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WTF is a budget?

There is one thing that always reigns true in the world of personal finance: Everyone does things differently, especially when it comes to budgeting. I’m convinced, no two budgets are the same. Here are a few of the different budgeting methods I’ve observed…

The anal envelope:

This method is no joke. It’s not for the faint of heart as it requires some serious discipline. Essentially you create a different envelope for all of your various expenses (rent, food, car, etc). After you’ve categorized your expenses, you put in a predetermined amount of cash in to each envelope every pay period. For example, if you allow $50/month for entertainment, you’d put $50 in cash in your entertainment envelope. Pretty straightforward. The hard part is not wanting to spend more than what you put in the envelope. Once you’ve spent the $50, it’s gone. No going to the ATM or using your credit card. Not even if that camera you really want is on sale. There is very little flexibility in the envelope system. Let’s just say it’s not for me.

The guess and check budget:

Ahh, this is my kind of budget. All you have to do is get out a piece of paper (or use excel) and itemize all of your monthly expenses. Instead of putting the budgeted allotments in envelopes each month, I use a guess and check method as I go about my spending. For example, if I feel like I’ve spent a lot more on dining out than I normally would, I cut back for the rest of the month and survive on PB&Js. This method is definitely more flexible than the envelope system, but it also allows for overspending if you aren’t careful. I generally stay within my allotments for each category, but every now and again I’ll get a little crazy and spend some money I probably shouldn’t have. If you don’t have some solid discipline I would not subscribe to this method.

The “WTF is a budget” budget:

Unfortunately, this is probably the most popular budgeting method in our culture. The people who use this method couldn’t spell budget, let alone live on one. They are usually broke, stupid, and stupidly broke…. but hey, at least they have 786 pairs of shoes they never wear. They don’t keep track of their money at all. They often don’t know how much they make and they definitely don’t know how much they spend. This is not a good plan. It’s financial suicide. If you’re a member of the “WTF is a budget” club, you better figure something out quick ’cause a financial disaster is brewing.

What kind of budget are you rockin’? Do you set aside a predetermined amount each month and stick to it religiously? Do you have an idea of what you’d like to spend, but don’t follow it to the “T”? How do you budget for the irregular expenses like car maintenance or haircuts? I’ve never really figured out a good way to set aside money for things that don’t occur on a monthly basis. Any budget tips, tricks, and helpful hints are always appreciated.



  1. Bahaha. I’m definitely in the guessing camp. Pretty much everything I consider a ‘bill’ which includes car stuff, is budgeted for in a bills account. Grooming and gifts get built into the budget as we go. Haven’t worked out clothing quite ye…

  2. I’m also like you. I use excel and budget for things I know I have to pay for. I don’t budget in things that don’t happen every month, I just make it work when I do need a hair cut or something else that is variable.

    My BF is a WTF is a budget and I don’t know how he does it. He always pays all of his bills but other than that, he has no idea where his money goes. I’ll throw him a bone and tell you he has a variable income so it’s more difficult for him. Those two things would cause me a tremendous amount of anxiety!

  3. I’m an envelope girl. I tried to “guess and check” last month, and I ended up having a panic attack (and I ended up over spending). I budget down to zero, and we always have leftover at the end oy paying necessities, so if I need an oil change or medicine or anything like that I budget it next. Then I snowball to debt/savings.

  4. I have a budget set in mint, but it’s not as rigid as the envelope budget. It’s more of a guideline that I try & stick to, but if I go over in one area (movies) I try to stay under an equal amount in another area (gas) so that everything stays under the master number, or my total monthly budget. It’s worked quite well for me for some time.
    For stuff like haircuts/oil changes, I suggest figure out how many haircuts you get a year (you must get less than 12, or you’d have a monthly budget for them, take the total yearly cost of your oil changes 5 oil changes per year x 20 = 100 then divide by months (12) to get $8.33
    Give that a try!

  5. I do the guess and check budget but find it’s not quite working for me as well as I’d like. Home and bills are always paid for but I never seem to allow enough for myself and small pleasantries. I’m considering a per diem budget I read about on another blog. It’s a bit drastic but may just be the shake up I need.

