Micro budget or broad and general

[MiikeB]

I am working on a new budget right now. At first I had micro budgetted the savings out, ie $150 for house repairs $250 for trips $150 for gifts etc. Then I read a post somewhere here and instead decided to make it one big slush fund I contribute $400 a month to.

The advantage here is that I don't have to wait 4 months of contributing $150 to reach a goal, but the disadvantage is if I spent it all on a trip I wouldn't have anything left for a home repair. I think I am responsible enough though to know not to do that, and I always have my emergency fund (sitting at $5k right now ) should a true emergency arise.

I also leave $200 a month unaccounted for, because I despise when I go over in one category (say, groceries or gas) and have to take it out of another area like savings. I think the $200 of free-flowing money will help avoid the "failure" feeling when this happens (and of course in a perfect month it gets added to savings!).

So, who here prefers budgetting for every category and who here likes broader budgets? And what are the reasons?

[kork13]

Personally, I have to "micro-budget" as you call it.... I have to have everything planned out to the t for me, so I have exactly what money goes where. However, as you mentioned, I have a 'slush' category, with a note to myself that reads, "Admit it, there's always something". Because you're right, a budget isn't something that you can spend to and abruptly stop when you hit your limit. You go over occasionally, or have stuff that doesn't fit into any specific category, so it's good to have some wiggle-room.

As for the WHY, ... well, partly I know it's because I'm a bit CDO. Okay, it all can be explained because of that... but whatever. I like being able to say "this is how much I spend each month on ______." Also, esp. for savings, since I have it in multiple accounts, it's nice to have it planned out which accounts get how much.

Lastly, and probably most importantly, doing it this way tells me when i'm spending too much on a given category. For example, my "groceries" category has been over-spent slightly for the last 2 months. This tells me that either I need to find ways to decrease my food expenses (more store brands, closer attention to costs, etc.), or it tells me that I simply don't have enough budgeted to that area, and I need to update it. In either case, having specific categories helps me stay on top of my finances better.

[jIM_Ohio]

Macro for me only. 5% of gross pay goes to short term savings to account for the types of expenses you indicate.

[Fizgig]

I used to do the micro-budget thing, but after a few years of obsessing over $5 being spent on the "wrong" thing, I decided to become more big picture about it. Now my budget categories are much more general and I like it better that way.

For long and short term savings, I do like to split it up a little. I have 3 savings accounts - The emergency fund, the house fund (taxes, insurance, repairs), and my splurge fund. I like to keep those separate so that when I DO indulge in a vacation or gorgeous pair of boots, I know that I'm not compromising the larger goals.

[skydivingchic]

I do mostly micro budgeting with one exception - my personal savings. I like it this way because I do tend to be a bit obsessive and the micro budgeting helps me feel more in control of my money. For example, before I started running my budget this way, I really loathed having to do any maintenance on my car as it seemed to me that car repairs took money away from spending on fun stuff. In reality, I should have been setting money aside for car maintenance every month. But because it was just one big pot, I didn't see it that way. Now, I set money aside every month in my vehicle maintenance envelope and when I have to spend some of it on a repair it doesn't irritate me as much.

Having seperate categories also helps tremendously in prioritizing goals. I would like to get back to participating in several of my expensive hobbies and could easily pay cash for those activities. However, in order to pay cash I have to give up something else. The only area to take from is my personal savings and the goals I have for that savings I consider higher priority than the hobbies, so it is an easy decision to make.

Right now I have two goals for the personal savings account - a new to me car and an extended vacation to do a spanish immersion program. That money is just all lumped together until I get closer to achieving those goals, at which point I will seperate it out.

My budget is pretty consistent and I've yet to encounter an overage in one area that couldn't be covered easily with another area. I plan my budget so that there will be "slop" left in some areas most months. For instance, groceries are budgeted at $400/month, but usually come out to be $300-$350, so that is an envelope that can usually afford to make up small overages in other envelopes.

But as with so many things in life, to each their own. Budget the way that works best for you.

[kork13]

I used to do the micro-budget thing, but after a few years of obsessing over $5 being spent on the "wrong" thing, I decided to become more big picture about it. Now my budget categories are much more general and I like it better that way.

I sort of feel that mine are fairly generalized (for example, lumping phone, cable, power, water, etc. into "utilities", and ~5 different monthly charitable contributions into "Charity"), so that I'm not "obsessing over $5 being spent on the 'wrong' thing." I mean, I don't list out each and every expense/bill and call that a budget, is that what is meant by 'micro-budgeting'?

