This may seem like a silly question, but I’m starting to wonder if some of the caps I set for my budget categories are too high. How did you determine what your cap should be for each category? Any tips on how to refine my budget so things don’t feel as tight?
I always recommend two budgets - one backward-facing and one forward-facing. For the backward one, look at your past spending over a few months to see where your money really goes. For the forward-facing one, create a predictive budget based on that past spending. Over time, you can adjust as you go and tweak things to make sure your budget feels right. Make sure to give yourself some wiggle room for unexpected expenses!
@Skylar
That makes a lot of sense! I’ve been so focused on getting it perfect upfront that I didn’t consider adjusting as I go. I’ll give this a shot, thanks!
Basing your budget on past expenses is a good way to start, that way you’re dealing with realistic numbers. After that, you can tighten it up if needed.
Rio said:
Basing your budget on past expenses is a good way to start, that way you’re dealing with realistic numbers. After that, you can tighten it up if needed.
Thanks for the advice! I think I’ve been setting arbitrary caps without really knowing what’s realistic for me. I’ll look back at my spending and adjust from there.
A common rule is the 50/30/20 budget—50% for needs, 30% for wants, and 20% for savings or debt. Prioritize your essentials like rent, utilities, and groceries. Once your needs are covered, try to save at least 20%. If you have debt, try to allocate more toward that until it’s gone. It’s a good balance and helps keep things in check.
@JosephThomas1
I’ve heard of the 50/30/20 rule, but I’ve struggled with sticking to it. It might be time to get more serious about following that breakdown. Thanks!
We started by listing all bills and expenses, like rent and groceries, then estimating for things that change monthly like utilities. It helps to plan for larger, irregular expenses like car maintenance by dividing those costs into monthly amounts and setting that aside. Anything left after essentials goes into savings or fun money.
@Mal
That’s a really practical way to look at it. I’m going to try setting aside for irregular expenses like you mentioned!
I started by entering all my known expenses, then guessed on the rest and adjusted as needed. I tweak it as I go, especially at the beginning. It’s better to budget high and come in under if you can.
True said:
I started by entering all my known expenses, then guessed on the rest and adjusted as needed. I tweak it as I go, especially at the beginning. It’s better to budget high and come in under if you can.
That seems like a solid approach. I’ve been trying to get it perfect from day one, but I guess budgeting is always a work in progress.
We put everything on a credit card we pay off every month to track spending, then set our budget based on that. It’s worked well for us, but you have to be really careful with this approach to avoid debt.
@Sky
We tried that, but we ended up with debt because it was hard to keep track. It can work, but you have to be super strict!