# Budgeting with Glass Jars



## eulogy (Oct 29, 2011)

Like a lot of people hear, I've seen Debt Due Us Part and the budgeting methods used in that show. This year I created my very first budget for myself to follow. I'm a person that hates cash with a passion. I don't like carrying it around. I don't like having pocket change, or a change jar. I just like using my credit card for all my transactions and I pay it off at the end of the month, plus I earn a little cash back.

But I've found my experiment with my first budget lacking. I've never been a bad spender and I wouldn't find myself in a bad place with no budget, but things aren't functioning like a real budget. I have a spreadsheet that I document my spending, assign a category to that spending and I can compare it against a preset number.

What has resulted is that I just have targets for my money. Whether I come in under or over doesn't matter and this is essentially where it's not a real budget.

I'm curious whether people have tried running a budget with glass jars and the cashless method, and essentially what you think of it, how well it worked?


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## MoneyGal (Apr 24, 2009)

FWIW...I don't love budgeting. I like tracking spending, and I do it now mostly out of habit - but not very closely any more. 

I don't watch Until Debt Do Us Part, so I don't actually know about the glass jars method or the cashless method. 

But here's what I'd ask: *why* are you budgeting? I don't budget because I pay all my bills, meet my (aggressive) savings goals (just noting that my savings goals expressed as a percentage of income are not small), and don't accrue new debt. So what gain would I get out of budgeting? 

I guess what I'm really saying is that as long as you keep your overall spending under control and meet your savings goals, you don't need to budget. My $0.02 is that working on the first two goals is way more important. If budgeting helps get you there, by all means - have at it. But if the problem(s) is/are overspending/undersaving, then deal with those first.


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## MoneyGal (Apr 24, 2009)

p.s. I'm sorry if that was the most annoying post EVAR. Budgeting talk kind of drives me nuts. Partly because people talk to me about it all the time...and it only takes a few seconds to realize their problem is overspending...no "budget" is going to fix what's going on in their finances.


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## Eclectic12 (Oct 20, 2010)

eulogy said:


> ... What has resulted is that I just have targets for my money. Whether I come in under or over doesn't matter and this is essentially where it's not a real budget.


For the individual items, maybe but I'm sure if say everything was supposed to be at say $3K and your CC bill for any month was $15K where you weren't expecting it, then it would matter.

Because you are staying within your income - that's why it doesn't matter.




eulogy said:


> I'm curious whether people have tried running a budget with glass jars and the cashless method, and essentially what you think of it, how well it worked?


No ... but like you, I've stayed within my income. 

The point of the glass jars as I understand it is to provide a physical reminder of the dwindling amount and a forced action for the bad spender.


Cheers


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## Eclectic12 (Oct 20, 2010)

MoneyGal said:


> ... Budgeting talk kind of drives me nuts. Partly because people talk to me about it all the time...and it only takes a few seconds to realize their problem is overspending...no "budget" is going to fix what's going on in their finances.


Agreed ... but the budget plus tracking where money was spent makes the overspending obvious, a concrete number and clear as to what is was. Without this, it's easy for people think something completely different.


Cheers


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## Plugging Along (Jan 3, 2011)

Like MG I don budget either. I have my savings automatically transfer into my various accounts for saving, My bills come out of the account. If here is anything left over, it sits here. When I hit a certain amount in my bank account, the excess gets invested. If it dips below, take a little money out of one of my other funds. It usually doesn't get low ness here have been not regular circumstances. 

I think budgeting may help to get an understanding of ones spending, and then to get it under control.

I do use a jar method for my kids at 4&7 but thats more of spend, save, give jars so hey can see their money being split up each month.


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## MoneyGal (Apr 24, 2009)

So is the (developing) consensus here that the "glass jar method" is an anti-overspending prompt, with budgeting as the mechanism for the prompt? (i.e., how would you know whether the jar was "full" or "empty" without a "budget"?)

If yes, I totally see merit for chronic overspenders. :02.47-tranquillity:


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## mind_business (Sep 24, 2011)

The glass jar method is actually a great visual reminder of one's limitations in spending. Some people need a visual representation of 'amounts' to put things into perspective. It's great for people who use credit as an income source, without realizing the ramifications. I doubt too many on this board can even relate, but there are people out there like this, which is who 'Until Debt do us Part' showcases.

Myself, I definitely set up a yearly budget, however I rarely refer to it through the year. Admittedly I used to be a bit fanatical about budgeting, tracking and forecasting, but I'm finding I have better things to do with my time  The main goal with my yearly budget is simply to define the amount I will be able to save that particular year.


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## Plugging Along (Jan 3, 2011)

How they d,it on the show is Gail sets the budget and writes out how much each jar starts with. The money gets put in two cash, and the people can only spend that amount and write down in the paper in each jar where them none went.

