Ask HN: How Do You Budget?
28 comments
Take the opposite approach.
It’s easier to calculate how much you want to save and save it upfront then the rest of the money can be spent.
Max out 401k - money never touched your bank account
Split direct deposit so a portion or multiple portions go to your investment account and/or savings account
The rest goes into checking account to pay for bills and lifestyle expenses.
Save the money up front and never let it touch the checking account!
You can start by giving yourself some buffer into your checking account and later dialing down those numbers in your direct deposit config.
It’s much easier to do it this way and not worry about every single expense line item. Just calculate how much you think you can save and never let that money touch your checking account. Evaluate every quarter and adjust the numbers at the front accordingly.
It’s easier to calculate how much you want to save and save it upfront then the rest of the money can be spent.
Max out 401k - money never touched your bank account
Split direct deposit so a portion or multiple portions go to your investment account and/or savings account
The rest goes into checking account to pay for bills and lifestyle expenses.
Save the money up front and never let it touch the checking account!
You can start by giving yourself some buffer into your checking account and later dialing down those numbers in your direct deposit config.
It’s much easier to do it this way and not worry about every single expense line item. Just calculate how much you think you can save and never let that money touch your checking account. Evaluate every quarter and adjust the numbers at the front accordingly.
> It’s easier to calculate how much you want to save and save it upfront then the rest of the money can be spent.
Indeed! Decades ago, I adopted the "pay yourself first" principle. That is, I take 10% of every dollar that comes into my hands and stash it away into an account that never otherwise gets touched. That's my core savings and I pretend it never existed. The remaining 90% is my entire income as far as I'm concerned, and that's where budgeting (including savings) happens.
Indeed! Decades ago, I adopted the "pay yourself first" principle. That is, I take 10% of every dollar that comes into my hands and stash it away into an account that never otherwise gets touched. That's my core savings and I pretend it never existed. The remaining 90% is my entire income as far as I'm concerned, and that's where budgeting (including savings) happens.
I've tried numerous apps, but never got any value out of them. What has worked best for me is to have two checking accounts. One where all recurring expenses are billed from that holds all the money, and a second that contains the money budgeted for the week. Every Friday I replenish the weekly account with the budgeted amount no matter how much was spent. I tried doing this on a monthly basis but would always end up overspending and going over. Weekly has worked great because you can quickly see if you are overspending. My wife and I also have personal checking accounts where we each deposit the same amount of personal spending money every month.
Daily? No, that is too granular for me. Monthly is more reasonable - many expenses are on that cadence, and once you have it laid out at that scale, you know how much extra spending you have for the month and can choose what days to spend it.
FWIW, I'd never tie my bank account to a service for this. Spreadsheets work fine, and most banks let you download transactions so you can import them into your spreadsheet. If you really want a daily spending limit enforced by your bank, they might be able to set that up for you - we have it as part of our fraud protection and call the bank if we need to make a large purchase to get it temporarily lifted.
FWIW, I'd never tie my bank account to a service for this. Spreadsheets work fine, and most banks let you download transactions so you can import them into your spreadsheet. If you really want a daily spending limit enforced by your bank, they might be able to set that up for you - we have it as part of our fraud protection and call the bank if we need to make a large purchase to get it temporarily lifted.
Interesting! I’d never want my bank to _enforce_ a daily limit though, I’d just like to know roughly what we can spend today.
We tried spreadsheets but that’s a bit too manual for us.
We tried spreadsheets but that’s a bit too manual for us.
By not budgeting.
One of the many benefits of being frugal and moderate is that I don't have to worry about a budget. I save most of my money in accounts and in a sock under my bed. I have ample funds for emergencies and occasional gifts. I don't need to worry about daily spending limits because I'm not spending daily. I only buy what I need. And when I need it, there's always enough money to buy it.
It's freeing.
One of the many benefits of being frugal and moderate is that I don't have to worry about a budget. I save most of my money in accounts and in a sock under my bed. I have ample funds for emergencies and occasional gifts. I don't need to worry about daily spending limits because I'm not spending daily. I only buy what I need. And when I need it, there's always enough money to buy it.
It's freeing.
I would tend to agree with this. But as a frugal person, I find I don’t spend enough money on certain categories.
One, often forgotten, value of a budget is to learn where you’re underspending and help enforce that. For me this is often education that disguises itself as entertainment (think books, dev kits, art supplies), travel, and random minor home improvements that don’t come out of the upkeep fund.
I’m very good at saving, but I’m terrible at spending on things that could actually make a qualitative difference in my life. So budgeting can help remind me I’m not spending enough on these things.
