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Wednesday, May 27, 2020   
 

Survey Results: Personal Budgets
by Scott Bilker
Scott Bilker is the author of the best-selling books, Talk Your Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit Card and Debt Smart. He's also the founder of DebtSmart.com. More about and DebtSmart can be found in the online media kit.
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Scott BilkerThis survey originally ran in the 8/14/02 DebtSmart Email Newsletter.

Do you track your spending by category? For example, Dining Out, Gas, Entertainment, Utilities, etc.

60% of respondents said Yes
40% of respondents said No

"I only take out a certain amount for groceries/husband's allowance/extras (entertainment) each pay. His "allowance" includes his gas."
--Anonymous

"Most of our bills are tracked by the individual company or expense (i.e. we don't have a utilities category, but electric, gas, telephone, etc. categories.) I find it easier to estimate expenses this way."
--Anonymous

"I do in my head. Also, as I budget, I allot certain amounts for gas, etc. I only vaguely keep up with it."
--Hannah

"I am starting too in September!"
--Michelle

"I used to but after I got married, it got harder to keep track of the receipts - I do know this is a great help."
--Laura

If yes, how do you do the tracking?

25.3% of respondents said With Software
33.3% of respondents said With Paper
8% of respondents said Other

"Every evening I enter the day's expenditures into Quicken."
--Jan

"Our budget is written on paper, but we track actual spending using Quicken."
--Anonymous

"Mostly in my check book journal. I do a running total on deductible items, medical, church, charities, books, education... in a notebook. I do have Larry Burkets software, for managing money. I couldn't get it to balance because we are in the "red". I haven't tried it in a while. I suppose I could see if we balance, now."
--Lisa

"My own Excel spreadsheet, I can control my input better than by using the commercial ones (Quicken, etc.)."
--Dan

"I don't always have the time to turn my computer on and record my tracking as it happens. If I don't plan to be on the computer for at least an hour, I don't even turn it on. So I track my expenses on paper and later transfer it to MS Money."
--Tracy

"I keep a "running balance" in all areas on index cards. This has worked out great for us because all anyone has to do is look up the category to see if the money is there...whether it is for a night out, clothes, car parts, etc...it doesn't matter...the info is available instantly!"
--Anonymous

"I use a combination of both software (quicken) for those items that come out of our checkbook and paper for cash transactions and savings balances."
--Christine

Do you set a specific spending limit by category?

50.6% of respondents said Yes
45.3% of respondents said No

"No, but I have an figure in my head which I deem to be enough. If I go beyond that I cut back the best I can, yet I will spend if I want to."
--Mary

"We have limits for categories, but they're variable from month to month. In other words, our limit for clothing is $50/month which means we may spend $25 this month & $75 next month which equals the same $100/month average. As long as our monthly average isn't rising, then I consider us on track."
--Amy

"We set aside savings and investments first, and then are free to spend the rest. So we don't stress out if we overspend in one category, it just means we have less to spend in other categories."
--Anonymous

"I should but don't. We are only one income so I just pay the bills when they come up. I have two savings acct. that I take car repairs and emergency spending."
--Lisa

"But it is a guideline, not a hard and fast rule. I think that is part of the problem."
--Julie

"If something happens beyond my control and we go over the limit in one category, we try to tighten our belts in some of the other categories so we don't overspend for the week. It's not always successful, but most of the time it works."
--Tracy

"I remain flexible and make adjustments about each quarter. I'm more concerned about remaining within the overall monthly budget rather than a specific category."
--Bert

Do you use an envelope system to limit spending by category?

82.6% of respondents said No
9.3% of respondents said Yes
2.6% of respondents said Other

"Just for special purchases ...(school clothes, kid's birthday money, stash money)"
--Anonymous

"I tried it & didn't like it. As much as some financial gurus teach against it, our Visa check card has been a lifesaver for us. We have this nasty habit of spending cash if we have it. However, we're more hesitant with money in the bank. I don't know why it works, but it does."
--Amy

"I have heard it and have been told to do our money this way. I just don't like the idea of running to the bank to deposit money for each bill. It is not convenient to go to the bank weekly."
--Lisa

"As long as you're at budget or below when all categories are added up for the week, you're OK and shouldn't need an envelope system. Remember to watch your spending each and every day - then the weeks, months, years, etc., will take care of themselves."
--Tracy

"I used to and I found this the most effective way because I saw physically what was and wasn't available. However, my husband was concerned with that much cash lying around every month if there were a fire or a burglary. (Plus certain household members were less trustworthy than others, and one month half of the rent money was "lost".) Once it is deposited in a lump sum in my checking account, I'm working on an "in theory". My average for bills per week are thus, therefore, theoretically, I should have so much left over. It's much less accurate."
--Dawn

"I use a combination of an envelope system and my checkbooks, since I pay some things with cash and others through the checking accounts."
--Anonymous

What are your top three spending categories?

The most popular answer was Housing
The 2nd most popular answer was Groceries
The 3rd most popular answer was Utilities

Do you create reports based on your spending by month?