Once the money is gone, no more spending in tha jar. I think the idea is that if they are on the cash system, they are constantly reminding about how much money they have left in each category.


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## eulogy (Oct 29, 2011)

This is my first year of really *attempting* a budget, but it really isn't much of a budget as I'm not constrained to it (which I guess is sort of the problem). Why am I budgeting? I just want to see what it is like. If it helps me or doesn't. Haven't done one before, so I thought I'd get it a try. Usually what I do is (I get paid monthly) is pay off all my credit cards, pay my rent and save the rest. Works well for me, but alas this isn't the only method of doing things.


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## Sampson (Apr 3, 2009)

We only budget at a higher level, on an annual or longer term basis. 

We have no problems with overspending and can absorb one-off purchases/expenses, even whole vacations simply by spending less over subsequent months. I guess we are typically a no 'extras', minimalist spending sort of family.

The jars make sense for people who don't know how much they spend.


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## nathan79 (Feb 21, 2011)

I used to give myself a strict cash budget, but I always gave myself too little and always went over budget. I guess I wasn't good at foreseeing expenses, especially those odd expenses that catch you off guard.

I think a better idea is to just write down everything you buy for a month, then review it. Figure out where you think you're spending too much, then take steps to reduce that specific area(s).

I agree that a yearly budget is a better idea, because monthly spending tends to be too variable to keep to a set number. A longer time period can filter out those spikes in spending.


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## eulogy (Oct 29, 2011)

Does anyone have any advice on the yearly budget? As it has been brought up by a few people. I like the idea, but since it's such a long term thing that I feel I could be way out to lunch by the end of the year.


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## Plugging Along (Jan 3, 2011)

eulogy said:


> This is my first year of really *attempting* a budget, but it really isn't much of a budget as I'm not constrained to it (which I guess is sort of the problem). Why am I budgeting? I just want to see what it is like. If it helps me or doesn't. Haven't done one before, so I thought I'd get it a try. Usually what I do is (I get paid monthly) is pay off all my credit cards, pay my rent and save the rest. Works well for me, but alas this isn't the only method of doing things.


 My question is what are you trying to achieve or what problem are you trying to solve?

If you have somewhat works for you then no real needs change. I hate budgeting and have really never wanted to do it, I hate the whole idea of being restricted to arbitrary categories and numbers. 

I pay off all my fixed expenses, and use my savings like a fixed expense too . Money goes aside for all of those, and then the rest is for spending. Similar to your method, except I don't just let what ever is left over to go to savings, do allocate an amount to savings, and then anything left over goes to additional savings.


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## Daniel A. (Mar 20, 2011)

I'm sure the glass jar works for the clueless.

I track spending because I like to know where my money is going and am able to pull the numbers from memory.
No need for me to budget I'm not much of a spender.


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## Sampson (Apr 3, 2009)

Plugging Along said:


> If you have somewhat works for you then no real needs change. I hate budgeting and have really never wanted to do it, I hate the whole idea of being restricted to arbitrary categories and numbers.


I don't think budgets have to be restrictive, one doesn't have to restrict themselves to the amounts allotted if spending is lower in a different category. But as you allude to, the budget should be used for a goal-driven objective, whether that be planning a savings rate to achieve a goal, or to ensure one has some buffering capacity if somethings goes way off budget. 

I like to set the annual budget so I can anticipate upcoming major expenses etc and determine if those come out of savings, or cash flow. Mortgage prepayments, RRSP, TFSA, RESP contributions are an example. I like to all these in the first week of January and it is difficult to anticipate how such a large out-flow will impact without a year long budget.

There are two concepts I find are often mixed up in 'budgeting'. For me:
Budgeting = planning
Expense tracking = figuring out what can be cut out.

How to begin with a budget? I like to base spending on averages over a long period of time, and because we put everything on credit cards, variable spending is rather easy to determine on an average basis. Start with your after-tax income, then use a standard budget spreadsheet and fill out as accurately as possible. Then leave two categories as 'flexible', for both spending and saving. Should balance to 0. Based on the amount saved, this should help you determine if your financial goals are achievable, or the timeframe it would take to save for a goal.


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## doctrine (Sep 30, 2011)

I don't have an exact budget, but i do track my savings monthly and I have specific goals. If I'm not meeting them I can just "tighten down" generally, and then I'll see improved results in the next few months. I don't need a spreadsheet with 1000's of $30-40 expenses on it. Either I'm saving $x amount per month of excess cash for investments or other big ticket items, or I'm not.


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## brad (May 22, 2009)

MoneyGal said:


> I don't budget because I pay all my bills, meet my (aggressive) savings goals (just noting that my savings goals expressed as a percentage of income are not small), and don't accrue new debt. So what gain would I get out of budgeting?


