Financial Planning

Discussion in 'Miscellaneous' started by Gryffindorian, Sep 24, 2013.

  1. Gryffindorian

    Gryffindorian Vice Admiral Admiral

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    Does anyone here have a budget? Well, I don't. :( I think I need to start saving money, or I'll be broke by the end of this year. I may also start looking into consolidating my bills and cut down unnecessary spending. I certainly don't want to get to a point where I'm living paycheck to paycheck.

    What say you? Do you find it easy or challenging to save money or balance your budget?
     
  2. Kirby

    Kirby Rear Admiral Rear Admiral

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    We live on a budget, and yeah, it's not easy, especially at first. I would say if you want to do it dip your toes into the process first. Spend the first month or so just writing down everything you spend and categorize it (rent/mortgage, food, utilities, gas, clothes, entertainment, etc). Just get in that habit and analyze what you're spending it on. After a few months then put some controls on what you can and can't spend in each of those categories. I remember being surprised about how much we actually could save just by sticking to the budget. Emergencies come up, so its a good idea to throw some money into an emergency fund for car repairs, emergency room visits, or trips for funerals or whatever.
     
  3. Timby

    Timby LIKE LIGHTNIIIIIIIIIIIIIIIING Administrator

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    I live by a pretty basic rule of thumb, in that if I'm considering any sort of luxury expenditure, I ask myself if I could afford it twice without being in trouble. If it would wreck my bank account, I don't do it.
     
  4. Collingwood Nick

    Collingwood Nick Vice Admiral Admiral

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    Yeah I love financial planning. It appeals to the inner accountant in me.

    I had money problems for years. Basically I was spending more than I was earning and being rather silly about it. Wound up with credit card debts in the tens of thousands. Not a problem as long as I had a job, but that's not always something you can control..

    Anyway long story short I got jack of it, sold off a lot of crap and just stopped spending my money. Now the only liability that appears on my balance sheet is my mortgage. Ace! It helps that I'm in a reasonably well paid job too, and that when I'm not at work I'm at university (I don't have spare time in which to spend money)

    I use MYOB which is accounting software for small business to track my in and outflows. Every cent is accounted for because I know just how hard I have to work to earn it.

    Good financial habits can be a pain, especially if you are not pedantic by nature, but the sooner you practice them the better. I agree with the poster above, watching where your money goes is a great way to begin. You might be surprised with where your money is going.
     
  5. Robert Maxwell

    Robert Maxwell This is fine. Premium Member

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    I keep a simple spreadsheet where I budget things out from paycheck to paycheck. I don't actually live paycheck to paycheck, but I like knowing where things are going on that biweekly basis.

    The top three rows are: Income, Expenses, Balance. Then I skip a row and have each line item. There's one for every major bill or other regular expense, then a few "wildcard" rows for entertainment and miscellaneous expenses. I'm going on a bit of a debt-clearing spree lately so my savings aren't growing like they usually do, but I've basically got things on a good positive trajectory.

    Once you make a budget, think about what you can cut/reduce. I'm a single parent with two kids and I found that I was simply blowing too much money eating out because I was often too tired to plan for meals in advance, so in the heat of the moment I'd just say "fuck it" and go out/order in. My solution was to draw up a weekly meal plan with an appropriate shopping list, so I don't have to spend brainpower making decisions about what to eat every night, and I can keep food costs down by shopping to a predefined list and not eating out often. Little things like that can make a big difference to your pocketbook.
     
  6. Kelthaz

    Kelthaz Rear Admiral Rear Admiral

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    1.) Keep a budget in excel. Categorize your spending (e.g. food, rent, drinks, restaurants, clothes, etc.). Don't just lump everything into a misc category. I'd recommend adding a special category if you have any expensive hobbies or debts (e.g. video games, student loans, jewelry, crack cocaine, etc.) to better figure out where your money is going every month. Don't get lazy and skip anything.
    2.) Figure out what you can do without and start trimming.
    3.) Don't go crazy with budgeting and turn into Ebenezer Scrooge. You'll get discouraged and learn to hate saving. Enjoy yourself, but keep your spending in check. That's all.

    Step 1 is the only hard part. Once you're aware of how much you're spending and where you're spending it the rest comes easily. Don't worry too much about meeting certain targets the first few months -- just track your expenses and go from there.
     
  7. RoJoHen

    RoJoHen Awesome Premium Member

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    My primary income comes from tips. When business is good, I usually have more money than I know what to do with. When business is slow, I struggle a bit. It's all very up in the air.
     
  8. Kelthaz

    Kelthaz Rear Admiral Rear Admiral

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    Yeah, that would complicate things. However, as long as you have a decent salary, your expenses shouldn't be based on your income. A better month of tips should mean more savings.
     
