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!).
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!
Readers, does a very detailed budget work for you, or do you have more general spending guidelines?