  6. WTF is a budget? In certain respects we are quite fortunate because we spend less than we earn. Far from rich, we do live quite simply so our expenses are low. Having a small house makes all the difference. Sometimes I would like to save more but then I start to feel like I’m being too much of a scrooge. Always trying to find the balance still. Maybe a budget would help?

  7. i budget out all my expenses for the month, set aside that money, and then i use the remaining however i want. expenses include all the set things i need each month (rent, food, etc) as well as savings and retirement spending. the leftover cash is then mine to use as i wish!

    Preferred Financial Services

  8. I started with the jar/envelope system (Go Gail Vaz Oxlade!) I rocked that for about 6-8 months then sort of weaned myself off it it. At the end I would take out all the cash I needed but not categorize it, and if it ran out – it rant out. Now I’m back to a bit of guess work with using my debit/credit cards and an excel spreadsheet.

  9. I thought you were gonna go a very different way with the “anal envelope”. But since most of your readers are not inmates, your description is probably better.

    I personally use the “frugal hypocrite” method myself. Be cheap in general but don’t bother itemizing, and then make my wife stick to her regimented list.

  10. I’m trying different things and have found no system that I love completely. I, too, find it hard to budget for irregular expenses. The most difficult ones are not haircuts or oil changes, but kids’ unexpected sports/school expenses. (“What do you mean you need $30 for that field trip I didn’t know about?” or “They want HOW MUCH for your soccer uniform?”) There are so many and it’s never-ending.

    We do use envelopes for church tithing, groceries and gas, although it’s very easy to give in to using the debit card for a “few more things” at the store. But at least the church gets their portion up front.

    We have several bank accounts. Our main account is for regular expenses, and a predetermined amount goes to another account that is used for things like car insurance (2x/year), trash/sewer (quarterly), vet exams (at least once a year). Car insurance bills used to bite me in the ass for so long…. I knew they were coming and how much they were, but we never saved enough to pay them and then it felt like a big shock when it came time to pay up. Now the money is there. There is a third ING account that is our emergency fund. Still fairly easy to get to if we need it, but not as easy as our brick and mortar banks.

  11. I take $300 out every two weeks on payday (i’m a single person providing only for myself).

    This is my spending money for everything outside of monthly bills:
    -Eating/drinking out
    -Gifts for others
    -Gifts for myself
    -Clothes, shoes, various personal effects, etc.
    -Gas, car maintenance, other transport costs
    -Groceries/home and food supplies
    -Pet care
    -Entertainment (Random gym visits, museum or film festival trips, etc.)

    Bottom line is: if it’s someone else’s birthday or there’s another freakin’ wedding to attend (I’m in the age of weddings), I know I’m going to buy more frugally at the grocery, put off a haircut, or scale back my dining out expenses.

    It’s only every 3 months or so that I have to take out an extra $40 or so for a pay period. 😉 This I just take out of my buffer in my checking account. 😉

  12. We have the following budget and use multiple ING accounts for different categories of stuff (auto and car expenses, individual fun money accounts, vacation account, extra Roth and Stock money, etc). That way the expenses that “pop up” can be paid for out of the pre-stocked accounts. Unexpected medical bills get taken out of the emergency fund. Anything else that goes over even those accounts (which has never happened), comes out of the vacation account. This also allows for flexibility.

    Extra money from our hobby jobs is either put towards debt or split between the Emergency Fund (50%), the Vacation Account (25%), and our two individual Fun Money Accounts (12.5% each).

    Our current budget is for a quick car loan payoff by December, so we’re not currently funding the emergency fund. We’re starting a gift fund account next year but currently pay for them with misc. bill money or joint fun money. Chrity money comes out of the fun money accounts too.

    Mortgage – $900.00
    Car Debt – $650.00
    Roth IRA – $300.00
    Extra Roth – $120.00
    Car Payment – $330.00
    Car Insurance – $115.00
    Gasoline – $200.00
    Electricity – $200.00
    Water – $30.00
    AT&T U-Verse & DSL- $100.00
    Sprint – $85.00
    Groceries – $300.00
    Fast Food / Restaurants – $200.00
    Medical – $100.00
    Misc. Bills – $100.00
    Joint Entertainment – $100.00
    Hubby’s Fun Money – $125.00
    My Fun Money – $125.00
    Housekeeper – $100.00
    Lawn Services – $50.00
    Netflix – $20.00
    Pet Account – $100.00
    Car Account – $200.00
    Min. Vacation Acct – $250.00
    Property Tax & Insurance Account – $0.00 since it’s been funded for the year
    Emergency Fund (currently has $10,000) – $0.00 since we’re paying off the car
    Cash – $200.00
    Total = $5000

    That comes to $60,000 a year and we make $78,000 jointly. Taxes, the pension, the 401k, and our benefits account for the other $18,000.

