First post + first question on budgeting :)

[Ticker]

Howdy all, I have been reading the forums for a while now but this is my first post.

What are the general guidelines on budgeting? Are there any numbers on what people spend per month on rent/food/restaurants etc? Had a long conversation with my wife dearest yesterday and even though we make semi decent money there is relatively little left over at the end of the month...

Regards,
T.

[snshijuptr]

The guidelines I like are 50% to needs 20% to wants and 30% to savings/debt repayment. You just have be really critical about what aneed is versus a want. I treat my trips to the grocery store and costco as needs, but the farmer's market is a want. A car payment could be either a need or a want depending on what car you purchased. Our cell phones are a want, butfor others it might be a need. I usually ere on the side of saying something is a want.

[jpg7n16]

The best guideline may be: trial and error

You try a budget, and see what changes you need. You review your expenses, cut out where you can, add on where you need - and over time stuff starts to work out.

And when trying to reduce expenses, look at your biggest ticket items 1st. Then down the list.

Like: *example of last months expenses* Rent $1500, Cars $750, Food $675...

Can we find a cheaper place that meets our needs at $1000/month?
Can we temporarily move down in car and pay off a lot of that debt to lower our payments to $300 total?
Can we reduce our food expenses down to $400 by eating at home more?

In this case, dealing with the top 3 expenses could save up to $1,225 a month. That's way better than starting from "can we clip coupons?", "do we need a different mobile plan?" - although those topics may get addressed eventually.


If you'd like to give specifics we'd be glad to give input Household income, expenses by category, amount left over, 401k percentage, debt picture, etc.

[disneysteve]

A car payment could be either a need or a want depending on what car you purchased.

And it isn't quite that simple. A car can be a need AND a want depending on the car. If you buy a $1,000 beater, it is probably 100% need. If, however, you buy a $20,000 sedan, it is a blend of need and want. You need a car but nobody needs to spend $20,000 to get comfortable and dependable transportation.

Other items get blended, too. You need a phone but you don't need caller ID, call forwarding, voice messaging, 3-way calling and every other add-on service.

I like the 50/30/20 formula, too. I think if you stick with that, you won't go wrong.

[gpoitras]

I would suggest trying a Zero balance budget. Find out where your money is going and assign every dollar a home the moment your paycheck hits your account. If you know you and your wife like to enjoy a meal out on the town, budget for it monthly. I'd suggest sitting down with your wife and coming up with the amounts allocated to each category.

In my experience alot of budgets found online have too many categories for me. I've since made my own excel spreadsheet / zero balance budget and the results have been great. At any time I can take a look at it, see where I can save a few dollars and where I can't. For the first time, my wife and I are actually going to enter the Christmas season with cash in hand, vs. having to scrounge up whatever we can in December.

Different things work for different people, but the zero balance budget works great for me.

Although these figures only apply to me, I feel I have a fairly tight budget.

Married, one child, making 113k annually

Mortgage 20%
Utilities 2%
Groceries 6%
Auto loan / fuel / maintenance 10% (9k Auto Loan, Fuel for 2 vehicles and $45/month set aside for maintenance or deductibles etc.)
Insurances 2%
Investments 10%
Phone / Cable / Internet 3%
Child Care 6%
Spending 8% (A general category I call our "blow money" clothes, entertainment, guns etc. )
Cash 33% (which I use each month to make large payments on the Auto Loan)

[Ticker]

Sure, below is what we come up with so far
Recurring expenses:
rent* 2950
credit card payments 1670
nanny 1600
groceries 1197
kids 1191
dining 1110
auto 931
shopping 584
utilities 519
household 450
Gym 174

Monthly one time 1200
The problem with monthly one time stuff is that it happens every month.....

Regards,
T

The best guideline may be: trial and error

You try a budget, and see what changes you need. You review your expenses, cut out where you can, add on where you need - and over time stuff starts to work out.

And when trying to reduce expenses, look at your biggest ticket items 1st. Then down the list.

Like: *example of last months expenses* Rent $1500, Cars $750, Food $675...

Can we find a cheaper place that meets our needs at $1000/month?
Can we temporarily move down in car and pay off a lot of that debt to lower our payments to $300 total?
Can we reduce our food expenses down to $400 by eating at home more?

In this case, dealing with the top 3 expenses could save up to $1,225 a month. That's way better than starting from "can we clip coupons?", "do we need a different mobile plan?" - although those topics may get addressed eventually.


If you'd like to give specifics we'd be glad to give input Household income, expenses by category, amount left over, 401k percentage, debt picture, etc.

[disneysteve]

Sure, below is what we come up with so far
Recurring expenses:
rent* 2950
credit card payments 1670
nanny 1600
groceries 1197
kids 1191
dining 1110
auto 931
shopping 584
utilities 519
household 450
Gym 174

Monthly one time 1200
The problem with monthly one time stuff is that it happens every month.....

What is your household income? You list $13,576/month in expenses. You haven't listed any figure for saving/investing. How much is going toward that? How many people in the family? You spend $2,307 for food between groceries and dining. Unless you have a very large family, that sounds awfully high. Are the credit card payments just what you spend each month and pay off in full when the bill comes or are you carrying credit card debt that doesn't get paid each month? If you have debt, you need to cut back on the luxuries and get debt-free before you do anything else. What does "kids" "shopping" and "household" all mean as those 3 categories consume $2,225/month or 16% of your spending. And what is covered by the "monthly one time" which obviously isn't "one time" since you say it happens every month.

I think you need to really track your spending for a month or two and figure out where all of the money is actually going.

