In January, The Tall One got a raise. Hooray! More money to put into savings! More money to help us reach our financial goals!
Or not.
We didn't even adjust the budget, but I still feel like we're not saving as much as we could be. Before the raise, we had enough for our needs and some wants too, and now there's enough for the needs, some wants, and even more wants. I don't want to up our standard of living, but it feels like we're sliding upward without even thinking about it.
We always promised ourselves that when we got raises, we'd not absorb the extra. But easier said than done, I guess.
The way our budget worked pre-raise wast that every dollar went somewhere, with nothing budgeted for savings. But, we didn't always spend $100 a month on car repairs, so more often than not that would go into savings. And each month had some amount budgeted to clothes, but I didn't buy clothes every month, so more money for the bank. In the spring and fall, our utility bill was usually quite under budget, again more money to save for later. But now sometimes I find myself tempted to spend more. I mean, since all our numbers reflect a lower income, I can max out every category and still have extra money. But sometimes I don't. Sometimes I think that extra money should go far far away in a savings account and we should pretend it doesn't exist. Sadly, it's usually the former when it's something I want and the later when it's something that TTO wants.
We should probably allow ourselves a bit more wiggle room (yes, TTO, I know you're reading this and that's your cue to jump up and down in a happy manner), but oh it would be so cool to be that much closer to our goals.
Wiggle room, here we come. But that's a subject for another day.
Tuesday, March 25, 2008
The Raise
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8 comments:
Yay for a raise! Yay for wiggling!
I know exactly how you feel! It is nice to enjoy wiggle room. One thing we did was set up an automatic transfer from our checking to savings every month. It helps me stay on track and is less painful1 :)
Congrats on the raise! But I know what you mean when you sort of just start using that money on 'other stuff' and your budget still stays the same! Oops! ;) Thanks for entering my contest too...and good luck!
I like your budget. I call it cushioning. Then there's a little extra if something unexpected comes up, and money for savings when it doesn't.
Lisa
Congrats to your family for the raise! I agree that it's hard to avoid some form of lifestyle inflation. My husband and I struggle with this a lot, especially since we don't have a formal budget. Rather we save a lot of money and then make sure our checking account covers the spending. I cringe when he says, "we work hard so we can spend money" since it reflects our slightly different mindsets, but I will admit that I probably end up spending more (non-reimbursed) money than my husband! I put in that qualifier since we both travel a lot for work, but I do so more than my husband does.
I think you might like to try budgeting using an envelope system (with software) so that you allocate a given amount to each category each month and let the balances accrue. So instead of budgeting 100 per month and putting the extra in savings, you budget say 50 for clothing and 50 for savings. Essentially, budget a monthly amount for each category that amounts to the total you want to spend on clothing in a year, and always allocate th at much in each month to clothing.
If in a year you discover you need more or less for clothing, adjust the monthly figure down a little.
But make your savings figure, as much as possible, totally firm month to monthl
YNAB is good software for this purpose. Quicken is useless for it as far as I can tell. I would give YNAB a try (it also has a really effective budgeting philosophy and system behind it, it's not just software) as you can try it for 60 days money back guaranteed. It has worked for me where Quicken and Money were utterly useless in helping me to stay o n track with my budget.
My philosophy is unless you are putting away $2700 or so per month in savings, you need a formal budget. If you can put away $2777
a month away, maybe you can get by without a budget.
I currently only put away 900 per month, so I have a ways to go according to my own criteria of $2777 per month savings, which would result in accumulating 1 million over a 30 year timespan. In o rder to do this I need another 1877 in take home income per month, while not spending a cent more than i currently am. After that, I can afford lifestyle inflation.
@bugbear: Thanks so much for the suggestion. I'll look into some specific budgeting software. I've always thought software such as YNAB were too similar to Quicken to be useful for us.
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