# How to budget for Wants (and not feel guilty about it)



## GreedIsGood (Dec 4, 2013)

How do you guys budget for your wants? I've been living at home for 2 years now since graduation and I never had to spend much or had the need to keep track of what I spend.

Normal monthly expenses for me are $200 for gas, $200 for groceries (varies b/c my parents decide on when to buy groceries), $100 for eating out (again varies). Income is $2700 after tax.

But for the past three months I've been spending on stuff that I have thought about for a long time. I don't impulse buy but I do dwell on a "big" purchase for a long time (and eventually purchasing them).

For example, I have bought:

$370 - bday gift for my dad in March
$200 - bday gift for my brother in April (tennis racquet)
$750 - tennis stringing machine (Costs $50 to restring each time so I might as well diy)

I want to buy:

$150 - Magic the Gathering playing cards - My friends started playing and want me to get them as well
$100 - a voice recorder (want to improve my public speaking skills)

So how do you guys budget and when do you say enough?

Additional information about me:
Cash - $18k
TFSA - $15k (I know I can max this but not the point of this post)
RRSP - $6.8k


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## brad (May 22, 2009)

I think the simple answer is to budget for needs first and then move on to wants.

Once your needs are satisfied, whatever's leftover can go for wants, and of course it makes the most sense to save up for the wants until you can cover the cost without incurring debt. 

Defining "needs" can be tricky, though, and can evolve over time. Do you need to max out your TFSA and RRSP before you move on to "wants?" Maybe not. 

The point in living under a budget is to find a sustainable lifestyle that allows you to live within your means without feeling like you're suffering. If you feel too hemmed in, you'll probably go on periodic spending sprees. It's just like dieters: anyone can lose weight quickly on a spartan diet, but most people who lose weight quickly gain it all back and more. That's because they haven't taken time to develop new habits or develop a diet that they can sustain for the rest of their lives. They go on a crash diet, and then when it's over they drift back to their old comfortable habits. A diet in which you lose no more than 1-2 pounds per month is a lot more sustainable in the long term. 

If you deprive yourself of wants, you'll be unhappy and are more likely to overspend as a compensation.
But if you overindulge in your wants, your needs (present and future) will suffer.
It's a balancing act, and only you can decide how to balance those priorities.

One comment on the voice recorder: most computers (laptop and desktop) come with microphones these days. They're not very good quality, but if you're just trying to improve your public speaking and using recordings of yourself to see how you're doing, a computer or cellphone mic and whatever built-in software comes with it might be adequate.


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## tygrus (Mar 13, 2012)

Are you going to live with your parents until you are 40. 

You need exposure to the real world, then you will gain a little financial wisdom first, then you can start planning life out. Your cash and TFSA are only there because you aren`t paying real rent or utilities. Thus you have disposable income to spend on wants. 

Stand on your own, then you can see how much of a person`s income goes to bills and how long and how hard people have to work to maintain it all. 

Every little discretionary purchase you make, is a little longer you need to work. To me, the greatest asset is my freedom. People drive by my house in BMeers and Benzes but they are all still going to one place - work. Work they probably don`t like with people they probably don`t like. At 7:00am when its -50C, I am still in bed. I never miss my daughters activities and I do whatever I want every day. I only buy things that pay me and I don`t buy depreciating things like electronics and fad junk.


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## smrtalec (Dec 16, 2010)

I set a saving goal per month, so anything leftover after deducting my fixed expense (rent, utilities, insurance, groceries, etc) and variable emergency spending (vehicle repairs, broken appliances) is fair game, and I don't feel guilty about spending it on "wants".

The saving goal is a running tally, so if my fixed/variable spending causes me to contribute less than usual, then I don't get to spend as much the next month either.

For example:
$2000 savings goal
Net Income $4000

1st month
Fixed + variable $1800
$200 left for wants, spent $100

2nd month
Fixed + variable $2200
-$200 on saving goal
Running tally -$100 (since you had $100 left over last month)


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## heyjude (May 16, 2009)

Another (very effective) strategy is to "pay yourself first", i.e. set up automated monthly savings of at least 10% of your take home pay. Pretty soon you won't miss it. Next, get an Excel or Google spreadsheet and a year's worth of bank and credit card statements and enter all your regular mandatory expenses (e.g. savings, rent, utilities, insurance, fees). For expenses that happen less frequently (e.g. car insurance, professional fees), divide the annual cost by 12 to get a monthly figure. Subtract the sum of your monthly expenses from your monthly income. What's left is discretionary. 