[snshijuptr]

One reason I favor the needs/wants/savings budget is that it forces you to face overspending on luxuries. I categorize by this, but I also label each debit by the type of expense: Gasoline, Groceries, Travel, etc. Personally I'm actually on a 53/17/30 budget and our excess needs every month pull from our wants.

[gpoitras]

One reason I favor the needs/wants/savings budget is that it forces you to face overspending on luxuries. I categorize by this, but I also label each debit by the type of expense: Gasoline, Groceries, Travel, etc. Personally I'm actually on a 53/17/30 budget and our excess needs every month pull from our wants.

I'd never heard of the needs/wants/savings budget (learned something already here!). This morning I quickly tried to place my categories into these three (needs / wants / savings) and I have some questions.

Needs: Shelter, food, utilities, fuel?

Wants: Auto Loan, Cable TV, Internet, Spending (general category)

Savings / debt: Investments, savings

What about a cell phone, assuming no land-line? Would an Auto Loan be a want or be put into the savings / debt category?

[Ticker]

Thanks for the comments.
Income varies:
Base salaries 300k+
Bonuses 50k+
Side ventures 10-30k. These are little harebrained ideas that I pull of occasionally. This is pretty much then reinvested in something more stable..
Investment return/income is allways reinvested and as such not really relevant.
We fully fund both 401k's in January.
Roughly 1500 a month goes to stock purchase plan. Bonuses, awards etc goes to investment accounts.
We put in average around 70k-100k a year after tax in various savings/investment accts and fully find 401ks.

We rent.
Two adults, two little boys (1 and 3).

I was quite proud of how we squished our food budget. It was around 4-5k a month now we are down to 2500k or so.
Credit cards have around 200k on them on 1.9 until paid off. The payments are minimum payments since I don't want to pay this off.
We have no debt.
Category "kids" contains all the diapers/formula/toys/swimming classes etc.
Category "shopping" contains things like iPads, shoes, clothes etc..
Category "household" contains everything from floor lamp being destroyed by climbing to any target/costco purchases.
"one time monthly" would be any non recurring expense such as tire needs replacing, dental crown, stuff like that.

What is your household income? You list $13,576/month in expenses. You haven't listed any figure for saving/investing. How much is going toward that? How many people in the family? You spend $2,307 for food between groceries and dining. Unless you have a very large family, that sounds awfully high. Are the credit card payments just what you spend each month and pay off in full when the bill comes or are you carrying credit card debt that doesn't get paid each month? If you have debt, you need to cut back on the luxuries and get debt-free before you do anything else. What does "kids" "shopping" and "household" all mean as those 3 categories consume $2,225/month or 16% of your spending. And what is covered by the "monthly one time" which obviously isn't "one time" since you say it happens every month.

I think you need to really track your spending for a month or two and figure out where all of the money is actually going.

[disneysteve]

I was quite proud of how we squished our food budget. It was around 4-5k a month now we are down to 2500k or so.

Please don't take offense at this comment as I say it will all due respect and concern but are you nuts? Your food spending matched or exceeded the median annual household income in this country. In other words, you were spending more on food than half of all American households earn. What the heck do you eat? I know the 1 and 3 year olds aren't eating that much. Even at $2,500, that's $83 per person per day. I'm sure the kids aren't consuming $83 worth of food every day. When we travel, which we do regularly, we typically average between $20 and $25 per person per day and that's with us away from home, eating out 3 meals per day. At home, the average is well under that. I think you need to take a good hard look at this category.

I have a lot of other comments and suggestions but I'm at work right now and don't have the time to share them. I'll be back later.

[wincrasher]

You could buy all the food a family could ever need plus hire a person to prepare every meal for $2500 a month.

This number he's given must include meals out, entertaining/parties, prepared meals, wine/booze, plus the regular groceries. That or they have Beluga caviar and Dom Perignon at breakfast/lunch and dinner.

[Beppington]

The guidelines I like are 50% to needs 20% to wants and 30% to savings/debt repayment. You just have be really critical about what aneed is versus a want. I treat my trips to the grocery store and costco as needs, but the farmer's market is a want. A car payment could be either a need or a want depending on what car you purchased. Our cell phones are a want, butfor others it might be a need. I usually ere on the side of saying something is a want.

All car payments are wants IMO

[Beppington]

Please don't take offense at this comment as I say it will all due respect and concern but are you nuts? Your food spending matched or exceeded the median annual household income in this country. In other words, you were spending more on food than half of all American households earn. What the heck do you eat? I know the 1 and 3 year olds aren't eating that much. Even at $2,500, that's $83 per person per day. I'm sure the kids aren't consuming $83 worth of food every day. When we travel, which we do regularly, we typically average between $20 and $25 per person per day and that's with us away from home, eating out 3 meals per day. At home, the average is well under that. I think you need to take a good hard look at this category.

I have a lot of other comments and suggestions but I'm at work right now and don't have the time to share them. I'll be back later.

He's spending $2,300/ month on food for his family but feeding us bologna I'm afraid

[jIM_Ohio]

Howdy all, I have been reading the forums for a while now but this is my first post.

What are the general guidelines on budgeting? Are there any numbers on what people spend per month on rent/food/restaurants etc? Had a long conversation with my wife dearest yesterday and even though we make semi decent money there is relatively little left over at the end of the month...

Regards,
T.

1) spend less than you earn
2) set aside about 20% of gross pay to savings
3) after you do #2, re-read #1.

Your success will be determined by the percentage in #2. If you save only 10%, you will be less effective than someone which saves 30%... even if the person which saves 10% has better investments.