I'm in the same situation (pay all bills, meet savings goals, don't accrue new debt), and didn't budget for years. But last year I started keeping a budget and it has been really useful for me. The difference, I think, is that instead of viewing it as a budget I view it as a spending plan. Tracking spending is great for keeping track of where your money went; a spending plan helps you manage where your money will go. When I started keeping a budget, my spending actually increased because my budget revealed that I could afford things I wasn't quite sure I could afford before.

I use the You Need a Budget software and method, which I found attractive because the first step in its process is to "give every dollar a job." That allows me to assign "jobs" to every dollar I earn. It also keeps me from simply allocating money to savings without having a purpose for it. In YNAB, you generally don't have a budget category for "savings" because savings isn't a job: you have to think about what you're saving for. I set up categories for things I want to save for (retirement, a new car, a vacation, etc.), categories for regular monthly expenses, categories for occasional expenses like home repairs, insurance bills, etc. The initial setup took a while, but once it was set up the process of budgeting out each month takes about 10 minutes. You budget as you receive income, although YNAB encourages you to establish a "buffer" so you live entirely on last month's income: my August paychecks were allocated as income for September, and as soon as my August paychecks come in I can budget for the entire month of September.

YNAB is also built on flexibility, recognizing that nobody can predict expenses accurately, so you're encouraged to shuffle money from category to category as the need arises, as long as you don't exceed the total amount of money in your budget. I manage about $1 million in contracts at work, and this is exactly how we manage those budgets as well.

Bottom line for me is that my budget--or spending plan, if you prefer to call it that--puts me in the driver's seat and forces me to decide where every penny goes. I'm truly managing my money this way, instead of simply watching where it goes. I avoided budgeting for most of my life, and could easily continue without a budget, but I find it very empowering.


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## eulogy (Oct 29, 2011)

> My question is what are you trying to achieve or what problem are you trying to solve?


I'm not trying to solve anything, just trying to improve my overall efficiency with where my money goes.


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## tiffbou2 (Jul 4, 2013)

I echo the power of tracking rather than budgeting. 
I would track all my spending every single day. I track my expenses through an excel spreadsheet and enter in all my fixed expenses (eg. mortgage, utilities) as I pay them so I know what has already been paid for the month. Then I have a daily spending log and I track everything I spend, whether it be $200 on clothes or $1 on a coffee. Then at the end of the month I can saw, "wow, I spend $700 on clothes this month" (my biggest downfall) or "ack! $150 on coffee!" and then I know better where I need to cut back the next month when I set my monthly goals. 
I got out of tracking for the summer months and my spending has exploded!


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## brad (May 22, 2009)

tiffbou2 said:


> Then at the end of the month I can saw, "wow, I spend $700 on clothes this month" (my biggest downfall) or "ack! $150 on coffee!" and then I know better where I need to cut back the next month when I set my monthly goals.


You've perfectly illustrated the limitation of tracking outside of the context of a budget: it's retrospective. It lets you look back at what you spent, putting you in a reactive rather than proactive mode. Businesses recognized this shortcoming long ago and started developing dashboards and other tools for real-time tracking _against goals_ (i.e., against a budget). That way you can catch problems before they get out of hand and make mid-course corrections during the month.


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## brad (May 22, 2009)

Just to clarify, a real budget doesn't involve saying "I only budgeted $250 for food this month, which means I can't invite my friends over for an impromptu party because it'll put me over my food budget." That's the non-budgeters prejudicial view of budgeting, and the reason most people avoid budgeting: they think it's too restrictive.

A budget simply says "I have a limited pool of money available to get me through the month. I'm going to allocate where that money will go and track my spending against those allocations. If I guessed too low for any given line item in my budget, that's okay, but the money has to come from somewhere: I have to rob a Peter to pay Paul." You have to take money out of some line items to fund an overexpenditures in other line items. The process of determining which line items you will rob and the ones you want to keep sacred tells you a lot about your priorities, and helps you fine-tune your budgeting over time. And it helps ensure that you never spend more than you have. The people using YNAB range from multi-millionaires with zero debt (not even a mortgage) to people with $1 million in debt. They all find budgeting useful.


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## Daniel A. (Mar 20, 2011)

Sort of like the government budgets really don't mean much.


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## Sampson (Apr 3, 2009)

brad said:


> You've perfectly illustrated the limitation of tracking outside of the context of a budget: it's retrospective. It lets you look back at what you spent, putting you in a reactive rather than proactive mode.


But I think the purpose is that you can curb or affect spending in the future. Unlike a business, I'm guessing most individual's finances are wrought with discretionary, consumerist spending. If you see that you are spending X dollars on a discretionary category and feel it is to much, presumably that is or can be motivation to reduce the drain.


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## MasterCard (Aug 2, 2013)

Why live that way?
The people on the show are in serious debt issues...I'm assuming you're not, so why would you need to live that way?


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## My Own Advisor (Sep 24, 2012)

Not a big fan of jars or anything else to create a budget. I just monitor my spending and I only spend after paying myself first every month (i.e., TFSA + RRSP + savings account contributions).


