How do you budget?

[Prototype]

I know everyone has their own spending habits, but how do you set aside your money?

I want to become more financially responsible, and I need some advice to how people set aside thier bills, gas, groceries, etc.

Do you have a formula? What's the best thing that's worked for you?

[Slava]

I spend almost entirely on a credit card and then pay it off every month; that way I can see how everything really adds up, and understand where I need to take it a little easier!

[Agamemnon]

Originally Posted by Prottotype

I know everyone has their own spending habits, but how do you set aside your money?

I want to become more financially responsible, and I need some advice to how people set aside thier bills, gas, groceries, etc.

Do you have a formula? What's the best thing that's worked for you?

Just have the bank (or whoever) automatically take $xxx out of your account a day after your paycheque goes in... cheque goes in on Friday, money comes out Monday/Tuesday, every paycheque (say... $100-$300). Get it to automatically re-direct to whatever investment vehicle you want.

You can pretty much do it yourself, but I find it easier to have the bank take the cash from me through auto-direct-withdrawal. It adds up quick over a year...

[ken0042]

When bills come in they go to the "IN" pile. On payday anything that is in the "IN" pile gets paid. I also make up a list that goes along with the bills for stuff I need; toiletries, household cleaning stuff, etc. I then take it shopping. Fill the car with gas, and see how much money I have left, and divide it by the 14 days until the next payday. Then act like I'm broke until a couple of days before payday. Then if I have extra cash I buy stuff that I want.

Of course there are things like mortgage, tax, insurance that are on automattic withdrawl.

[CaptainCrunch]

I didn't know the banks would do that, I've been doing that myself for the last 10 years.

Need to talk to my banker.

[Agamemnon]

Originally Posted by CaptainCrunch

I didn't know the banks would do that, I've been doing that myself for the last 10 years.

Need to talk to my banker.

There are limitations... I'm not sure if they can do 'every 2 weeks', they seem (as far as I know) to only be able to pick certain days a month... great if you paid on the 1st/15th, unworkable if you get paid every 2 weeks (at least, if you want it out right after payday).

Definitely the easiest way to save... and if you have it go directly into RRSP's, you won't even be able to touch the money in a weak moment (unless you're cool w/ the disadvantages of taking out RRSP money...).

In the end I found it was better to control this stuff myself, but the auto-withdrawal definitely help the 'willpower' aspect of saving for investing.

[Slava]

Originally Posted by Agamemnon

There are limitations... I'm not sure if they can do 'every 2 weeks', they seem (as far as I know) to only be able to pick certain days a month... great if you paid on the 1st/15th, unworkable if you get paid every 2 weeks (at least, if you want it out right after payday).

Definitely the easiest way to save... and if you have it go directly into RRSP's, you won't even be able to touch the money in a weak moment (unless you're cool w/ the disadvantages of taking out RRSP money...).

In the end I found it was better to control this stuff myself, but the auto-withdrawal definitely help the 'willpower' aspect of saving for investing.

You can also have an investment advisor set this up for you, and set-up a withdrawal to come out as often as you like.

[Agamemnon]

Originally Posted by Slava

You can also have an investment advisor set this up for you, and set-up a withdrawal to come out as often as you like.

Yeah... though just doing it through online banking is free... do you have to pay an investment advisor? Do they get commission based on what you buy if it happens to be within a certain product-range?

[Burninator]

I have automatic withdrawals for my money. I have money come every month for my RRSP's insurance, loans etc. I also started a ING account that takes money out every month and puts it into one of their savings account. If the bank doesn't do it for me, then it wouldn't happen.

[BlackEleven]

Originally Posted by Slava

I spend almost entirely on a credit card and then pay it off every month; that way I can see how everything really adds up, and understand where I need to take it a little easier!

I do the same thing. Its nice now because CIBC Visa prints percentages spent on certain categories on the bottom of the bill. For example, 20% retail, 20% entertainment, 50% food and grocery, 10% restaurant... or something along those lines.

[Slava]

Originally Posted by Agamemnon

Yeah... though just doing it through online banking is free... do you have to pay an investment advisor? Do they get commission based on what you buy if it happens to be within a certain product-range?