One, often forgotten, value of a budget is to learn where you’re underspending and help enforce that. For me this is often education that disguises itself as entertainment (think books, dev kits, art supplies), travel, and random minor home improvements that don’t come out of the upkeep fund.
I’m very good at saving, but I’m terrible at spending on things that could actually make a qualitative difference in my life. So budgeting can help remind me I’m not spending enough on these things.
Indeed!
I don't.
I am naturally (very) frugal, so I know I live within my means. I purchase whatever I convince myself is worthwhile, and that is still lower than my income w/ acceptable buffer.
I literally do the opposite of budgeting (specifically do NOT look at finances, other than to pay cards off / balance portfolio).
It's glorious. I highly recommend it. I appreciate that this is the complete opposite advice than from everyone you have ever heard from. But the peace of mind, freedom, agency.... It's incredible. Everyone obsesses over what they can afford, trying to justify purchases etc. - And when you are able to remove that sort of thing from the equation, I feel it helps to make correct decisions, and then enjoy those decisions more.
*Edit: Now I think about it, I treat it exactly the same way as I do with media. I don't watch depressing news if it isn't valuable to consume it. I curate my media and make sure that it suits me and maximises enjoyment+productivity.
I am naturally (very) frugal, so I know I live within my means. I purchase whatever I convince myself is worthwhile, and that is still lower than my income w/ acceptable buffer.
I literally do the opposite of budgeting (specifically do NOT look at finances, other than to pay cards off / balance portfolio).
It's glorious. I highly recommend it. I appreciate that this is the complete opposite advice than from everyone you have ever heard from. But the peace of mind, freedom, agency.... It's incredible. Everyone obsesses over what they can afford, trying to justify purchases etc. - And when you are able to remove that sort of thing from the equation, I feel it helps to make correct decisions, and then enjoy those decisions more.
*Edit: Now I think about it, I treat it exactly the same way as I do with media. I don't watch depressing news if it isn't valuable to consume it. I curate my media and make sure that it suits me and maximises enjoyment+productivity.
I have been using plain text accounting for almost a decade with my wife. Specifically, I use beancount (https://beancount.github.io/docs/) and a custom set of scripts that I have developed to categorize expenses and other features (https://github.com/luciano-fiandesio/beanborg/)
I reckon is not for everyone, since a lot of stuff takes place in the terminal, but it has been working very well for us.
I reckon is not for everyone, since a lot of stuff takes place in the terminal, but it has been working very well for us.
I keep my household budget in a simple spreadsheet.
I don't track my daily spend at all. Instead, I have a personal account for daily/casual spending and use that. All other money goes into a different account. This way, the budget item is the amount of money I put into the "daily" card every payday.
But my daily/casual spend is really stable from day-to-day so it doesn't need tracking. I already know what it is. Others may have more volatility to track.
I don't track my daily spend at all. Instead, I have a personal account for daily/casual spending and use that. All other money goes into a different account. This way, the budget item is the amount of money I put into the "daily" card every payday.
But my daily/casual spend is really stable from day-to-day so it doesn't need tracking. I already know what it is. Others may have more volatility to track.
My personal finances are a mess (I'm both poor and careless, dangerous combo), but my partner and I have a better system for our shared expenses, thankfully.
We first did a simple monthly budget in GSheets based on monthly income and expenditures. We just looked at invoices and credit card statements averaged out over the last year. It only took an hour or two.
Once that was done, one person pays all the fixed monthly bills (rent, ISP, etc.) The other person Venmos half the total. This doesn't change that much month to month, and we estimated conservatively (budgeted for more than we typically need) just to be safe.
Variable non-entertainment expenses like groceries get put on a dedicated credit card that we pay off in full every month.
We each contribute a fixed amount per paycheck to a separate debit card for an entertainment budget. When that's empty, we stop going out until the next paycheck. The Zeta card and app is great for this.
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That works well enough for our shared stuff. She's paid off all her debt this way and still saves hundreds a month, despite making less money.
On the other hand, my own finances are probably beyond hope lol, and bankruptcy is a likely possibility in the future. Between lifestyle bloat, credit card debt, and general financial illiteracy, it's just a bad situation all around. I've tried many tools, including YNAB, but never really found a thing that works. Wish there was a personal budgeting class or something I could take. I rarely have stable employment, rent, etc. Don't be like me, lol.
We first did a simple monthly budget in GSheets based on monthly income and expenditures. We just looked at invoices and credit card statements averaged out over the last year. It only took an hour or two.
