What bank can one use to make multiple accounts for this kind of thing? I’m reading a book called Profit First that proposes a certain way of bookkeeping for small businesses (involving 5 bank accounts, to trick yourself into preparing for taxes and earning a profit without working at it), but I’m not sure how to figure out which banks make this easy so that I can compare them.

      • Beth Says:

        I use USAA which is a terrific bank, and although it’s a credit union, I think almost anyone can get into their banking services. Highly recommend, great interface, good mission, etc.

  5. Shannon Says:

    We’re like Solitary Diner. We figure out what we want to save and then allocate the remainder across each week. We have a large blackboard on our kitchen, which we use to track our spending. Whenever we buy something, we add it to the total on the blackboard. It’s not too much work, but it allows us to make sure we’re staying on track with what we want. I don’t want to be obsessive about it, so this is a happy medium for us to keep on track.

  6. chacha1 Says:

    I call it a spending plan rather than a budget, but yeah. My take-home pay is already minus health insurance, contributions to 401k and HSA, and of course a breathtaking list of taxes. I get paid every two weeks so I know almost to the penny what my take-home will be. Twice a year I get an “extra” paycheck in a month, which means a bigger deposit because all the insurance and savings deductions are made from the regular two paychecks.

    My list of bills to be paid is pretty short. Power bill monthly; my car insurance twice a year; renter’s insurance once a year; life insurance quarterly; private mortgage on the property we’re buying monthly. Power bill is the only one where I have to wait to get the bill to see how much I owe. Which means it’s really easy to plan out when to pay things.

    I am current on my credit cards now, i.e. not running balances. As a forced savings plan I have a $12K emergency fund and am, instead of adding to that, sending extra to the property loan every other month. It was going to be *every* month this year, but then we decided to move into a rental house that needs ALL the renovation, so my extra is going to building materials.

    Our biggest indulgence is food. I shop for groceries at convenient and high-priced markets, and we order takeout (or just plain eat out) with some frequency these days. That last bit will go away to a large extent after we move, because we are moving to an area with less to offer by way of takeout and restaurants, but also because we will have a backyard and a grill, and we will not be spending all our time going back and forth between two properties. :-)

    • nicoleandmaggie Says:

      So how does it work functionally– does the money end up in your checking or savings? What causes you to transfer money between accounts?

      • chacha1 Says:

        I get paid by direct deposit. My regular savings account (aka e-fund) is at the same bank as my checking account. I use my debit card for groceries, the hardware store, or other running-around type minor spending. I transfer $$ to the savings account whenever I have a mind to, although right now, since we are working on paying off the property loan and on renovating our future rental house, “have a mind to” = “nope.”

        I also set us up so I can transfer my share of rent to my husband’s credit-union account instead of writing him a check. Should have counted that as a monthly bill!

        Also forgot to specify that a couple of monthly bills are charged to my operational credit card, a rewards Visa. Hulu and my cheapie cell phone, total $25 for both. Whatever else I charge on that card (typically anything I order online), I try to pay-as-I-go by sending an online payment from my checking account on or about payday.

        My other credit card is a pain in the ass because they constantly question my decisions. They declined a Domino’s pizza charge!! So I stopped using it for anything online, and only use it for brick-and-mortar spending I want to leverage. Same payment protocol.

        Have not felt the need to take any money out of my e-fund for quite a while – since paying off my tuition and auto loan, my paycheck has enabled payment in full of the annual and semi-annual insurance bills, which are the biggest bills I have aside from rent.

      • Debbie M Says:

        Cha cha, I’m surprised your pain-in-the-butt card can just go around declining charges! Mine just e-mails me on suspicious things, like when I give my favorite-restaurant waitress the same tip as usual even though we ordered less than usual. Wow, that’s terrible!

  7. Debbie M Says:

    I can think of several ways to answer your question.

    One answer: I basically have a feel for what I can afford these days and don’t need to budget, though I do add to my savings in various categories to help me realize when I can again afford some big thing that I want.

