8 ms·

I know you're not asking directly for advice, but if you'd be interested, I find the following is the easiest way of keeping a budget. 0. Forget about tracking

• 6510 6y ago
  Nice! I just stop spending money unless I absolutely have to. A cup of coffee and a bit of candy at the gas station every other day (2+4 euro) * (365/2) * 10 years. Thats ELEVEN THOUSAND euro I could probably be doing something more interesting with. At 7 euro/kg and 30 gr/liter 11k is 52380 liters of coffee or 314285 cups or 86 cups/day for 10 years. 2/3 was candy (we are not buying that) so we only have 28 cups left per day. At 2 cups per day (which is 4 times as much) it still is 140 years of coffee every 10 years. I pick 10 years because its short. If we take 50 years it is 55 000 euro. Now imagine throwing money around like that all day long. Think about that when you get a free coffee. I know it doesn't sound very convincing but most people manage to match their spending with their income. It really doesn't matter how much you earn. Real wealth is in not spending it. Also, if you hoard enough cash and enough discipline it eventually stops making sense to work. More time to enjoy life! (jay!) Also, that bag of candy is probably killing me. If I'm hungry I must have planned things poorly.
  • nacs 6y ago
    Agreed, and that whole "oh just ignore purchases less than $10" is what causes people to go into debt without realizing it. Buying $8 daily coffees, lottery tickets, in-app purchases for crates of Candy Crush tokens, and subscribing to all kinds of useless subscription-delivery services (razors, shirts, Japanese candy, etc) adds adds up even if you're on Silicon Valley salaries.
    • anitil 6y ago
      I think I phrased my comment poorly. I agree that a daily coffee is probably worth considering at ~$3x5x50 = $750 a year. (actually in my case I have multiple coffees throughout the day so if I were to purchase them it'd be more like $1500 or more). What I mean is the _occasional_ coffee is not worth bothering about. I think any recurring payment is worth recording, but where you set the level is pretty personal
    • 6510 6y ago
      You are pretty much buying shots of endorphins. You get those anyway. You can get more of it for a short while but then sensitivity is dialed down and you have to buy candy crush crates forever. I really enjoy turning down the offers.
  • anitil 6y ago
    While I agree that recurring costs should be accounted for, I'm trying to get a bit of balance in my approach. To put it in perspective, it's not out of the realm of possibility that I could switch jobs and make $11k extra this year. It's also not out of the realm of possibility that I have an injury that puts me out of work for the next 2 years. (Or, hypothetically, a global pandemic that reduces or increases my hours) I deal with that level of uncertainty by only tracking the broad strokes.
  • monksy 6y ago
    I agree with the "I will teach you to be rich" (it's a book) approach a bit more than "i can't buy a $5e coffee daily". Their approach is more like a performance engineer. You look at the biggest costs first and reduce it down. I.e. Ask for a raise, refinance your place, find a cheaper place to rent, etc. When you get down to the coffee you would be faced with: is it cheaper to make good quality coffee, or am I paying for the experience? Personally I tend to view these re-occurring costs and I try to look at a way I can amortize them over a longer period of time. It's easier to justify the cost of a 200+$ espresso maker if I'm really that big of a fan and already have a defined habbit.
• Yhippa 6y ago
  When all the financial aggregators (Wealthfront, Personal Capital, Yodlee) fail me and I need to get a clear understanding of my finances, I always regress to something like this.
• tzs 6y ago
  > 0. Forget about tracking things down to the dollar, or even the tens of dollars. That level of precision is unnecessary. If a coffee here or there is going to break your budget, it's already broken and you need to go in to panic mode. I'd suggest considering using a separate payment method for those things, and only those things, that you just think are going to be just a little expense here or there that doesn't need detailed tracking. Track the total spent via that payment method every month on your budget. It's then easy to tell at a glance if you were right about not needing to track these things in detail or if you have missed some things that you should be tracking in detail.
  • unglaublich 6y ago
    My bank has this feature where the same card has two PIN codes. The PINs are coupled to different bank-accounts, the PIN determining which account will be charged. So groceries I pay with 111222, coffee-to-go with 333111... My bank does the rest. All easily analysable and exportable.
    • tendencydriven 6y ago
      I've never heard of that being an option at any bank. Who are you with? Sounds really useful.