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## tiffbou2 (Jul 4, 2013)

Sampson said:


> But I think the purpose is that you can curb or affect spending in the future. Unlike a business, I'm guessing most individual's finances are wrought with discretionary, consumerist spending. If you see that you are spending X dollars on a discretionary category and feel it is to much, presumably that is or can be motivation to reduce the drain.


That's exactly what I meant...most of the time, if I can see in my tracking I've already spent quite a lot of money in one area, say eating out, I would say ok, no more eating out until next month. Or perhaps I would return my latest clothing purchase. It's better than waiting to the end of the month to see the CC bill. Plus, how would you know how much was left in your allotted budget without tracking your purchases? I am aware of the amount of money coming in and how much I have to spend after living expenses and savings, and by tracking I always stay within that amount, but it seems silly to put a rigid allotment to things like clothing, gifts, dining, entertainment. 

I've tried a cash only diet and it doesn't work for me. I'd get the wad of cash in my wallet at the beginning of the week and just fritter it away within the first few days and end up charging what I didn't have cash for. I spent twice as much as when I diligently track myself.


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## brad (May 22, 2009)

tiffbou2 said:


> Plus, how would you know how much was left in your allotted budget without tracking your purchases?


Right, I don't know anyone who runs a budget without also tracking expenses: the two go hand in hand. All I'm saying is that you can track without having a budget, but that tends to lead to reactive rather than proactive decisions. You can't have a budget without tracking, because the tracking is needed to tell you how your spending compares with what you've budgeted.

If you feel "x is too much" to spend on a discretionary category, you are in fact working with a budget even if you don't realize it. The moment you attach an expected or "acceptable" value to a category, you're budgeting.


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## brad (May 22, 2009)

tiffbou2 said:


> it seems silly to put a rigid allotment to things like clothing, gifts, dining, entertainment.


It _is_ silly, and as I mentioned above that's not how budgets work. You allocate an amount to those categories, but if you need to adjust it later, it's flexible. You have total freedom to reallocate among categories; the only area where you're constrained is staying within the total amount of money you actually have. If you go over that amount, you're overbudget. But reallocating among categories is normal budgeting practice, both in professional budget management and in personal finances. Nobody can predict future expenses with 100% accuracy, so rigid budgets are unrealistic. But if you're going to shift allocations around, you have to accept the consequences: if you need another $100 in your clothing budget to cover the cost of some cool item you bought on sale, you may have to take that money out of your vacation category. I like that process, because it shows the consequences of your decisions.


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## Oldroe (Sep 18, 2009)

I hate the word budget.

What I have are realities. 1st of every month these bills need to be paid. When I worked the correct amount for these bills went into the bill paying account and payed on time.

I have another account for yearly bills taxes, car house boat insurance. Same thing the correct amount of money each week so these bills are payed on time.

Then investments, money is accumulated each week and deployed when time is right.

After that if we want to eat out every night so what, if we want to spend a bunch on a hobby so what we just don't go in dept for it.

All the bills and investment are looked after. Time to have fun.


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## My Own Advisor (Sep 24, 2012)

After "All the bills and investment are looked after. Time to have fun."

I like that Oldroe.


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## brad (May 22, 2009)

My Own Advisor said:


> After "All the bills and investment are looked after. Time to have fun."
> 
> I like that Oldroe.


Ditto. And that's exactly how it works when you have a budget as well. When I do my budget each month, the best part comes when I'm done ensuring that all my expenses and goals are met, and I see what's left over and get to decide what to do with it while staying within my available funds.


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## Homerhomer (Oct 18, 2010)

Budgeting, glass jars and so on really doesn't apply to most of the forum members here but is great for anyone who doesn't think they save enough or is in financial troubles.

First off some people don't even know how much money they make, secondly they don't know how much money they spend.

Once the actual calculations are made and all the OMG I spend so much on coffee, lunches, clothes, cell phone...... and OMG I spend so much more than I make, for anyone with a bit of discipline glass jars are really not necessary, getting rid of credit, curbing some unnecessary spending and sometimes making more that's all is needed.
After that all the calculations are IMO a bit of a waste of time.


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## Eclectic12 (Oct 20, 2010)

Homerhomer said:


> Budgeting, glass jars and so on really doesn't apply to most of the forum members here but is great for anyone who doesn't think they save enough or is in financial troubles.


I mostly agree but would qualify it to anyone who needs a visual reminder.




Homerhomer said:


> First off some people don't even know how much money they make, secondly they don't know how much money they spend.


True ... but tracking where the money goes without the use of jars have helped people discover this. Hence, my qualifier about being visual driven.




Homerhomer said:


> Once the actual calculations are made and all the OMG I spend so much on coffee, lunches, clothes, cell phone...... and OMG I spend so much more than I make, for anyone with a bit of discipline glass jars are really not necessary, ...