    The answer I think you’re looking for: I get my monthly check direct deposited into my checking account with a local credit union. Then I make sure everything for the month is paid off and then transfer money to (or from!) my online savings account (also a credit union! woo!) so that my checking account balance minus what I already owe on my credit cards is $1200. This seems exactly like your option 2 above.

    While my boyfriend is underemployed and having to sell stock to pay his credit card (a several-step process for which he likes to wait until the last minute), I delay my transfer until his card is paid or until he pays me back for paying off his card.

    I also have $500 in my local credit union savings account which can be transferred into my checking account instantly for emergencies.

  8. Lisa Says:

    We have always been pretty bad at budgeting, despite the fact that I always think I should be able to make a detailed budget and stick to it. I mean bad in the sense that we can’t point to where every dollar goes, not bad in the sense that we are out of money by the end of the month. I feel like I missed a life lesson somewhere in there and should perhaps have tracked every receipt for a while in my youth. But now, we make enough money and our spending habits are conservative enough that we don’t need to worry that much.

    Functionally, most of our savings is automatic – healthcare, 401K, 403B, etc. taken out of paychecks. Paychecks all go to checking and DH moves things around as necessary (keeps a savings account for taxes and other larger periodic expenses) and pays the bills from checking. He gets a quarterly bonus as well, and that usually goes toward whatever the expense of the quarter is (paying off credit card from a vacation, adding to tax savings, into 529 accounts, etc.).

    • nicoleandmaggie Says:

      As long as your spending is conservative compared to your resources and you’re on track with savings, I don’t think a budget is at all necessary. In fact, you’re essentially paying for not having the budget by having that large cushion– if you budgeted then you could spend more and still be safe.

      Neat system! Are your DH’s bonuses predictable?

      • Lisa Says:

        More or less – we can usually count on at least a minimum amount, sometimes it is unpredictably high. It’s also going to go up in the near future, so we’re going to need to figure out what to do with the extra – he’s a physician and has recently become a full partner in his practice. The bonuses are tied to production over the quarter; both his personal productivity and now, the practice as a whole. Probably need to put more in the kids’ 529s and want to make some housing changes.

  9. First Gen American Says:

    In college, when cash was tight, I used cash…when the cash was gone, the spending was done..but my spending life was much less complicated then.

    Most of my professional life, my main budgeting was in the manner of auto-withdrawing as much as possible from my paycheck (401K, emergency fund, healthcare expenses, mortgage, etc). and then the rest was kind of a catch all slush fund.

    Once our mortgage is done again, we’ll swap that out with a 529 auto deposit option that comes out of both paychecks….which brings me to another question…Should we funnel a ton now into older kid and worry about younger kid later (he’s 4 years younger) or should we fund both at the same time now? I’m assuming we can roll over older kid’s excess into younger kid if we over deposit but then if we die before kids do, an uneven distribution would screw things up for kid 2. Not sure what to do yet.

  10. C.S. Says:

    Reading on your blog how you keep track of money I adopted the same. I’m not as careful as you as yet but trying to get there. Keeping track of money allowed us to live under our means and now living under our means is allowing us to track money better. One of the reasons I started blogging is to keep track of money better as I felt I was slacking off.

  11. nicoleandmaggie Says:

    Oh hey, if you’re registered to vote in GA or SC where elections are happening and haven’t voted yet, go vote!

  12. Leigh Says:

    This year, I’ve been doing your second option. On the first of every month, my portion of the joint budget gets automatically transferred from my savings account to the joint checking account. I then transfer however much I need to keep my personal checking account in the black and if I’ve used less than N/12ths of the annual budget, then I transfer the unused portion to my wedding fund savings account. If the checking account has too much money in it, then I transfer the excess to the wedding fund savings account.

    I like this better than transferring a specific dollar amount to my personal checking account each month since spending varies from month to month and I would rather try to spend less money at the moment.

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