72% of respondents said No
22.6% of respondents said Yes

"I keep a copy of each spreadsheet after the month is closed for future reference."
--Amy

"This shows us the areas we need to be careful of."
--Anonymous

"We spend just about the same amount every month."
--Anonymous

"Seeing how we do each month, six months, and annually helps keep us motivated into a new year - it's much more invigorating than a New Year's resolution! Usually we do very well. Just watch what you spend daily - the little things really do add up!!"
--Tracy

"Mostly just electronic for viewing status. Print outs for additional analysis, but I don't keep them. All records are electronic and backed up."
--Bert

"Actually, I just graph it in Excel. But creating a report is very interesting... maybe I'll do that."
--Anonymous

What do you do if you notice an increase in spending in one category?

"Determine why the increase happened. If it is avoidable, cut back spending in that area. If it is unavoidable, try to cut back spending in other areas."
--Anonymous

"Figure out what we are doing wrong and try to remedy it."
--Leslie

"Re-evaluate situation to determine why there is an increase. For example, gasoline costs - price may have increase dramatically from previous month even though driving habits are same."
--M

"Re-adjust in another area."
--Jan

"If it's a permanent increase (such as an increase in insurance premiums), I rework the whole budget to account for the increase. If it's something temporary such as we overspent on groceries, I try to either reduce spending in another category or reduce spending for groceries the next month."
--Anonymous

"Panic!"
--Anonymous

"If I don't see an obvious reason for it (ie-car expenses increased because of a trip due to a family emergency) or new clothes because our child decided to grow overnight without 1st consulting our budget, then I'll sit down with hubby & we'll figure out why we went over & what to do to prevent it in the future. If possible, we'll reduce that spending category for the next month or so until we're back on track with our monthly average. If we realize that we're consistently going over in that category, then we analyze whether or not we need to increase the budget limit in that category. We did this with clothes after our 2nd was born when our expenses went from $30/month average to $50/month. With a 3rd, we're going to have to raise that again I think."
--Amy

"Take my husband's debit card! :) reduce spending in another category."
--Anonymous

"Immediately find out what the problem is and take care of it if you're the culprit. If it's something you have no control over like insurance, then it may be necessary to cut costs in other areas to balance the budget. The WORST thing you can do is put it off!"
--Tracy

"I determine why I had the increase and determine if spending needs to be changed or if an increase in that category is warranted. If I increase that category I look for another category/categories to offset the increase. Almost always the offset category is a discretionary category, but sometimes it's covered by increased income."
--Bert

"Go into the details of that category and see if what caused the increase was a one-time occurrence or whether it is something that will likely repeat again. To compensate for the overage in one category, I try to cut back on other categories that can be trimmed."
--Anonymous

"I monitor it for a month or two to determine if it needs adjusting. After that, I adjust if needed. Sometimes, just being aware of the over spending cuts down on it and it is not a recurring problem."
--Anonymous

Do you know if your best friend tracks their spending?

64% of respondents said No
26.6% of respondents said Yes

"Discussing finances is often like talking religion or politics - it can lead to big problems due to the differences of opinion. Therefore, I usually don't discuss this topic with others - not even my closest friends. Some things are just better left unsaid."
--Tracy

"My husband is my best friend, and so he must be budgeting ;o) But I do know of 1 other friend who tracks spending (I think)."
--Anonymous

"They definitely do not!!!"
--Anonymous

How much time each week do you work on tracking your spending and budgeting?

46.6% of respondents said 'Less than an hour'
29.3% of respondents said '1 to 2 hours'
12% of respondents said '2 to 3 hours'
4% of respondents said '3 to 4 hours'
2.6% of respondents said 'Over 4 hours'
5.3% of respondents said n/a

"That may sound like a lot, but I love to do it! I am an accountant by trade!!"
--Valerie

"I spend a lot of time on this, but it's worth it to me because I want to be able to stay home with my new baby, and need to be on top of the budget and paying off debts."
--Anonymous

"I keep a post-it note in my checkbook with the next 2 pay-periods and the bills that are due on those dates. Each pay period I go thru and setup the payments to the bills and check them off. I know exactly how much leftover money I have between paycheck and that week's bills for play. I balance out my checkbook at least 1x a week to ensure I haven't gone over. I have also had great success with setting up the bill pay system with my bank. Now 9 of 16 monthly bills are sent automatically (mostly the credit card debt), another 6 are handled when they come in by scheduling their pay dates (ie. utilities that fluctuate each month) and 1 that is hand carried to it's destination (rent). Big time saver and less worry of late or missed payments."
--Anonymous

"Once you get the budget down and are familiar with it, it's really amazing what little time it does take up. Most of the trick is being organized and knowing where your money is going at all times."
--Tracy

"Once I found and set up a system that works for us, it became a very easy method to follow, requiring almost no maintenance."
--Anonymous

Do you find that using your credit cards helps you track your spending?

