Budget or Automatic

[maat55]

I would like to hear some opinions on whether you should stay with a budget or some other plan.

I just finished The Automatic Millionaire and found it to be a very good book. I was reluctant to accept advice against having a budget, but have noticed that I haven't been as diligent to keep up with mine.

I think that when starting a financial plan, of any kind, you should make a budget to establish your priorities so to decide what you will have to invest. After this is done, i'm not so sure that you need to stay with the budget. I personally follow many of the principles mentioned in the book such as: Automatic investing, paying house down early, paying only cash for cars and etc. I'm sure a budget can be revisited as need be.

I'm interested in knowing how you do it. Thanks.

[billchrz]

Like you I've been following the Dave Ramsey plan (with a few modifications) and also am currently reading the Automatic Millionaire. Most of my bills are static and don't change much month to month. I've often thought to myself, why make the budget so difficult and rigid to follow? As long as we save for the EF and Retirement first, who cares how much is spent in each other category as long as I spend less than I make.

This change in philosophy has seriously cut down on the fights between my wife and I. I'm happy because our savings goals are being met on a monthly basis and the wife is happy because I'm not hounding her constantly for receipts and such.

[fruitbowlk]

I have read the The Automatic Millionaire and I agree with him. I don't do a budget I just get all my bill/savings/debt/investments automatically deducted and whatever I have left over after having bills, debt, savings, and investing taken out I use the rest of my left over money as things come up. I also have been following the Dave Ramsey plan (with a few modifications.

[moneybags]

I don't budget. I use the "pay yourself first" method. It has worked great. I direct deposit into savings/mutual funds the same amount every month. I've been doing this for 15+ years. We increase the amount saved with each raise.

[LivingAlmostLarge]

I don't budget in the traditional sense either. I have mostly everything automated savingswise, and I automatically pay specific bills. Then the rest I know approximately what I can spend.

I do an annual budget for things like home repair, car repair, vacation, gifts, etc, so I know how much monthly needs to go into savings. And then I tap that because I "planned" to spend say $6k on home repairs this summer. Whether I spend it earlier or later in the year doesn't matter. I have it "budgeted" but not really.

There's a point where it doesn't really matter.

[Caoineag]

I don't always do a budget, but I do periodically make sure I am still on track. I do automatic savings though so I don't have to worry about budgeting for that.

[Snave]

We fall in between with the budget. We have had a budget and will look at it periodically, but do not write in the amounts, etc... We try to pay cash so my wife will take cash out at the beginning of the month for those type of items (groceries, spending money for us, etc...) We have paying ourselves first as part of that budget so that is paid like any other bill. We usually always fall within the budget. We might be slightly over in one area, but slightly under in another. We don't watch it so close that we are running around with an excel spreadshhet to right down every expense. However, we have been doing it for so long that we know what the numbers should look like. For us, paying in cash also is a big help. It is easy to see how much is left for spending money, groceries, etc... when it is physically right there and you don't have to balance a check book to see how much you have left for each category.

[PrincessPerky]

I think budgets that separate fun money are to rigid. extra is extra to be spent as desired, use the movie money for ice cream if you like.

but I do think we need to look at yearly expenses to make sure we have the amount when the bill comes without having to spend that month funless.

I also tend to be a bit lax about which month the money was spent in.

However, there was a time when every penny mattered, then a stricter budget was important.

[feh]

I haven't read "Automatic Millionaire", so I don't know what plan it espouses.

However, my wife and I have never had a budget. We simply live well within our means, and save as much as possible.

[cooliemae]

Like you I've been following the Dave Ramsey plan (with a few modifications) and also am currently reading the Automatic Millionaire. Most of my bills are static and don't change much month to month. I've often thought to myself, why make the budget so difficult and rigid to follow? As long as we save for the EF and Retirement first, who cares how much is spent in each other category as long as I spend less than I make.

This change in philosophy has seriously cut down on the fights between my wife and I. I'm happy because our savings goals are being met on a monthly basis and the wife is happy because I'm not hounding her constantly for receipts and such.

I agree, my wife and I have the same philosophy. Though I do occasionally increase the automatic savings and retirement contributions as we see more money. My wife will go several months before realizing that I had increased the amount of money we're saving.

[sounderella]

DH and I use a budget. I'm a visual person and I need to see where all the money is otherwise I'm lost. Along with helping us with our spending, it also ensures that I don't forget a bill. I use an excel spreadsheet and highlight everything I've sent a payment out for one color and highlight it another color when it clears the bank. It may sound super basic, but it works for us.

[jIM_Ohio]

We have a budget spreadsheet. That sheet is more of a theory than a constitution or set of rules which are rigidly required.

We pay ourselves first.
A siginificant amount (17%) is set aside
I received a raise recently and the savings is what was increased, so I think the 17% is low.

We don't bounce checks and also have cash in the bank (CDs) which is not spent either. If the water bill is low and we spend that (increasing spending not in the budget)- I am OK with that.

[disneysteve]

No budget here. Well, that's not entirely true. I do budget our savings (19% of my pay; 50% of DW's pay) but I don't budget our spending. As far as I'm concerned, as long as all the savings needs are being met, how the remainder gets spent doesn't really matter. Some months more goes for food, other months more goes for travel or entertainment or clothing or whatever. I honestly have no idea how much we spend on food or gas or other variable expenses. Of course, I know how much the recurring bills are - mortgage, utilties and such.

[atomicrc11]

I'm also in the same boat. As long as I'm saving for retirement and paying my fixed bills such as rent, gas, electric, cable, etc, where the rest goes doesn't really matter.

[stressedmama]

Wow, I'm really surprised to see how few people use a budget.

We do automatic contributions for retirement savings and our kids 529s, but I do budget for all our other bills. Actually it's probably more accurate to say I track all of our expenditures and if we are starting to spend a lot in one area like groceries, I can catch it right away and then adjust. Or if we really want to take the kids someplace and end up spending more this month on entertainment then I can cut back on some other discretionary spending.

I think once our daycare and diaper bills start going down, I'll probably we able to lighten up and not be so rigid about budgeting individual costs, but at this stage in life I feel it is a must. We just seem to cut it so close every month spending less then what we make.