What kind of budgeter are you?

matthew's picture

I read a short review of a product I'm considering -- "You Need A Budget" -- and the initial paragraph of the review really grabbed me.

I’ve decided there are three types of people out there:

  1. One who needs a budget, otherwise they’ll spend whatever they can get their hands on, and then some,
  2. One who does a pretty good job by themselves, stays out of debt, but could definitely benefit from a proper budget, or
  3. One who is so anal about their money, that they don’t need a budget. They already scrutinize every purchase before they make it.

My epiphany was this: I've been a Type 1, trying to be a Type 3 and failing. After many years, I've finally arrived at a Type 2. The only debt we have is our home, but we still feel strapped for cash all the time. We're considering buying some real estate in the near future for rental income, and I realized that we probably need to get a better handle on our finances so that emergencies or vacancies don't catch us with our pants down.

I'm thinking of buying You Need A Budget, mainly because Quicken is far too anal for my purposes. I don't want to track purchases to that level of detail. But I do want to be able to have a general outline of where things should go, a bit more than our current strategy of only four categories: bills, mortgage, savings, slush fund.

What's your budgeting archetype?

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Sammy G's picture

There's a fourth

There's a fourth archetype (and likely more) -- One who does a good job setting up a household budget system such that heads of household can spend freely and openly knowing how each purchase impacts the household 'estate' and avoiding any feeling of stress.

IMHO, a budget is a decision tool. It's a tool that lets someone see, for a static period, inflows and outflows. It generally works best for examining either monthly or annual spend-and-save outcomes. It certainly shouldn't be confused with a full cash flow planner or a tax impact sheet. Thus, while the $20 product seems appealing it doesn't look like it supports a holistic financial management method (read: habit) that informs long-term saving and planning strategy.

Matt, et al, I have a couple spreadsheet tools that I've developed over the years. I can send to those who request, no problem.

matthew's picture

Send 'em!

Sammy,

Could you just post those spreadsheets as attachments to a new blog entry? I'd be interested in seeing them. I use a primitive spreadsheet with monthly, quarterly, and annual expenses, and just rely on a 401(k) and a few other small investments to grow over time...

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Matthew P. Barnson

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Matthew P. Barnson

JB's picture

I'm interested.

I have been reading a couple books on how to improve my financial position. I am currently making more money that i ever have, but still feel strapped. My wife currently has been trying to use M$ Money (a quicken like app) but it doesn't really seem to work like we want.

If you would pass along your spread sheet that would be interesting to see...

Sammy G's picture

More online budgeting tools

www.mint.com and www.mvelopes.com both look pretty cool. Mint is free, but ad supported.

matthew's picture

Went with YNAB

I checked out your spreadsheet (thanks for that!) and a few other sources, and ended up going with YNAB. What I wanted was a really straightforward month-to-month budgeting tool, and I'm tracking performance of my other investments in other ways.

Quicken/Money were just too complicated, and gave me great reports about how I'd blown the budget last month, but didn't work well for me. The other problem I had is they carried overages into a particular category, when what I really wanted was to have under-spending carried over in a category, and over-spending deducted from the next month's budget as a whole so that I don't have a "deficit" in a category of spending.

I'm only on week 3 of YNAB; I'll have to let you know how it goes. So far, though, we're definitely making smarter spending choices because we're aware of the fact that we have a budget, and we're not going to make that budget next month if we try to spend this paycheck's money right away.

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Matthew P. Barnson

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Matthew P. Barnson