Once that was done, one person pays all the fixed monthly bills (rent, ISP, etc.) The other person Venmos half the total. This doesn't change that much month to month, and we estimated conservatively (budgeted for more than we typically need) just to be safe.
Variable non-entertainment expenses like groceries get put on a dedicated credit card that we pay off in full every month.
We each contribute a fixed amount per paycheck to a separate debit card for an entertainment budget. When that's empty, we stop going out until the next paycheck. The Zeta card and app is great for this.
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That works well enough for our shared stuff. She's paid off all her debt this way and still saves hundreds a month, despite making less money.
On the other hand, my own finances are probably beyond hope lol, and bankruptcy is a likely possibility in the future. Between lifestyle bloat, credit card debt, and general financial illiteracy, it's just a bad situation all around. I've tried many tools, including YNAB, but never really found a thing that works. Wish there was a personal budgeting class or something I could take. I rarely have stable employment, rent, etc. Don't be like me, lol.
I invite you to hang out in the https://plaintextaccounting.org/#news-discussion -> chat rooms, we like to discuss tactics.
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I put all of the big monthly bills on to a airline-points card, which also breaks down spending into bill categories. Every three or four months, I go through and check to make sure the amounts aren't increasing -- if they are, I reduce them (often by unsubscribing to stuff I'm not using anymore) or groan and increase my budget.
Once I have total income and total bills in hand, I can reasonably divide the rest into savings goals (yay, FIRE... or at least not dying before retirement) and fun money.
I spend my fun money through a separate credit card (Apple card honestly does great for this). If I overspend my allowance, I look through how I spent money and adjust my habits.
When I get a windfall (taxes back, indie work, etc.), if I overspent my allowance that gets paid back first. Then 50/50 fun money and long-term savings.
The biggest thing for me was always trying to reduce monthly bills. I'm disabled, and suddenly being unable to work for a few months is something that happens. Living in a shared house, and in a state with PMLA, has helped, but aiming for a 50% savings rate has saved me more than once.
Once I have total income and total bills in hand, I can reasonably divide the rest into savings goals (yay, FIRE... or at least not dying before retirement) and fun money.
I spend my fun money through a separate credit card (Apple card honestly does great for this). If I overspend my allowance, I look through how I spent money and adjust my habits.
When I get a windfall (taxes back, indie work, etc.), if I overspent my allowance that gets paid back first. Then 50/50 fun money and long-term savings.
The biggest thing for me was always trying to reduce monthly bills. I'm disabled, and suddenly being unable to work for a few months is something that happens. Living in a shared house, and in a state with PMLA, has helped, but aiming for a 50% savings rate has saved me more than once.
I was thinking about budgeting lately (I don't do it already) but the extreme inflation in my country, Argentina, makes it a bit difficult.
I had the idea of introducing some kind of "randomness" to the amount of money I can spend on non essential expenses in order to avoid the lifestyle creep. One month maybe you have enough money available to spend it on several eatouts and another month you can't.
I had the idea of introducing some kind of "randomness" to the amount of money I can spend on non essential expenses in order to avoid the lifestyle creep. One month maybe you have enough money available to spend it on several eatouts and another month you can't.
Hey! I'm also from Argentina, and what seems to work for me is to budget in dollars.
I use beancount and load the blue ARS-USD exchange rate and record all my transactions in the currency it actually happened. I am a bit flexible as to avoid lifestyle creep and ARS appreciation (like this month)
I use beancount and load the blue ARS-USD exchange rate and record all my transactions in the currency it actually happened. I am a bit flexible as to avoid lifestyle creep and ARS appreciation (like this month)
From systems engineering, it's easier to track the amount of stock rather than the input/output. Stock here is your cash. If it's below a certain level, you can control it more easily. It's easier to have a fixed cash stock rather than a "budget" because you can exceed budgets. You can control it with a debit card.
Have a formula to generate your expected savings, maybe 3 months salary or expenses. I base it off gold price. I then split it into fixed costs (non-negotiable), impulse purchase, non-fixed costs (like food, gas, classes).
Invest in active income first - it's just way easier to increase salary by 15% than it is to invest in something that brings in 15% year on year. This can come out from general expenses, pay in installments, sometimes even going into debt for it.
Once expected savings are covered, then it goes into investments and stuff.
Have a formula to generate your expected savings, maybe 3 months salary or expenses. I base it off gold price. I then split it into fixed costs (non-negotiable), impulse purchase, non-fixed costs (like food, gas, classes).