Agreed.

The key is tracking it to know for sure & seeing it. I had a co-worker who complained about how tough it was to save for emergencies/investing. I pointed out to him that he was visiting Starbucks three times a day @ $5 + a visit. He brushed it off until I pointed that in addition to the yearly total, he had to make significantly more to replace that money. I found it interesting that it was the total of the yearly amount plus estimated taxes to replace it that finally captured his attention.


Cheers


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## Homerhomer (Oct 18, 2010)

Eclectic12 said:


> I found it interesting that it was the total of the yearly amount plus estimated taxes to replace it that finally captured his attention.


That's because $5 doesn't mean much, but $3,000 is a lot of money (just a rough calculation of $5 per cup times three for 200 working days - and that's before it is even grossed up).
All good points as usual Eclectic, as always in more details and more eloquent I would have ever done ;-)


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## Eclectic12 (Oct 20, 2010)

Homerhomer said:


> That's because $5 doesn't mean much, but $3,000 is a lot of money (just a rough calculation of $5 per cup times three for 200 working days - and that's before it is even grossed up).


That's what surprised me ... the $3K made no dent. 

Saying "Keep in mind it's after tax money your spending so it's not $3K to replace it, it's $3K x 1 x MITR. 
If the tax rate is say 30%, it's really $3.9K."


The $3K made an impression on me but it was the $3.9K that made an impression on him.




Homerhomer said:


> All good points as usual Eclectic, as always in more details and more eloquent I would have ever done ;-)


Thanks


Cheers


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## Jungle (Feb 17, 2010)

I do the same as the op.. but at the end of the month, the spending is reviewed and I say, "how can I lower my spending in XXX or save more money? " 
I will admit I have become lazy lately with actually doing implementing ideas like saving on gasoline, booze, etc. 

But I agree with posters above, budgets can be unrealistic someones, but that's not to say money shouldn't be left unmanaged and spending is a free-for-all due to ignorance.


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## eulogy (Oct 29, 2011)

> I do the same as the op.. but at the end of the month, the spending is reviewed and I say, "how can I lower my spending in XXX or save more money? "


And maybe this is enough. The suggestion to track seems to be a pretty universal thought in this thread. It is something that works. It's essentially what my "budget" is now. I'm essentially tracking it and at the end of the month is a see the numbers up against the targets.

Maybe the best thing to do is make time to sit down and just review it. See if I'm satisfied with what I'm doing.


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## Eclectic12 (Oct 20, 2010)

eulogy said:


> And maybe this is enough. The suggestion to track seems to be a pretty universal thought in this thread. It is something that works ...


IMO, it's the bare minimum required ... it's far to easy to think "I only have a coffee a day" and not know that it's really three @ $5 + for around $3K a year.


Cheers


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## Robillard (Apr 11, 2009)

I'm like Brad. I budget and tranck my spending. Mainly I budget so that I know roughly how much I expect to save/invest and consume. I set aside funds every month to save for vacation, based upon what I have budgeted for vacation in the year. Every so often I tweak the monthly version of my budget to reflect changes my cash flow situation. 

I think of budgeting as sort of an optimisation exercise. I can project roughly how much I well spend in a given month, along with the income from paycheques. This lets me figure out the optimal amount of cash to hold in my chequing account in order to avoid service charges, while maximising the amount I can set aside for investment or saving for vacation. 

I would also mention that I use jars only to hold coins to use for the laundry room. I also keep leftover cash from prior vacations in jars where the amount leftover is too small to be worth exchanging.


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## randomthoughts (May 23, 2010)

I'll chime in that I love having a budget. Jars would be horrifically inconvenient, though - using the computer makes it a matter of minutes. 

Really, though, expense tracking is where it starts. If you understand your expenses then you can create easily create a realistic budget and make adjustments that you WANT to make. And the closer you're tracking your expenses, the more agile you are at making adjustments.

If you have adequate savings, you don't have to be agile. If you potentially could run out of money to pay bills - then you should be expense tracking/budgeting more closely. For me, a monthly check of how my spending met with my plans is sufficient.

For some, it's about savings - if that's the case, you can probably get away with just putting away your savings and spending the rest (though potentially, you won't be saving as much as you could, spending on things you don't really care about etc.)

For me, it's about conscious spending and goals. My goals:
-spend a certain amount on fun... if I don't spend it, it does NOT go to savings, it goes to "future fun" so that when I figure out what I want, the money is there (currently musing about Teslas... but I'm not sure I want it enough)
-when spending on fun, spend it on big things (experiences, things I'll use repeatedly), not little things (eating out randomly, knick-knacks, un-researched purchases)
-spend a bit more on groceries to eat a bit healthier (I'm addicted to sales...)