    • Mediterraneo10 6y ago
      What do you do if PIN pads are disabled due to COVID concerns and customers are only permitted to make contactless payments?
      • madengr 6y ago
        Have you actually seen disabled PIN pads? I have seen places refusing cash (which I believe is illegal), but the PIN pads are easily wiped down between uses.
        • Mediterraneo10 6y ago
• mrmonkeyman 6y ago
  Agreed. Keep it simple. It annoys me when people talk of worrying about coffees and sandwiches when talking about earning (way) more and moving to a more sustainable area is out of the question.
• globular-toast 6y ago
  My way is as follows. Have three accounts: current, savings and retirement. The first two are cash, the third is something more long term. First work out the percentage of your income that you need to go into your retirement fund to maintain your current lifestyle when you retire. I plan to retire at 50. Your salary will get paid into your current account periodically. When it does, you check how much was still in your current account from last month and (hopefully) move the correct amount to your retirement fund. Whatever is left after that goes into your savings account. You can spend your savings on things you don't need like car, holiday etc. But never spend it all as you don't want to liquidate your retirement in an emergency. You'll know you always have enough in your current account for your essentials (bills, groceries). You never have to worry.
• mikekchar 6y ago
  > If a coffee here or there is going to break your budget, it's already broken and you need to go in to panic mode. I understand exactly what you are saying here, however, there have been several times in my life where buying a coffee here or there will break my budget. I know that's a level of poverty that most people on HN have never experienced before, but it's a reality for many people. You don't really ever want to go into panic mode. Living on a very limited budget is not the end of the world. I actually chose my lifestyle. I had this idea that there are 2 ways to be rich: make more money than I need, or need less money than I make. Sometimes the second one involves a lot less stress (which is admittedly quite difficult for a lot of people to believe). If you are on such a limited budget, it is quite important that you know whether or not that coffee on Monday means that you aren't going to eat on Sunday. At the same time, if you do have some wiggle room, it's quite important to treat yourself occasionally. What is important to track as your expenses has nothing to do with absolute value. It has to do with the value relative to your total budget. If nothing you buy costs more than $5, then obviously you are going to track smaller values. On the other hand, one of the huge advantages of having no money is that it doesn't take long to count it ;-) So I would rather say that if you need to track down to the level of individual dollars for a personal budget, something like GnuCash is probably not the appropriate tool.
  • 72deluxe 6y ago
    I think the old addage "look after the pennies and the pounds will look after themselves" really applies. Some people don't seem to mind not really tracking their spending down to an extremely granular level (ie everything) because they make so much money that small outgoings on their bank account are worthless, or they have to dedicate their time to their family and can't be bothered to track it. That seems odd to me because they could be paying for things they don't need, or odd subscriptions they really could live without. Small subscription services rely on you not noticing the "small" amounts, but many small items make a big item. I think a spreadsheet to track everything is really helpful to ensure that you are only spending what you need to spend, particularly if you wish to simplify your lifestyle (work less!) and do your proposed lifestyle 2 (need less money to live).
    • 6y ago
• zhdc1 6y ago
  Cutting down on the small stuff like has really helped us out over the long run. Coffee is about 4.5 USD where I'm at, which is part of the reason. The big expenses are still what matter though.
• TeMPOraL 6y ago
  > 0. Forget about tracking things down to the dollar, or even the tens of dollars. That level of precision is unnecessary. If a coffee here or there is going to break your budget, it's already broken and you need to go in to panic mode. Yes and no. Late last year I did track everything to the cent (well, to the grosz, the fractional part of Polish złoty) and used ledger (the CLI double-entry accounting tool) to analyze it. My main discovery there was that most of our spending was so thoroughly distributed across every category that there was no easy wins to be had. Pretty much the only things we could do that weren't serious lifestyle changes involved garbage-collecting some subscriptions and instituting monthly limits on $favourite-foodstuffs. But before doing a high-granurality trace of expenses, I was sure there were trivial cuts to be made. Turns out, they weren't. Doing this level of tracking is probably not sustainable in the long run (unless you're in emergency mode), but doing that for couple of months is a great opportunity to reevaluate all spending in your life.
  • agapon 6y ago
    I and wife have been tracking our expenses (and income) to a penny for more than 10 years now. It's easy when you don't have a lot of cash expenses and have a habit of entering them every night you make them. Dealing with card and other electronic transactions is even easier. Convenient software also helps a lot. We use KMyMoney, but there are many good choices.