Let's use your numbers from your first post:
After tax income: $2700
Transfer to savings: $270
Rent?
Insurance?
Any other mandatory expenses?
Gas: $200
Groceries: $200
Eating out: $100

Remaining monthly balance: $1930 (assuming other categories are zero, which is probably not the case).
This is the amount you can spend on your "wants", including tennis racquets for Mom, etc. (lucky Mom!). It's up to you. The beauty of the system is that your savings are automatic. It's very easy to forget to save unless you make it a priority. You might even "want" to save more, and that's great!


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## GreedIsGood (Dec 4, 2013)

tygrus said:


> Are you going to live with your parents until you are 40.
> 
> You need exposure to the real world, then you will gain a little financial wisdom first, then you can start planning life out. Your cash and TFSA are only there because you aren`t paying real rent or utilities. Thus you have disposable income to spend on wants.
> 
> ...


Of course not.

After having lived in university I _want_ to move out. My plan is to find a permanent job first. My job right now is contract ending in October. I think I will be let go before then too because the company is going through a restructuring.

I just want a balance between spending and saving. I think it's great that you get to spend time with your daughter without having to think about money. My biggest concern is spending my youth worrying about not saving enough or saving too much while sacrificing moments where I should spend a bit of money for fun.

May I ask how old you are and what you did?


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## lightcycle (Mar 24, 2012)

2014Me wishes that 2001Me hadn't had spent money on stupid things.

However, if 2028Me came back in time to tell me not to spend money on things that I find important right now, I'd tell him to f*** right off.

It is possible to be unhappy doing the "right thing" all the time. Much better to do the wrong things at the right time, preferably when there's time enough to fix it. But I'm sure there will be a lot of dissenting opinions on this particular forum. YMMV.


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## indexxx (Oct 31, 2011)

I usually just buy whatever the hell I want, when I want. I personally would rather have the item in question than waste energy and time agonizing over it, because I know I'll usually end up buying it anyway. I get more living enjoyment out of having the things I want than worrying about what it costs me. I don't believe in deprivation; I work hard and deserve to enjoy my life. Of course this is all within reasonable limits; I'm not rushing out to by a new 911 anytime soon.

BTW your smartphone can be used as a voice recorder.


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## Nemo2 (Mar 1, 2012)

I wanted not to have to work.......and I _needed_ not to have to work too.......'worked' out quite well.


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## DayTek (Sep 26, 2013)

Two words: *Savings Accounts* (notice the plural)

A rough draft of our budget looks like this:

Fixed Expenses (Our monthly bills/needs and dates of their payments)...
Mortgage x 4
Weekly Groceries x 4
Weekly Gasoline x 4
Land Taxes 1st
Hydro 5th
Union Gas 5th
Donation 15th
Cell Phone 16th
Car Insurance 16th
Phone/Internet/Cable 25th
Other Donation 25th

Total = Sum of Fixed Expenses

After our Fixed Expenses or "needs" are budgeted, then we divvy out the rest, which would be our Variable Expenses or "wants". These include Cash (or "play money", which is used for eating out, entertainment, etc.), Christmas Savings, Emergency Money, Vacation Money, Short Term Expenses (clothing, birthdays, etc.) These things are not bills, but our safety nets and provide our current and future wants. Most of these are paid into consistently, but can vary depending on how much our bills are that particular week (some are obviously more expensive some weeks than others), what you are saving for and if there are changes income. Emergency Money is what is poured into the most. 

Micromanaging savings is what works for us and having financial goals, even if they are just short term. What are your goals? A house? More education? Travel? A new car? It's up to you to find a balance. Practicing saving now will help you adjust to living independently. I know people who's parents didn't charge them rent, but they paid "rent" to their parents anyway and asked them to stick all the money into savings for them - This was just so they could get used to having a good portion of their money delegated to a need like shelter. Plus they had a sizable down payment for a home after 

If you want a number on it, I'd say $700 for "rent" (25% of your income, doesn't have to be given to your parents, but just stick it somewhere and don't touch it) $200 for gas, $200 for groceries, $400 spending money ($100/week), $900 to a long term savings goal (house, car) and $300 to a short term savings goal (trip, birthdays). That's just an off the top of my head plan. Considering we bought our first house when I was 20, it's been a looong time since I had that kind of disposable income to play around with...LOL.


