Pay Attention to Your Money
Many personal finance gurus say your basic budget should look like this:
Savings – 20%
Bills/Needs – 50%
Fun – 30%
That breakdown is so simple. It should be pretty easy to follow, right? Wrong!
Lately, my expenditures have been looking like this:
Savings – 10%
Bills/Needs – 40%
Fun – 50%
I blame it on the Goose! LOL
In the past few weeks, my spending has increased significantly. Why? *shrug* I always track my spending so I knew where my money was going, but I wasn’t paying attention to my money. The difference? I dutifully kept my receipts and updated my spreadsheet at least once per week. But tracking my money doesn’t mean a thing if I don’t use the information to prompt action when I notice that I am overspending.
Instead, I watched the fun category triple what it should have been. As long as I wasn’t incurring debt, I justified the expense in my head and convinced myself that it was acceptable. Now don’t get me wrong – staying out of debt is great – and so is having fun! Oh boy, fun can not begin to describe my life over the past few weeks. Whew! But I needed to remind myself that all good things are acceptable in moderation. If I continued down that slippery slope, I may have found myself in a ton of trouble.
So what did I do?
I had to redistribute my cash flow and give myself a reality check. Now, my budget spend plan looks more like this:
Savings – 30%
Bills & Needs (long/short term) – 60%
Fun – 10%
Savings: I was getting lax with my savings. I’d already reached my goals and I had nothing else to keep me motivated, so I began to spend the surplus. Wait! *pump the breaks* There’s always a reason to save! I mean, how long have I been dreaming about going to Paris? Yea, umm…let’s just say I am recommitted to saving/investing 30% of my net income, in addition to maxing out retirement accounts. No more ’save some through payroll’ then ’save a little more’ at the end of the month. Nope! I don’t trust myself, so I’m putting ALL of it on automatic allotment!
Fun: This is where all the overflow went. Whenever one of my friends would say “Hey, let’s go ____!” I’d be the first person responding to the email. Dining out became a natural occurrence. Taking weekend trips with unplanned expenses was the second runner up. And the biggest problem – being punked by BabyGirl when she did something exceptional at school. What can I say? I’m a sucker for a couple of As and a few awards.
In an attempt to pull in the reins, I consolidated and reduced my ‘fun’ elements from 8 to 4: personal pampering, dining out, entertainment, and shopping. Fewer categories to track make it easier to manage. And beginning July 1st, I am giving myself a monthly allowance to spend guilt free. Shoot, I may even try a cash only system! We’ll see about that part…
Do you follow the basic budget formula (or some variation)?
Have you ever noticed your spending get out of hand before it hurt you financially? What did you do?
No formula here. I just add up my basic living expenses (food, rent, etc).. and then tack on another $200 on top of that, and voila. A budget.
Generally speaking, I keep myself in check quite easily.. and I try to make a “major” purchase each month rather than all at once when I get the urge to shop.
It helps me weed out what’s important and what’s not. Like this month for example, it’s getting a pair of really good headphones.
I still love tracking my expenses, and I’ve noticed that this month, I’ve eaten more pastries than any other month, and more for my waistline and health than anything else, it’s gotta stop LOL
I think mine is more like your recent spending. I still haven’t put a firm plan in place, so I make sure I save some, pay all my bills and don’t incur any debt. The rest has been going to ‘fun’ and I’ve been enjoying myself immensely. But I need to get it under control. I know I won’t get in any trouble because I keep this spreadsheet that helps me determine how spending on something today will affect me for the rest of the year. I keep a close watch on my daily spending but I need to reallocate my fun spending to savings – for real!
“I already reached my goals and I had nothing else to keep me motivated”
You took the words out of my mouth, once I reached 5 figures in the account, I had no excitement thereafter.
I save 30% and force to live off the rest. Everything fluctuates. Each month can vary
Funny thing you posted this. I literally just setup my automatic allotment to savings. I started following the same split, it’s a lot easier than other methods I’ve come across. I have the tendency to not transfer the money back out, so this makes it brainless.
Just a quick question.. Do you include what you save for your 401k as part of the 20 or 30 percent savings amount?
40k
No, my savings are in addition to my retirement accounts. [-SM]
I’m still trying to get to my goals so things haven’t been running (too far) away.
I track my spending with a fluid budget – meeting my savings goals and housing needs. Then I make myself live on the rest.
There is no particular budget or spending plan. Once I get paid a few hundred goes into my savings account and the rest goes to paying bills and other day to day necessities.
I don’t have a budget based on percentages. Rather, it is based on goals and the percentages roughly work out to savings 30% and the rest to bills and fun.
That overall guideline has worked out, over the years, to what I expect to see on my credit card bills and in my checking account during the month. So, I monitor my “mindless” spending my monitoring the credit card balance during the month and looking at my checking account balance. If the credit card balance is higher than I expect after the first week or two during the cycle, I know something is off. It is is ‘fun’ I slow it down so I come in where I expect to for the month to maintain my savings rate. It probably sounds complicated, but it works for me.
Oh, clarification…the 30% savings is net savings, not gross.
I don’t have a strict percentage wise budget, but I strive to save 50% of my take home pay every month. About 40 to 45% goes to bills/needs (medical/ electric/ internet/
rent/ groceries/ cell phone/ charity) and whatever is left goes to fun (eating out/misc).
In June, I saved 46% of my take home pay, spent 42% on ‘needs,’ and had about 12% of fun.
FYI I can’t legally contribute to any retirement schemes so I’m trying to make up for that lack of savings, plus I just like the idea of leaving as frugally as possible.
um, that was supposed to be ‘”living” as frugally as possible.’
I also don’t have a strict plan with percentages.
My student loan repayment varies, but my goal amount each month is around 40% of my income each month – some months it drops down to between 20 and 30% (usually when it’s gift time/occasions – such as this month where I have to get a wedding gift for my brother and I’ll need to dress appropriately, etc).
My living costs (rent, food, cable, etc) are shared, and my portion is around 40% of my income as well.
My transportation is a mere 5% (I use a bus pass).
My savings were 10%, but now I’ve reached my goal, and plan to drop the savings to 5% (my emergency fund is at 10 months) and put more against my loan.
My “fun” money (entertainment, shopping, and miscellaneous things that crop up during the month) tends to hover between 5 and 10% of my income, but any amount that I don’t use before the end of the month goes into my savings.
And then with the “bonus” pay cheques that aren’t part of my budget, one will go to fun, the other goes to my savings/loan (that’s also where my tax return goes, when I get one; next year will be the last return). For me, the “fun” means a cheap vacation, possibly new clothes – last year I went to Cuba and will probably return again in September. $650 (inc. taxes) for all-inclusive, including flight, accommodations and meals/drinks is an excellent deal, and leaves me with extra money that I can use for excursions off the resort, and tips.
Good Stuff. I can incorporate that in my budget! Thanks hun!
Sincerely,
Go.
I think most of my money goes towards bills and helping other people out, plus some fun. I’d say mine is about 70% mine or other’s bills, and 30% fun. I haven’t been saving; it’s something I REALLY need to do! The economy is so bad though, it’s hard for my boyfriend to keep a job, so I end up helping him out with bills when his unemployment doesn’t cover it. I feel like I’ll never get ahead. There’s always my student loan and his huge debt. When will we ever get on top and start saving?