Personally, I think the only real budgeting sins are: 
-spending money that you can't afford
-spending money on things you don't want or need (this is what I'm watching!)
-not realizing that you're doing either one!


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## fraser (May 15, 2010)

There are some people who are completely clueless...the ones that consistently spend more than they earn, don't understand value, and are good friends to the credit card companies.

These are the people for whom jars are wonderful. If the jar is empty, you don't spend. It is perhaps not their fault, that is just how they are.

We consider ourselves to be fortunate to be successful in using a different method. But to each his own, whatever works.


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## Eclectic12 (Oct 20, 2010)

randomthoughts said:


> I'll chime in that I love having a budget.


Apparently, you are one of the few.




randomthoughts said:


> Jars would be horrifically inconvenient, though - using the computer makes it a matter of minutes.


Being inconvenient and/or a barrier to spending is the point. 

If the people using glass jars could use a computer to track expenses and budget, they wouldn't be in the rough financial shape they usually are in.





randomthoughts said:


> Jars Really, though, expense tracking is where it starts. If you understand your expenses then you can create easily create a realistic budget and make adjustments that you WANT to make. And the closer you're tracking your expenses, the more agile you are at making adjustments.


+1 ... though there is a segment who know they should make adjustments but decide or through inaction end up deciding not to. 



Cheers


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## MoneyGal (Apr 24, 2009)

I just read an article (I'm catching up on many neglected things in my reading pile this morning) about the apps that allow spenders to pay for things without taking out their wallets (like Square, in which Starbucks has a large stake) - and I reflected that apps which allow people to "spend seamlessly" - i.e., without taking out money or even a credit or debit card - are the exact opposite of the glass jars solution. That is, they making spending invisible, and the whole point of the glass jars is to make spending visible. 

I don't need the glass jars, but I suddenly saw "how" they work. They make a process visible that is not otherwise visible. (This is distinct from "budgeting" which, I guess, tells you how much to put in each jar.)


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## brad (May 22, 2009)

Eclectic12 said:


> Apparently, you are one of the few.


Or one of the enlightened few. ;-)

Many people seem to think that a budget is useful only to people who are having trouble living within their means, or who need to enforce discipline in their spending. And of course it's true that a budget can be very useful for people like that. But as a financial management tool, budgets can be useful to anyone who wants to manage their finances proactively. It's a more hands-on approach, perhaps like driving a stick shift versus an automatic. Personally I find the process of assigning jobs to all my available dollars an empowering and educational experience. I've just completed my first year of living with a budget and I don't think I'd ever go back to just tracking. I've been tracking my expenses since the early 1990s, but always avoided having a budget because I manage budgets at work and felt like managing a budget at home would be too much like work. Plus my finances were in great shape and apart from some credit card debt that I carried for a few years in the mid 1990s when I was starting a freelancing business, I've never had any trouble living within my means. But it turns out that I love budgeting, and I feel like I have a much better picture of my finances this way.

Clearly it's not for everyone, but it's naive to think that the only people who would benefit from a budget are those who can't make ends meet.


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## MoneyGal (Apr 24, 2009)

Every one of my dollars ALREADY has a job, and I don't budget. 

A bunch go into something called "investment accounts" where they do the job of "investing." 

Some go into a thing called a "savings account" where they perform the function of providing a cash cushion for my family. 

The remainder do this job called "meeting my day-to-day needs." :encouragement:

(added a smiley so my intention of friendly ripaste is ... perhaps more obvious than it would otherwise be...)


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## MoneyGal (Apr 24, 2009)

p.s. I know a lot of people who measure food macros for all the food they eat every day. This is totally independent of whether they "need" to measure macros for some reason (fitness or weight or body composition goals). You sound like them. They love doing this!


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## brad (May 22, 2009)

MoneyGal said:


> Every one of my dollars ALREADY has a job, and I don't budget.
> 
> A bunch go into something called "investment accounts" where they do the job of "investing."
> 
> ...


In my view, you're budgeting without admitting that you're budgeting. ;-) The moment you set aside an allocation for your dollars or set a goal, you're effectively budgeting. It's not so much different from putting it into a glass jar, in fact. You're taking your dollars and allocating them to different accounts or tasks.

A lot of budgeters have just three or four categories like yours: investments, emergency fund or cushion, and "day to day expenses." As long as they stay within their goals or allocations (or shift allocations among their categories without going over the total available), it all works. A budget doesn't have to be super-detailed in order to be a budget.


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## humble_pie (Jun 7, 2009)

brad you say you work on your budget every single month, do you know how much time this takes?

me i never budget. Never even thought about it. I try to obtain value for every dollar that i spend, though. I don't spend recklessly.


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## Plugging Along (Jan 3, 2011)

MoneyGal said:


> Every one of my dollars ALREADY has a job, and I don't budget.
> 
> A bunch go into something called "investment accounts" where they do the job of "investing."
> 
> ...