Yes, there could be commissions involved, but they are not coming out of your investment amount (in most cases). There is always a "commission" involved though...even at the bank!

[GrrlGoalie33]

The trick for my financial turn-around has been budgeting a certain amount of money every payday for everyday things. I take $150 from each of our paycheques for food, gas etc. The rest goes to pay off debt. If we get a bit of extra money, we usually use it for reno's or other things we need around the house.

[Agamemnon]

Originally Posted by Slava

Yes, there could be commissions involved, but they are not coming out of your investment amount (in most cases). There is always a "commission" involved though...even at the bank!

Maybe... I buy/sell mutual funds online for free with Scotia. I dislike the idea of a financial planner with a vested interest in selling you a certain brand/range of products... but I guess thats how the industry works.

[Pagal4321]

Well I have just started working in my career path, so my dad pretty much has informed me of how I should set up my budget.

I have set up a monthly withdrawal from my account to have 15% of my gross pay go into my savings. And going to set one up to have a similar amount go into my investment account.
But automatic transfers are prefect, because you never have the chance to even touch the money.

[Sylvanfan]

Originally Posted by Agamemnon

Maybe... I buy/sell mutual funds online for free with Scotia. I dislike the idea of a financial planner with a vested interest in selling you a certain brand/range of products... but I guess thats how the industry works.

I used to think that way too, but than I realized that the difference between having professional financial advice, and trying to do it myself was too much not to have it. You have to be careful selecting an advisor and check the credentials, but it's well worth it.

If I try to do all the flooring in my house myself, I can live with it for the next 5-10 years and eventually a professional can probably come in and fix any mistakes I make. If I try to do finanical planning for 10 years and make mistakes.....no one can come and fix it 10 years later, it's start over again time.

[Slava]

Originally Posted by Agamemnon

Maybe... I buy/sell mutual funds online for free with Scotia. I dislike the idea of a financial planner with a vested interest in selling you a certain brand/range of products... but I guess thats how the industry works.

Don't kid yourself, the same fees apply in either case, and the commission is just going somewhere else. Quite frankly, if you have a good advisor they will be able to provide you with a wide range of products including funds through the banks. (I just had to respond....sorry to disrupt the thread!).

[MoneyGuy]

Originally Posted by Agamemnon

... do you have to pay an investment advisor? Do they get commission based on what you buy if it happens to be within a certain product-range?

I can tackle this one.

Most planners don't charge a fee. Our income comes when products (investments, insurance, bank products, etc.) are purchased. For this you get services in a variety of areas. I disagree with the hate-on one poster had for planners. You are paying for service in your MER anyway (yes, at the bank also) but the difference is with a good planner you get tax advice, estate planning advice as needed and advice in a whole lot of other areas.

It's a misconception that planners will sell products that pay substantially higher commissions that others, so there is bias. The commissions are very similar on like products and most of us are ethical and truly believe that ultimately what benefits the client benefits us.

For the original poster, if he wishes I can email a budget template that is quite good.

Unfortunately, a smaller client just starting out may be hard pressed to find a good planner because the really good, sucessful ones will often not take on small clients. We have to devote our time to our larger clients. If you have a few questions that won't take lots of time, feel free to PM me.

But good luck. Starting young is one of the most important decisions that can have a large impact in youir financial life.

[notoepik]

I do my *budget* the same way Ken does. Pile of bills, pay them, go to the store and buy the stuff on the list. Check account balance every month or so and see if I have any money.

[Rerun]

I leave this stuff up to my wife. She is WAY better at it than I am. If it was left up to me none of the bills would get paid even though there's money in the bank... I tend to forget about stuff like that til the Past Due notice arrives in the mail. ... I'm terrible that way.
She know exactly how much money we have in the bank account... I however, don't have a clue.

If I want to buy something expensive, I always ask my wife if we can afford it.

[kermitology]

Personally.. my company sends me galavanting around the world for 5 weeks at a time so I don't spend any money at home. I save my per diem and buy cool electronics and toys and stuff.