I use 12 categories: Taxes, Tithing, Housing, Debt, Auto, Groceries, Utilities, Insurance, Charity, Savings, Pers. Spending, and Misc.

If I may, what categories do you use? how do you breakdown what expenses fall where? I guess I don't understand what "general" budget categories would look like. I just don't see a much middle-ground between what I have and .... well, I can't say "not having a budget", because I know there must be something more generalized than what I have, I just can't identify/quantify it... whatever a "macro-budget" would be.

[MonkeyMama]

I am much more of a macro budgeter.

I pretty much "budget" on an annual basis. I get my raise every January and it kind of makes sense then for us to have a calendar year budget.

I don't keep a lot of categories. For larger items I project what I Expect them to cost monthly (groceries and gas, for example). & we add up all the big ticket items, like insurance and property taxes, vacation and repairs, to make sure we are setting aside enough on a monthly basis.

Monthly, I enter every financial transaction into Quicken, down to the penny, but pretty much because it is not time consuming. So we monitor it on a monthly, quarterly, annual basis, and we do know where every penny is spent. It is more a monthly glance to make sure we are not getting out of whack in any one area. On the flip side, if some of our expenses are going down (we have had a couple of weird years in that regard - shrinking expenses) - we decide what to do with that extra cash.

Before we cut our income in half and had 2 kids, we didn't budget at all. I don't necessarily think everyone needs a budget. Now we just seem to have way more goals than income, so our budget is kind of like an annual plan to keep us on track with our limited resources. But I look forward to throwing it out the window someday. (We can still track our expenses and see where every dime is going and kind of monitor things without having to micro manage so much). I guess you could say I am more in the middle, for now. Some micro and macro aspects, but I don't particularly enjoy the micro aspects.

[GREENBACK]

I have never "micro budgeted". I don't think I'm organized enough to do it. I know what I have to spend and I write down my expenditures. Sometimes I spend a lot in one area and sometimes in another area. I usually stay below my income, though, not always.

I also pad my checking acct. with an additional 1k or so for the expensive months. I appld. those who can budget to the nth degree but it doesn't work well for me.

I look at it like a strict diet, which I can't do either, that few people ever stick with long term.

I say know your means and try to stay within them. It becomes ingrained after a time and you do it naturally and don't have to force yorself. This probably doesn't work for everyone though.

[Caoineag]

I do a flexible macro budget. I shoot for certain levels but if I consistently fail to meet them I know I need to alter something.

[boosami]

My "budget" (if you can call it that) is on a very macro level. All my monthly expenses go to my charge cards, which I typically don't look at until the end of the month. I pay those from funds in my primary checking account. After payment, if the balance drops below one month worth of income, I transfer to balance from my short term savings. This fluctuates, but overall I am contributing more to the short term per paycheck than I am pulling out overall. It's kind of a self-budgeted system in that if I end up transfering a lot over one month, I'll spend less the next month by default.

[PrincessPerky]

We are very macro..actually we don't have a set budget.

We don't spend more than we make and we do save, and send more to the car than needed, but the exact amounts are kinda up in the air.

I have budgeted much stricter in the past and hated it, I hated saying "No we can't try that new food no room in the budget" While I know I could budget some spare for new things in, I simply enjoy the whim of oh sure why not, 10 bucks less to the car for a new food is fine. (or by the end of the month 40, whatever)

once the required bills are paid (including house, tithe, savings, car, utilities - in order of greatest bill to least) we spend some of the rest, and send some to the car to pay it off (or 3 times a year pay a big bill-insurance and the like)

that is the extent of our budget. I wouldn't recommend it to anyone trying to get a handle on their finances, but like that diet, it is the best we can do long term.

[GREENBACK]

I think it is obvious here that if you're starting from scratch and fighting your way out of debt you may need to go the strict route but if you've been at this savings and investing thing for a while you probably have developed a lifestyle that doesn't require you to count every penny.

Like PP says, it gets old denying yourself little pleasures when you know you can afford them. If I go over my earnings by a few dollars I know I can make it up at some point but until you learn to discipline yourself to do this I can see sticking to the strict budget.

I use credit cards for the majority of my purchases and that's because I know I will pay the balance when it's due. Some people can't do this. Similarly, Some can't "macro budget" things because they haven't yet learned to instinctively stay within their means. It takes time and financial discipline.