Ditto, no wonder I like mg so much. This is pretty much how I do it.



brad said:


> In my view, you're budgeting without admitting that you're budgeting. ;-) The moment you set aside an allocation for your dollars or set a goal, you're effectively budgeting. It's not so much different from putting it into a glass jar, in fact. You're taking your dollars and allocating them to different accounts or tasks.
> 
> A lot of budgeters have just three or four categories like yours: investments, emergency fund or cushion, and "day to day expenses." As long as they stay within their goals or allocations (or shift allocations among their categories without going over the total available), it all works. A budget doesn't have to be super-detailed in order to be a budget.


I think if you look at the ops context of budgeting it was budgeting spending and or my category of life. The glass jars have never put the fixed expenses, savings, debt repayment. The budget on the show was tracking discretionary. 

We use glass(plastic) for our kids in allocating hey allowance. The categories are spend, save, and give. They get to see how important each one is. Hopefully, they will learn this lesson when they ar young, that there is no need for them split out each category.


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## brad (May 22, 2009)

humble_pie said:


> brad you say you work on your budget every single month, do you know how much time this takes?


Yep, as I mentioned above, it takes about 10 minutes. The initial setup (during the first month, with some fine-tuning over the next 2-3 months) took a couple of hours. But once its set up (I use the You Need a Budget software), it takes about 10 minutes. Some allocations remain constant from month to month, plus I have some recurring automatic payments that I've set up in the software; the software enters all those with one click of the mouse when I'm setting up the next month's budget. Then it takes me about 10 minutes to allocate the rest of my available dollars so they're all budgeted.

I then track my expenses daily, which takes about 5 minutes per day (I enter mine by hand but it's possible to download transactions and import them from your bank -- I prefer doing it by hand). The software shows me immediately how I'm tracking against budget so I can make mid-course corrections as needed instead of waiting til the end of the month and saying, wow, I spent $1,500 on groceries?! 

I do have a fairly detailed budget, but it's not because I love detail, it's because I like the satisfaction of knowing that all my upcoming expenses are accounted for so I can spend money on things like entertainment, a new lens for my camera, etc. without worrying about whether it'll cause any problems. In the past I've had a tendency to save too much and be too conservative with spending. I've never had trouble meeting my larger annual goals for retirement investments, charitable contributions, and paying down the mortgage, but with the amount remaining I've sometimes been a bit too frugal. I'm trying to enjoy life more now, and the budget helps me do that while giving me the peace of mind that none of my other goals will be affected and I won't have any cash-flow crunches.


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## brad (May 22, 2009)

Plugging Along said:


> I think if you look at the ops context of budgeting it was budgeting spending and or my category of life. The glass jars have never put the fixed expenses, savings, debt repayment. The budget on the show was tracking discretionary.


Sure, but there's not a huge conceptual difference between putting money in glass jars versus putting money in different accounts. You set a goal for your annual retirement contribution, and you figure out how much to allocate each month toward that goal and you invest it. It's kind of like putting that money in a glass jar -- that's its destination. You set aside some money for emergencies or contingencies, and you put that in a savings account, which is like another glass jar. And you have another glass jar for the rest. If you're allocating money to different tasks, and if you set that money off-limits somehow (in an account or a jar, no conceptual difference), then you're effectively budgeting. 

People who don't track or budget at all usually end up spending reactively without having any of those goals or allocations. (I do see tracking alone as useful; I did that for years myself; I'm not arguing that budgeting is necessary for anyone, just that it can be helpful). That's how they get into trouble with debt etc., and that's why those people can be helped by a budget or by having separate accounts for separate tasks. Some people set up separate accounts for things like saving for holiday gifts, saving for retirement, an emergency fund. That's not much different from glass jars, and it's not really different from budgeting.


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## humble_pie (Jun 7, 2009)

brad said:


> Yep, as I mentioned above, it takes about 10 minutes ... next month's budget. Then it takes me about 10 minutes to allocate the rest of my available dollars so they're all budgeted.
> 
> I then track my expenses daily, which takes about 5 minutes per day



ok, that's 2.5-3 hours per month.




> In the past I've had a tendency to save too much and be too conservative with spending. I've never had trouble meeting my larger annual goals for retirement investments, charitable contributions, and paying down the mortgage, but with the amount remaining I've sometimes been a bit too frugal. I'm trying to enjoy life more now, and the budget helps me do that while giving me the peace of mind that none of my other goals will be affected and I won't have any cash-flow crunches.



it's fairly clear that it's a kind of inverse budget. It's not a discipline to make cuts that will enable saving, it's rather an exercise to pacify that overly-thrifty little demon on your shoulder who keeps sticking the tines of his fork into your flesh & shouting No!