62.6% of respondents said No
32% of respondents said Yes

"My husband is forced to bring me a receipt for his purchases. It is easier with credit cards."
--Leslie

"Some break down spending for you, we don't pay much attention to it though."
--Heather

"I track my spending as it happens. By the time I get my credit card statement its too late."
--Anonymous

"I've tried the system of using credit cards for almost everything that I would spend cash on (gas, groceries, etc.) and paying them off at the end of the month. This never worked. I would always find something else to spend our cash on and then be left with a credit card balance. Now I use cash for these expenses, and this works much better for us."
--Anonymous

"Don't use cc's--that's how we got into this mess of debt!!"
--Anonymous

"Credit card or cash makes no difference."
--Anonymous

"We pay our balances off when we get the bills."
--Anonymous

"Credit cards are evil. Evil I tell you. They help me spend more."
--Julie

"I keep track of my spending anyway regardless of the method of payment used, so this doesn't matter in my case. Keeping track of spending should be automatic; you should not depend on credit card statements to do what you should be doing on an every-day basis."
--Tracy

"I try to use my credit card as much as possible and pay it off each month."
--Bert

"I try not to use my cards as I am working to pay them off. If I have to put something on one, when I make a payment, I try to pay that amount, plus the financing amount, plus the amount allocated to pay off the card. For one card it is $100.00/month (lowest interest rate) and $300.00 on the higher rate card."
--Dawn

"I have one card for gas only and one card for internet purchases."
--Christine

Do you find that using your credit cards helps keep you in line with your budget goals?

73.3% of respondents said No
21.3% of respondents said Yes

"We don't use the cards as credit charges but as charge cards."
--Leslie

"It's far too easy to over-spend in any one month when using a credit card; then when the bill arrives, you've gone over budget, sometimes by a lot."
--Anonymous

"I use my credit card as little as possible. I use my debit card more frequently. It keeps me in line with my budget goals because if the money isn't in my account I can't spend it."
--Anonymous

"Makes it worse!"
--Anonymous

"I still have one card I use for "emergencies" but it seems like it gets used for a lot of extras or just when things are tight. If I could wean us off the credit card, I think our budget would be in much better shape."
--Anonymous

"CC's allowed us to OVER spend-lived above our means, spent money like we had it, and got tricked (tricked ourselves; I don't/can't blame the CC companies. I spent the money) into this life of minimum payments that will never pay off the actual balance"
--Anonymous

"I find I buy things that I wouldn't ordinarily buy."
--Anonymous

"My goals are planned out in advance regardless of the method of payment used. When I use my credit cards I always pay them off when the statement arrives anyway, so they might as well be a cash transaction which is what I've always considered them as."
--Tracy

"I can see what I'm spending written out on paper. If I spend too much one month, I scale back the next month."
--Anonymous

"No, I spend too much with a credit card! Mine are in a water filled bag in the freezer!"
--Michelle

"Only use credit card on big ticket items that we need and do not have the cash for at the time. Pay off as soon as possible."
--Kathy

"It takes a lot more determination and discipline!"
--Anonymous

Did you specifically teach your children how to create a budget, track spending, and handle their finances?

22.6% of respondents said 'Kids Too Young'
22.6% of respondents said 'No Kids'
18.6% of respondents said No
22.6% of respondents said Yes

"We are working on that now. They get an allowance (no strings) and must divide it into three categories: long savings (bank), short savings (jar) and spending (wallet)."
--Heather

"Right now, our oldest is 3 1/2. However, she gets $1/week that we take to the bank. 50% of it gets put into her savings account. 10% goes to tithe at our church. The other 40% goes into her piggy bank. With higher dollar amounts we put 10% to tithe then the rest in savings. She does this transaction herself every week. She may not understand it yet, but is hopefully developing a habit that will stick. If she's with me when we go to the store, she always pays for at least 1 item herself with "her" money (we give it to her at checkout). The item we give her is something that she or her siblings will use or a food item like milk that we'll all use. I don't think they're ever too young to start learning."
--Amy

"My son watches me on the PC, and I've explained what I'm doing. He helped me keep track of our reduction in Credit Card debt. (It's now zero.)"
--Dan

"Tried, but they didn't want to listen and insisted on doing things their own way. When kids get to that point, then they are not teachable. To make a long story short, my kids are learning things on their own now down the road of hard knocks."
--Tracy

"We make them use their allowance and gift money to pay for toys, candy and other expenses that we consider to be whim desires. Their toys are now more expensive and can require months of saving. We don't have them doing budgets yet because they're too young and all spending at this point is totally discretionary. They put 25% of allowance into savings (bank account and mutual funds), 25% toward big toy savings and 50% for mad money (the small toy or candy they beg for when shopping). They have learned to restrict mad money spending to use toward big toy savings."
--Bert

"We taught them how to do chores and save for what they want. They watched us save the cash for a week vacation this summer. They are responsible for depositing all our change/refund/recycling $ in an account every few weeks that is being saved for a Disney trip. I did not learn any of this as a kid and am paying off 10,000 in credit card debt from the past. I am trying to teach my kids better!"
--Michelle

"Even though my child is only 7 weeks, we have already decided how to teach him about spending, budgeting and we are trying to be the best examples we can be to him so he will learn from us."
--Anonymous

"My older children did not benefit from the knowledge I have gained in this area, and they aren't very receptive (at least for now) to me trying to teach them now. My younger child is too young to start her yet....but I sure intend to!"
--Anonymous

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