  9. RoJoHen

    RoJoHen Awesome Premium Member

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    Tipped employees almost never have a decent salary. Their tips are their salary.

    My expense remain constant. My income varies wildly.
     
  10. DonIago

    DonIago Vice Admiral Admiral

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    I use Quicken to keep track of my money. I was rather careless with my spending for awhile and am digging myself out of that hole, but the important thing is that I -am- digging myself out of that hole.

    I basically assume a month of expenses but only two weeks of pay, and if I find myself with a surplus I dump it into the debt bucket.
     
  11. Gryffindorian

    Gryffindorian Vice Admiral Admiral

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    Thanks for all the suggestions and feedback. Looking back, I see that I've been a bit of a spendthrift all these years, and now I realize I'm not getting any younger and should start paying better attention to my spending habits. I don't make a ton of money, but when you're single, there's a tendency to overindulge in "wants" instead of "needs."

    I used to have a mini-spreadsheet that kept track of my budget, but I soon grew tired of tracking every single dollar that I earned and spent. Besides, nowadays I have on-line banking and can simply look up my checking account activity. I should probably go back to listing all my expenses on a periodic basis.
     
  12. thestrangequark

    thestrangequark Admiral Admiral

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    I never really had anyone to teach me finances, because both my parents sucked at managing theirs; we were poor to begin with, and dad's alcoholic (all the money went to liquor) mom's mentally ill (all the money either went to smack, spending sprees, or recovery -- she's much better now, though!). While I'm naturally pretty spendthrift, I still needed help. I went to a non-profit financial advice firm. They helped me learn the best way to pay my debts (massive student loans and a little bit of medical debt), they eased my fears about being in debt and explained what to do if I ever found myself in a situation where I couldn't handle it, they helped me understand my assets and set up a budget. They were great. I'd really recommend a good non-profit financial advisor to anyone.

    I'm not on a strict budget at the moment, money's still pretty tight but not so much that I have to keep an eye on every penny. I've got my student loan payments in order, I've got a small private savings account and a 401K, I've got a credit card that I save for use only in emergency, and I know things will get better the longer I keep up the good habits.
     
  13. Dimesdan

    Dimesdan Living the Irish dream. Premium Member

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    Myself and the future Mrs Dimesdan have been using a program called You Need a Budget for about 18 months, we have separate bank accounts, but share most of our expenditures and it's nice to see where our money goes, it also helps as I'm now back in full time higher education, my pay is about a quarter of what hers is each month.
     
    Last edited: Sep 25, 2013
  14. Chensams

    Chensams Vice Admiral Admiral

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    I don't really have a budget on what we are going to spend each month but I budget our savings. I've basically done that since I was in college. My wife and I have always bought what we could afford and stayed away from loans or maxing out credit cards. As our incomes grew, we still kept the same philosophy and are in really good shape in terms of retirement funds and savings. Both my wife and I put ourselves through college without loans (worked plus scholarships) so that helps.

    So I would at least have a savings budget with a retirement age and dollar figure in mind. I have my own spreadsheets for it but that's my area of expertise. Having a budget for spending or savings keeps it right in front of you so you don't lose track of where you are headed. Always a good idea.

    For me personally though, I hate it when I see people go crazy with a budgets where it dictates every step they take (both ways). Some times you cut back too much and get to the point where you don't enjoy life. Other times, you see people get a windfall of cash (bonus) and since they are under budget, spend, spend, spend.
     
  15. propita

    propita Rear Admiral Rear Admiral

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    We've had a spreadsheet to track income/outgo since 1993, when my husband went back to school. Basically, we did this because everything says that, to save money, you have to know where it's going. Back then, there was a lot less income and things were MUCH simpler. We lost 1993-2000 in some computer glitch, but that doesn't matter anymore.

    Now the whole thing is far more complex. Cause we're anal and all. It's more for curiosity, but has come in handy when a question has arisen about something.

    The main table has the months across the top. The left column starts by listing all the outgoing, and everything broken down and subdivided. So "Taxes" would have under it: federal, state, fica-ss ee, fica-mc ee, and see--however it's listed on the paycheck for each job.

    Taxes, retirement, one-time costs, health/insurance, housing, transportation, shopping (edibles and non), clothing, household, entertainment, vacation, eating out, gifts, misc. And each of these has subcategories, as needed, like each different utility, or different types of transportation costs, etc. My husband has, on occasion, had me add rows to clarify things. And many cells have comments for each entry in the cell.

    Like I said, we're anal. This doesn't all get referred to too often, but it's more for the "what did we do...?"

    Below that is a summary table: the income and sums of each of the above listed categories, with a BALANCE at the bottom, to see if we are +/- for the month.