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## brad (May 22, 2009)

humble_pie said:


> it's fairly clear that it's a kind of inverse budget. It's not a discipline to make cuts that will enable saving, it's rather an exercise to pacify that overly-thrifty little demon on your shoulder who keeps sticking the tines of his fork into your flesh & shouting No!


Sure, but it's a budget all the same -- or as I mentioned further upthread, it's really a spending and savings plan (which is just another name for a budget). I do use it to reveal how much money I have available for fun, which I wouldn't really know otherwise. But I also use it to reveal opportunity costs. My first mentor as a manager, way back in the early 1980s, was a brilliant, tough, demanding, but scrupulously fair vice president where I worked. She often gave my already overloaded department challenging new tasks, and we all grumbled about it. One day she called me into her office and said, "complaining about workload won't change anything: what you need to tell me is the cost of my decisions. If I ask you to do something new, it means that something else I've already asked you to do won't happen, or won't stay on schedule. That's what I need to know in order to determine whether I should ease up on you." That was a good lesson in opportunity costs. Budgeting forces you to think about opportunity costs all the time: if I buy this new shirt, which I didn't budget for, the money has to come from somewhere. I have to decide which category to steal from in order to fund the overspend on clothing. It might mean I have to take money from my vacation savings, meaning I'll have less to spend on our holiday. Or I might have to take it from the money I've been saving up for a new lens for my camera. Those lessons can be pretty valuable, even in personal finances, and even for people who have plenty of money, because they reinforce the idea that spending decisions have consequences.


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## eulogy (Oct 29, 2011)

The reason I brought up the jars was the physical limitation. I have no interest in seeing anything. I'm good with my money. I dump money into investments and dump money into my savings, but at the end of the day what ends up being saved/invested is at the mercy of what my credit card balances are. For example, I set a $250/mth budget for groceries. My spending can fluctuate from $200-$400/mth. The point of the budget is to allocate my spending to match an objective that I value. Just because I dump $1000 into a savings account, doesn't make that spending $100 extra on groceries any better. Maybe I would prefer that for entertainment, reinvesting in my human capital or just saving more.

The jars create a physical barrier, which is why I brought it up. If I have a jar with $250 in it for the month for groceries, that's all I have. If I go into the grocery store with $100, that's all I can physically spend. Beyond that point, I'm out of luck. If I walk in with a credit card, there is no limitation. That's not to say that when I have plastic with me that I go nuts, but I obviously can't be as tight with my money as I have planned objectively at an earlier time. It's a matter of "do I want to save $20 or did I have a bad day and could use a little junk food?"


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## marina628 (Dec 14, 2010)

I pay the bills ,set aside our monthly savings goals and the rest we can spend.I do it all in about 30 minutes on payday (once a month)


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## randomthoughts (May 23, 2010)

MoneyGal said:


> p.s. I know a lot of people who measure food macros for all the food they eat every day. This is totally independent of whether they "need" to measure macros for some reason (fitness or weight or body composition goals). You sound like them. They love doing this!


Guilty! I just started doing this.

Before, I would just use my pants size as a gauge. But despite my efforts a 31 inch waistline became 32... became 34... It took tracking to get me back in the other direction - a calorie budget is much like a money budget - only harder. Now I prioritize what I want to eat!


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## randomthoughts (May 23, 2010)

brad said:


> In the past I've had a tendency to save too much and be too conservative with spending. I've never had trouble meeting my larger annual goals for retirement investments, charitable contributions, and paying down the mortgage, but with the amount remaining I've sometimes been a bit too frugal. I'm trying to enjoy life more now, and the budget helps me do that while giving me the peace of mind that none of my other goals will be affected and I won't have any cash-flow crunches.


Guilty again! Any unspent money in the budget, I'd put toward the mortgage - which disappeared fast. But now, I actually track my unspent money - it does not get absorbed into savings. It's for when something cool goes on sale! (The mortgage payments, alas, now gointo savings... old habits die hard.)

The software I use (mesabe, a personal version of the old wesabe website) actually has little spending bars that fill up like thermometers as transactions are imported and you get closer to your goal. I used to love this because it basically took only a minute to import transactions and see how I was doing. But now, I'm so used to spending that amount that I'm usually only plus/minus 5% off.

Hopefully, the caloric budget will get that way eventually too. For now, though, I have to do it daily!


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## My Own Advisor (Sep 24, 2012)

I'm with marina628, although with a lot less money 

I pay the lump sum payment on the mortgage, invest in our RRSPs, contribute to and try to maximize our TFSAs, add money to our savings account, then I pay the bills and spend the rest. 

Every payday, set aside about 30 minutes to do some forecasting for the next 2 weeks, then, that's it.


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## Jungle (Feb 17, 2010)

Ahh forcasting is something to need to spend more time on again..I used to ask and think what "extra" things are coming up. you know birthday parties/ gifts, extra trips, cell phone minutes, repairs/ maintenance etc all seem to come with surprises when not thinking ahead.


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