Invest in active income first - it's just way easier to increase salary by 15% than it is to invest in something that brings in 15% year on year. This can come out from general expenses, pay in installments, sometimes even going into debt for it.
Once expected savings are covered, then it goes into investments and stuff.
Anytime I try to organize my budget in a meaningful way through an app, spreadsheet, or dashboard, I end up departing away from it after the initial rush of enthusiasm wears off I have for using it.
This might not be the best system, but it works for me. I simply take 70% of my income and deposit it in another account with a seperate bank (it's like a vault, i never really check on this account ~maybe once a month) as soon as my paycheck clears and then just make sure to make do with the other 30%, which includes one-off discrete purchases, emergencies, etc.
I have no visibility on my purchases. I am sure I would be alarmed at my monthly expenses for specific things, but on net, I think I am on the lower end of frugality.
This might not be the best system, but it works for me. I simply take 70% of my income and deposit it in another account with a seperate bank (it's like a vault, i never really check on this account ~maybe once a month) as soon as my paycheck clears and then just make sure to make do with the other 30%, which includes one-off discrete purchases, emergencies, etc.
I have no visibility on my purchases. I am sure I would be alarmed at my monthly expenses for specific things, but on net, I think I am on the lower end of frugality.
Personally, you're better off with separate joint accounts, your account, and their account, that you both have access to, at separate banking institutions. This gives you both a backup, and your own account to mostly manage yourself.
A very simple way to manage things would be to set a lower buffer limit you want to have on your checking account, and put anything after your monthly bills and your monthly allowance for yourself in savings.
Tangentially - One thing I've learned is that the first time you jointly file taxes, you should never change the order of your names on tax forms after that. It will cause boatloads of problems if you do.
A very simple way to manage things would be to set a lower buffer limit you want to have on your checking account, and put anything after your monthly bills and your monthly allowance for yourself in savings.
Tangentially - One thing I've learned is that the first time you jointly file taxes, you should never change the order of your names on tax forms after that. It will cause boatloads of problems if you do.
I'm recently started using YNAB via my friends recommendation. The only problem i feel in YNAB is i need to manually do all the entries since I am from India and it only supports US and Europe bank accounts.
I love You Need a Budget (YNAB) very, very much.
Quicken… it’s been the best for years and takes a practical approach. Worth the small fee to remove the space between your ears asking “can I afford that?”
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At a certain income saving is an income problem not a expense problem (unless you are naturally just very wasteful or big spender) even then it’s probably a few big ticket items that make the difference
This is complicated. Because while I do budget, I also don't.
The realities of life are too complex to plan for the way I'd like.
So, I budget in a more qualitative way:
"We should really try our hardest to spend below X but we shouldn't care about the specific allocation as much"
There's always something that comes along and fucks it up so why bother. If we feel we don't have enough money the solution is to try to make more money so we can stick to our qualititative, high level strategy.
If I was in a position where I needed to track everything that would be an indicator I'm either mentally unwell or we are not bringing in enough to live. Granular budgeting would be counter-productive to our goals.
Edit: I will add that I think the above "works" if you are trying to keep the gap within "some percentage of your income". If you can swing a few hundred bucks without a huge issue from month to month and can shoulder the odd vet visit or car problem, it's fine.
If your swings are thousands of dollars or you can't shoulder an unexpected expense, that would be how I'd classify it as an income problem and not a budget problem. I don't think budgeting can fix that.
TLDR: I prefer macro budgeting - micro budgeting would mean income stream problem, relationship problem, mental problem.
The realities of life are too complex to plan for the way I'd like.
So, I budget in a more qualitative way:
"We should really try our hardest to spend below X but we shouldn't care about the specific allocation as much"
There's always something that comes along and fucks it up so why bother. If we feel we don't have enough money the solution is to try to make more money so we can stick to our qualititative, high level strategy.
If I was in a position where I needed to track everything that would be an indicator I'm either mentally unwell or we are not bringing in enough to live. Granular budgeting would be counter-productive to our goals.
Edit: I will add that I think the above "works" if you are trying to keep the gap within "some percentage of your income". If you can swing a few hundred bucks without a huge issue from month to month and can shoulder the odd vet visit or car problem, it's fine.
If your swings are thousands of dollars or you can't shoulder an unexpected expense, that would be how I'd classify it as an income problem and not a budget problem. I don't think budgeting can fix that.
TLDR: I prefer macro budgeting - micro budgeting would mean income stream problem, relationship problem, mental problem.
Personal Capital is free. But I no longer budget for anything.
I’m wondering how others track their daily spending limits, if they do at all?