  • anitil 6y ago
    I did the same a couple of years ago, and came to the same conclusion, which is why I've settled more-or-less on the system above.
• ketzu 6y ago
  0. and 1. is exactly why I built myself a 'this-should-be-aspreadsheet' webapp to estimate my expenses to have a rough budget. I only update it once in a while and check if it's somewhat accurate. I'm quite happy with that approach. Thanks for the ideas of 2-4!
• nunodonato 6y ago
  some years back I started working on an app to track finances in that kind of way. No micro-management, just macro-management of budgets and categories. It would also forecast considering past data and future predictions and see where you would attain goals or go broke! :) I should get back to it sometime
  • anitil 6y ago
    I like the idea, but I would be wary of it for this reason: the people who would like to use it are probably the most miserly members of /r/personalfinance. The kind who are likely to quibble about the $8/mo plan compared to the $9.50/mo plan. Basically the worst customers you can imagine. That said, let me know if you do it!
• marcosdumay 6y ago
  > That level of precision is unnecessary. It may be unnecessary if you are just trying to see how you spend your money, but may be necessary if you are running a business. YMMV.
• pricechild 6y ago
  > 0. Forget about tracking things down to the dollar, or even the tens of dollars. That level of precision is unnecessary. If a coffee here or there is going to break your budget, it's already broken and you need to go in to panic mode. I use Homebank[1] which has pretty useful auto-assignment rules. I then have vague categories - think groceries, lunch & dining (e.g. buying lunch is more luxurious than buying lunch and dining is even more extravagant) Every couple of weeks I import my statements and have a quick look at anything that wasn't auto-assigned - there's usually a couple of things and I add these, based on the merchant name or description, never to worry about again. I figure this gives me the best of both worlds. The only reason this small amount of work works for me is that I don't have to pay cash for much. When I do, it's unique enough I remember and categorise it, no biggy. I understand this wouldn't work for most though. I wouldn't want to lose track of the small things, as they do add up! Keeping the categories loose (and not caring about the difference between coffee and a sandwich) makes it work. "Look after the pennies and the pounds will look after themselves." as my grandma always says. [1] http://homebank.free.fr/en/ http://homebank.free.fr/en/
• andrewzah 6y ago
  > 0. Forget about tracking things down to the dollar, or even the tens of dollars. That level of precision is unnecessary. If a coffee here or there is going to break your budget, it's already broken and you need to go in to panic mode I strongly disagree. Entering every penny, and tagging every transaction correctly, lets you see where your money is going very quickly. A coffee won't break my budget but now I can see that I'm spending $x/month at my local cafe, etc.
  • dionidium 6y ago
    Also, for most of the vast middle-class and below, an inability to track your spending down to the dollar is itself a sign that your budget is broken. Most of us don't have so many transactions coming in and out that this should be difficult and it's a possible sign of dysfunction if you do.
• buzzkillington 6y ago
  >0. Forget about tracking things down to the dollar, or even the tens of dollars. That level of precision is unnecessary. If a coffee here or there is going to break your budget, it's already broken and you need to go in to panic mode. A coffee is $5 give or take. If I have one every day that's $1,825 a year. If I splurge and have two every other day that's $2,737. That's a lot of money. The simplest way to budget is to just give yourself a set amount of cash every morning and keep spending it until you run out. You get immediate feedback because you can see how many banknotes you have left. Funnily enough I think that's the main reason why there's a war on cash.
  • anitil 6y ago
    Yes a coffee every day is worth tracking, my emphasis was more on 'here or there'. I would say any ongoing payment is probably worth tracking unless it's truly trivial
• mattbillenstein 6y ago
  You should try my sheet: https://docs.google.com/spreadsheets/d/1c24ZmUy19_n_QggMOjcEFUO9oqULpNDAT7JHL4N62yU/edit#gid=25855845 https://docs.google.com/spreadsheets/d/1c24ZmUy19_n_QggMOjcE...
  • anitil 6y ago
    Thanks! It's much more sophisticated than anything I've tried
    • mattbillenstein 6y ago
      I've evolved it over time - I think budgeting, the csv import is key to get a rough handle on expenses, but I guess not every bank supports that.