After a prolonged period of avoiding the task of managing the domestic budget, I have finally succumbed to the pressure. I’ve spent some time over the last few days rummaging through the bank accounts and figuring out the current financial situation.
It turns out things are OK (ish), so, always the engineer, I began to figure out some way to keep an eye on expenditure that makes sense to me. What I have come up with is something quite nifty, well to me at least.
Now most of you are probably one of two types: the first type (the Surfers) don’t care too much about money: so long as there is some loot sloshing around somewhere, everything is fine and dandy. The other type (the Turfers) are ultra-organised: with discrete, and closely monitored categories for expenditure: clothes, petrol, groceries, dog shampoo, I-can’t-believe-it’s-not-butter, that kind of thing. I firmly belong to the first group with a small proviso: I worry, every so often, about how close I am to there being no loot to slosh around. I’m a Surfer with a small “s”.
The idea of classical budgeting sends me into goosebumps. Who says I can’t buy the latest book on Japanese toe-painting because I have already overspent on my monthly Oriental Book Purchasing Budget? Gaaa!
Instead I have come up with the concept of a “run rate” – how much dosh is available to be spent on a daily basis, and how am I doing against this figure. The run rate is calculated by subtracting all non-distretionary expenditure (bills, in other words) from my monthly income (salary, wages), and then dividing this remaining amount by the number of days in the month.
I exclude bills because I don’ t have much control over them. I could, of course, decide not to pay them, but then burly people would come to my door and start stamping on my flowers. Or worse. Not nice.
So, if my monthly salary were 1000 euro, and I knew I would need to pay rent, electricity and cable next month of 400 euro, then my run rate would be 600/30 = 20 euro per day. If I go over this amount any day, that’s bad. If I can stay under it, that’s good.
That’s pretty much it. A small elaboration is where I look at my last week’s expenditure compared to the total weekly run-rate (20 euros x 7). I do that just so I don’t feel guilty about blasting money on a 180 euro book on Japanese toe painting if I so wished. (I also use a monthly run-rate, but as I said, I’m an engineer at heart).
What’s nifty about this is that I don’t need to keep too many figures in my head, and the whole analysis thing can be done on a computer in 5 minutes or less. It means I can monitor frequently how I am doing, thereby changing my spending behaviour in mid-course if that is what is required. I don’t need to wait until the end of month to start pulling out my hair. It also means I can decide very quickly if I can afford something or not.
That’s the idea anyway. The practice may be different but we’ll see.
So what about you? Are you a Surfer or a Turfer? How do you manage your budget?
Passive Impressions 
I guess I started my (grown up) life as a Turfer. Kept books over what I spent, which made me realise how much money easily disappears by just buying a newspaper and a choc bar every day. Without much pain that gave me money to spend on things I wanted by avoiding wasting them on other stuff.
I kept that habit as newly wed. With a huge mortgage and two rather meagre paychecks, of which one that turned into maternity leave pay within less than a year, it was necessary to keep a budget. We survived that, and six years and three kids later we sold that house at a nice price, purchased a big van and moved north.
The turfer habit ceased in the mid nineties when I started to commute four hours a day to a new job and “my other half” decided that keeping track of money spent was boring. Surfing was possible due to my earnings based on constant overtime and extra night shifts at the hospital.
Nowadays I’m a mix. I keep meticolous track of withdrawals and what I pay with my credit cards. But I don’t have a budget. Usually things get around anyway, even if the first years as single parent with an ex refusing to pay child support was a bit complicated every now and then.
I even manage to save a little every month. Not much, but hopefully someday that will be sufficient for a down payment for a house. If not the hatchlings will need financial support of course, something which not is unfrequent…
Thanks for your comment, dragonqueen! I guess I think that the first step in controlling money is having some regular visibility over it. And best of luck with the savings plan.
Well, I’m a surfer through and through. And I suspect my wife is on a jet-ski somewhere thumping through distant fiscal waves. I like the idea of a daily budget, although I’m concerned that those Game of Life “monster charges” would blow it out of the water.
“Your snow tyres are looking a bit worn.” “I wouldn’t count on this rust bucket of a furnace seeing in the New Year.” etc.
You can borrow my copy of “Japanese toe painting for discretionary splurge types” if you like.
Thanks John.
Ho yus, the big bad bombshell from nowhere. Like the car service I had 6 months ago that cost me a quarter of the cost of my car.. I guess the only way to deal with such things is to rebudget, defer the hit for as long as possible and change the run rate. Not fun. Not fun at all.
Turfer, definitely. Not so long ago, K and I hit a minor snag, financially (the company we both worked for went under). I landed a low-paying temp job and kept us both afloat on my single income, without applying for credit or bouncing a single check. When K returned to work and I got a roughly 50% pay increase, I only slightly adjusted our budget.
So we’ve managed to save about 1/3 of what we’ll need for a down payment for a home in a couple of years in just the past year.
I set a really strict budget: I sat down with a calendar and wrote on each date that a pay deposit would post or when a bill needed to be paid, along with the amount due and the balance forward. I also wrote in each week’s grocery allowance, any prescriptions that would run out, and fun money where applicable.
I’m glad we didn’t jettison the budget when the salaries stabilized, though; within the last six months we’ve needed over $2,000 in car repairs and had the cash to pay for them using savings rather than dipping into money budgeted for expenses. We’ve both been there before, too, and it can become downright scary.
Hi PC, that’s very impressive what you have been able to do. It requires real discipline and focus. But it makes it all worthwhile when you have something to work for at the end of the day. Well done. Hopefully the downturn in the US housing market will turn in your favour.
Thanks! I hope so, too.
But I do have to say that I wasn’t trying to brag; more my point was that if two people who’ve been utterly irresponsible at times, both of us with our own problems (K “forgets” to pay bills until they’re past due; I have a tendency toward “impulse” buying) can pull it off, I think darn near anyone could.
Thank goodness for computer software that balances my accounts for me, too! I use Quicken to download transactions directly from our bank accounts (K and I have joint checking and savings accounts). People seem surprised that I don’t do this manually because I work in finance/accounting. No way! I work with ledgers all day at the office- I don’t want to look at another one when I get home. I’d be willing to bet I’d be a little less focused on the task at times if I had to do it all longhand…