    To the right of all of this is a column with the yearly summation of each category and subcategory, so we know how much we're spending for the year. At the bottom is the monthly average, comparing it to the prior year. Here's where we can see if we're suddenly blowing money compared to before.



    To the right of all of this are a series of completely separate tables.

    The first notes the regular bills, when due, when paid. This was more because I handle the bill-paying now, and got tired of my husband asking questions about it. "Here, you can see what's due when and whether it's been paid this month yet." Pre-emptive strike to shut him up.

    The second summarizes our retirement accounts: IRA, Roth Ira, pension, 401k/403b, etc. Just to summarize in one place, at a glance. This gets updated just a couple of times a year because, whatever. Not many changes there.

    The last table summarized our checking accounts, savings accounts, and CDs. Most get updated only monthly, except for the checking account. We use that a lot, naturally, but it better match the check register and bank statement. No reason for it not to.



    As I said, we're pretty anal. Likely a bit of OCD in there. Most people say it's too much effort. The main effort is setting it up initially. After that, you really only need to spend about 10-15 minutes a week, unless you're actually looking at entries for some purpose.
     
  16. Gryffindorian

    Gryffindorian Vice Admiral Admiral

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    Very good perspectives, all.

    Last night I downloaded an Android app called Money-Wise, the free version, and I must say it's pretty neat. It functions a lot like a checkbook in that I have to list my income and expenses. There are some nifty graphs that illustrate my spending stats by percentage distribution; e.g. 40% rent, 30% entertainment, etc.

    TSQ, I grew up in a single-income household in another country. My dad, who retired from the Navy at an early age, had sufficient pension to raise a family of six kids (and this was the equivalent of foreign currency). Granted, my parents also owned properties abroad and benefitted from the agricultural income. And I remember growing up thinking we were rich. :lol: But no, we were just better off than most of the townsfolk.

    My dad, the most generous man I've ever known, was very kind and charitable to others in need. He was literally giving away money to the poor, and he was no millionaire. He was also very extravagant and had a tendency to overspend (which I probably got from him). My stay-at-home mom did some of the financial planning and did her best to make a great home for the family. I was very grateful that we kids were all well fed and healthy, raised in a comfortable home, got nice clothes, and never wanted for anything.

    I strongly believe that people should be taught at an early age how to budget and manage money wisely. I don't know if schools nowadays offer such classes, apart from home economics, although not every student might be interested in the subject.
     
  17. Mr Awe

    Mr Awe Vice Admiral Admiral

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    Budgeting and financial planning is a must. I don't live paycheck-to-paycheck, but I do have a simple spreadsheet so I know where my money is going. You shouldn't just aim to not going broke, but you need to save money each month for retirement. Otherwise your life will suck when you're old!

    It's pretty easy to do. The tough part is the discipline to actually do. I remember you made some sort of unwise car purchase awhile back. I forget the details but I do agree that you need to do this!

    Mr Awe
     
  18. thestrangequark

    thestrangequark Admiral Admiral

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    Gryffindorian, from my work in the education field I can tell you that, especially over the past 5 years, there has indeed been a push to increase and improve financially literacy among kids (in the states, not sure about other countries). There are even some calling for specific financial learning standards, and I think these would be great.

    However, I also think that even if I had had great role models I might have fallen prey to the same mistakes I made as a teenager. Like I said, I am naturally frugal, I'm no fool, and when it came to money I grew up in the harsh reality of (sometimes extreme) poverty, so I didn't take it for granted. Still, at 17 I was just not mature or experienced enough to make the choices I did regarding student loans. Now, like most Americans my age I find myself burdened with a staggering amount of debt -- not because I was carefree with credit cards or didn't work hard (I held down two jobs while in school full time), but because I believed what they told me about investing in my future. So, while I think education is hugely important, and I take full ownership of my debt, I also think there are some serious problems with the system (universities and loan companies fleecing students, unscrupulous banks and lenders, etc), and those need to be addressed as well.
     
  19. Gryffindorian

    Gryffindorian Vice Admiral Admiral

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    One of my sisters was in the US Air Force and supported herself through college when she got out. She was in her mid 20s then, and now she's a registered nurse, but still paying her student loan. I agree that education is a good investment and can be expensive; fortunately for others, they could qualify for grants and get scholarships. Some employers nowadays entice their employees to go back to school and finish their degrees or get advanced degrees at the company's expense through tuition reimbursement programs.

    Mr. Awe, I remember your smart, though unsolicited lecture on managing debt. I had almost forgotten that was you. :lol:
     
  20. Mr Awe

    Mr Awe Vice Admiral Admiral

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    ^ Sorry, but it was honestly only because I care and wanted to help! I hope we're good! :)

    (Maybe I shouldn't have reminded you that it was me!)

    Mr Awe