  13. I have a spending/entertainment plan that is set at a monthly amount. My spending/entertainment amount is kind of like the “envelope system” because I will NOT exceed it. Once the money is gone, I have to start saying no to entertainment invitations–it reminds me to be frugal during the week in order to party on the weekend. I save $100/month, $50 each to set aside for car and housing expenses that may arise. The car/house maintenance is treated as a fixed budgeted expense. Of course, the fix expenses are a given.

  14. I follow the “guess and check” budget. I have an excel spreadsheet with nearly two years worth of info at this point, and each month I record monthly budgeted amounts for each category, including expenses that don’t change monthly (rent, gym membership), expenses with a set limit (groceries, entertainment), and any irregular expenses I anticipate (haircuts, auto plate renewals, travel etc). Referencing my budget line from the same month the year before can be helpful to remember expenses that come up every year at the same time. Since my husband and I are able and motivated to live well below our means in order to save aggressively for a home and other goals, we can cash flow most other unanticipated expenses that come up, like car repairs and then save whatever is left over. For some people, this “save what’s left” method would be a disaster, but I find it’s better motivation this way, since I love saving!

    • Haha, irregular expenses, I used to *not* budget for that, but then would put off necessary irregulars like haircuts & oil changes b/c it ate up my “blow money” category ($400/mo to include clothes, households items, entertainment).

  15. I’m definitely use the rear view mirror approach. I try to spend reasonably and then I go back into excel and see what actually happened. Excel tells me what categories are getting out of hand, if any and sometimes I use it to justify expenses I’ve been holding off on like clothes. “I haven’t bought clothes in how long?”..okay, I guess it’s acceptable to buy a few things for summer.

  16. I have a flexible budget. I try my best to stay within the guidelines, but I don’t go without if I think I am overboard. If I was just responsible for my own needs, I would be more stringent, but with 3 kids, I quite often have to spend unexpectedly.

    That person with 786 pairs of shoes or whatever may still use a budget, but maybe they just have ‘shoes’ as their biggest expense! 🙂

  17. I suppose I’m “guess and check,” but with a diference. The main point for me is that I get paid every two weeks, which means 26 checks a year, but bills are due at a fixed time each month. This means there are two “extra” checks each year where I have some more money coming in. But the main point is I have to plan each month’s normal expenses based on when payday comes, and I usually work this out at least 4-5 months in advance.

    I start by deciding when to pay the three big bills – mortgage, co-op maintenance, and car payment. Then I fit in all the smaller bills – cable, phone, insurance, utilities, and gas. Plus a set amount each week goes into savings. For each pay period, this gives me a fixed amount that goes towards normal expenses. I substract that from net pay and then I subtract the reserve amount below which I will not let my checking account drop. The remainder is what I can spend during that pay period.

    So (not my actual numbers), let’s say my takehome is $4000 for a two-week period. I have fixed expenses that period of %1500, I put $200 each week into savings, and I won’t let my checking account go below $1500. That leaves $300 a week for food and all other expenses, or an average allowance of about $43 a day.

    Works for me.

    • Oy, same boat, and I budget the same exact way. It’s ironically too much effort to completely automate bills since each month payday is on a different date.

  18. Oooh, I get to be the first WTF Budgeter!!!

    I’ve tried budgeting, it didn’t work. All it did was make me feel guilty, frustrated, stupid and hopeless about my finance. The budgeting thing did open my eyes to how much money I was spending in each categories (I spent HOW much eating out?!?!) but that’s about it. I find the whole method very stifling.

    I know how much I spend on shelter, utilities, etc because they send me a bill every month. Everything else? Your guess is as good as mine. I have no idea how much I spend on food, health, beauty, etc. and, here’s the shocker, I really don’t care! I have no desire to keep track of my spending; I want it to roam free and have fun.

    But, it’s all okay.

