How do you budget?
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I’m not asking about what a budget is or why one should have a budget (I’d hope we all know that). What I’m curious about is the actual mechanics of your system. Here’s why.
In our house, we have a few fixed or mostly-fixed categories: mortgage, water, sewer, electric, gas, car payment, etc. But most of our other categories offer some flexibility, so we do those based on percentages: tithe, offering, my “fun money”, his “fun money”, travel, entertainment, etc.
Recently we’ve been looking at different personal finance software packages in hopes of replacing our somewhat innefficent home-grown program. We really only want a couple of specific features, and those are:
- The ability to import our 5000+ transactions in .qif format, with categories (MS Money imports everything but the categories, and the idea of either losing the relevance of the data or adding the categories by hand to each transaction is… uh, unappealing)
- The ability to budget using percentages and fixed numbers
- Well, that’s mostly it. Just those two things, though we wouldn’t mind being able to sync with our bank and credit card accounts automatically.
Those seem like simple requirements to me, but I haven’t found anything that actually has both of those features. In fact, I’ve yet to see anything that allows percentage-based budgeting at all. This seems a little weird, considering that most financial expert-types recommend putting xx% of your income into savings or investments or whatever. I did a search on Google for percentage-based budget and found nothing helpful. I can’t imagine we’re the only people doing this, or at least talking about it, but I’m really starting to wonder.
Which brings me to the question in the title of this post: do you use percentages? fixed numbers? flexible numbers? some combination? something else entirely? Please leave a comment if you have 45 seconds and enlighten me!
we percentage base some of our stuff like tithe, offerings, amount pre-tax retirement contributions. i use quicken and haven’t really figured it out so i can’t say for sure if it will do that. i’ll have to do a better job of understanding the software. right now i just dl the net salary deposited but i would like to track the amount taken out for 401k, insurance, etc… and i think it can do it, i just haven’t taken the time to figure it out.
it does have a place to enter the savings rate you get on an account, but it doesn’t always calculate that properly (again could be user error).
I recently took over the finances from my wife, and started using Moneydance. It was the only software I found, other than Money and Quicken that good automatic account syncing. This is a major requirement for me. It is Java based so it will run on any OS. It also has a free trial.
The main problem I have found with it is the budgeting feature is not very good. It does not support percentages either. I am trying to maintain a envelope system, which is hard but kind of works. I set up my “envelopes” as sub accounts of my checking. I have it set to automatically move money into these accounts at set internals. I import my checking account entries and choose the budget category for each imported item. All this works great, the problem is reconsiling the sub-accounts. I have to walk thru each new entry and manually transfer the amount from the sub-account into the checking account to cover the expense.
Thanks for your comment, Kris. It sounds like there’s really a market for someone to come up with some good personal finance software. If we can’t find anything that will work for us, I’ll probably end up writing something myself; if I do that, I’ll definitely see what my blog readers consider “minimum requirements.”
By the way, have you looked at Mvelopes? I took them up on their free trial last month but canceled because they didn’t let me import my transactions. However, it’s Java-based, it definitely does the envelope system, and I believe you can sync everything with your financial providers. Downside: monthly fee.