    15% of my paycheck is automatically taken out of my pay and put into various retirement accounts. Every paycheck I move a big percentage of my take home pay into my savings. I don’t have any debt, I pay my card off every month, and I have a hefty EF. For the most part, I live below my means- no big houses, fancy cars, expensive doodads or habits. I pay all my bills on time and I have all the necessary insurance (auto, dental, life, long term, short term, blah blah blah).

    The money I have left, after paying bills and moving money into savings, is mine to spend on whatever I want. Often times I can’t think of anything worthwhile to buy so I just put the extra money into savings.

    Personally, I don’t see the point in pigeon holing expense but,to each their own.

    So yeah… I assume I’m not quite the WTF Budgeter you had in mind (though, I do own a lot of shoes). But, just because I don’t keep track of my spending, doesn’t mean I’m financially irresponsible.

    • Jin, you absolutely nailed it. Just because somebody doesn’t have a budget doesn’t mean they’re a failure financially. I’m curious to hear just how much time you people spend on your budgets every month. Wouldn’t you be better off to do what Jin (and I) do, just take off whatever you want to save off the top and spend the rest? It’s just so much simpler.

      • I spend about an hour and a half every month on my very detailed budget (see above). I would totally agree that I’d rather not worry about it, but we don’t make enough to hit all our goals, hobbies, and regular expenses…something has to take the back seat in order for other stuff to be accomplished.

        Once our income is enough to contribute to hubby’s pension, max out 2 Roth IRA’s, put 15% in my 401k, put $5000 a year in individual stocks, and to afford the hobbies we enjoy (Curling, board gaming, comedy clubs), I’ll let go of my budget.

        Right now we are just trying to find a balance that works for us now and will still allow us to retire early (pension, one Roth IRA, 6% to 401k, $2500 a year in stocks, and a set fun money budget…).

        Based on what we spend now and what we’d like to save and spend, we need about another $10,000 a year to be budget free. I can see that happening in the next year or two, but until then…the budget makes it where we can enjoy life without sacrificing our future.

  19. We’re Dave Ramsey evangelists, as my husband likes to say, and we’re on the envelope system all the way. The “Guess and Check” method for us (and this was before we were really on board with any kind of financial plan) turned out to be “Guess and Now We Have Overdraft Charges.” Hubby and I do our budget (Dave Ramsey style) every two weeks, because that’s when the paychecks come in. It usually doesn’t take us more than 15 minutes each time. This way, we are both on board with the same plan, we get to talk about what we’re going to spend where, and we are both involved and in agreement. This is by far the best method for us. No more money fights! Hooray!

  20. I tend to use method number 2. But I use balance sheets and income statements for it to break down the four important elements to a budget. Usually on a monthly basis.

  21. I have a flexible budget. I try my best to stay within the guidelines, but I don’t go without if I think I am overboard. If I was just responsible for my own needs, I would be more stringent, but with 3 kids, I quite often have to spend unexpectedly.

    That person with 786 pairs of shoes or whatever may still use a budget, but maybe they just have ‘shoes’ as their biggest expense! 🙂

  22. […] post:  WTF is a budget? | Punch Debt In The Face Share and […]

  23. Envelopes – that’s how we budget for our day-to-day “predictable” expenses, like groceries, gas, entertainment, kids’ clothing, kids’ allowances and small miscellaneous expenses. As for unpredictable or occasional expenses, I thought through an entire year and wrote down all kinds of plausible and likely expenses that were kind of unpredictable or infrequent. I broke down those expenses into a monthly cost and was shocked to find out that those costs added up to about $600/month. No wonder my budget never worked in the past! That $600 gets pulled from the main account at the beginning of each month, set aside in a separate account for when it is needed. That account balance bounces between $1000-2000 as we spend and re-imburse. That’s how we handle inconsistent expenses.

  24. Woa dude, you are seriously biased against the envelope system–no flexibility?! I disagreee, afterall I’m the one who decides how much goes in the envelopes in the first place. In other words we control the budget, not vice versa…but then we follow the committment we’ve made. It does however, require planning and forethought—we do our budget every 14 days—it suits us.

  25. Somewhere healthily between the WTF is a budget and guess and check method. But I guess there usually isn’t enough money in my checking account to allow for a budget…It’s more of a “Don’t buy sh*t you don’t need” approach.

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