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## GreedIsGood (Dec 4, 2013)

DayTek, what do the numbers beside your budget mean? Weekly payments and most important to least important?

How many savings account do you recommend and how to you divide up your savings? Right now, I have nothing in savings with PC and I have chequing with RBC (the $18k I mentioned). Ever since I got my Visa card at 18, I have deposited everything into RBC because it's a hassle moving money between banks. Don't know if it's actually a hassle but I've never done it before.


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## olivaw (Nov 21, 2010)

I'm with the "pay yourself first" crowd, as long as it is within reason. Set a monthly savings goal in your budget and try to meet or exceed it. The rest is what you can spend on living expenses and entertainment. 

None of your purchases seem excessive. Gifts for your Dad and brother are a good use of funds that made your family happy. The tennis stringing machine will pay off in the long run and the tennis will yield health benefits. $150 for good times with your friends is not much. $100 for a voice recorder - if you have a smart phone, use it. Otherwise consider it an educational expense to help you develop public speaking skills. 

Some of my most frivolous expenses have created some of my happiest memories. The look on my wife's face when I gave her a Yukon gold nugget out of the blue, my motorcycle trips, our cruises, taking the kids to Disney. The memories are priceless.

But it only works if you pay yourself first. Otherwise you end up making regrets instead of memories. 

My two cents.


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## DayTek (Sep 26, 2013)

GreedIsGood said:


> DayTek, what do the numbers beside your budget mean? Weekly payments and most important to least important?





DayTek said:


> Fixed Expenses (Our monthly bills/needs and* dates of their payments*)...


ALL bills are important...LOL. We put the dates of when the bills come in/scheduled to be taken out automatically so we know how much to leave in our chequing account for that week. We create a monthly budget, than break it down weekly.

For example, one week may look like this:

Mortgage $250
Grocery $125
Gasoline $50
Hydro $140
Union Gas $60
Total = $625

And another look like this:

Mortgage $250
Grocery $125
Gasoline $50
Donation $20
Cell Phone $80
Car Insurance $175
Total = $700

We can typically contribute a consistent amount in savings, but Short Term savings usually gets the shaft if bills are higher for that particular week. We can make up for it on a week that doesn't have as high of bill payments.



GreedIsGood said:


> How many savings account do you recommend and how to you divide up your savings? Right now, I have nothing in savings with PC and I have chequing with RBC (the $18k I mentioned). Ever since I got my Visa card at 18, I have deposited everything into RBC because it's a hassle moving money between banks. Don't know if it's actually a hassle but I've never done it before.


For all the accounts I mentioned for myself (Christmas, Vacation, Emergency, etc.), each has their own savings account and they are all at the same bank. I believe you are allowed to open at least 10 savings accounts at one bank, which I don't think you will require that many...LOL. You can divide up your money into each savings account by just transferring into them every pay. Say you get paid bi-weekly $1300; $200 could be in cash for spending, $100 for food, $100 for gas. The rest you could disperse between savings accounts...The amounts vary on your goals. (Helpful hint: If you didn't know, you can label your accounts on your Online Banking...Very handy for not getting them mixed up!) As I stated before, how many savings accounts you have is dependent on your goals. 

Transferring money between banks is simple using Interac e-Transfer http://www.rbcroyalbank.com/products/deposits/interac-e-transfer.html, but can be costly depending on the type of bank account package you have. RBC offers 15 free e-transfers per month with the Signature No Limit Bank Account. However, I find it more efficient to just have all my Savings accounts at my main bank.

As some stated, there is nothing wrong with splurging on something big once in a while. There's a lot of joy in especially buying gifts for others! However, (and I am speaking as a middle-class earner here) most people living independently need to save up for things they want to buy because they have consistent bills that need to be paid beforehand. They can splurge, it just has to be fairly pre-planned...If they don't want to utilize debt to fund it, which is overall a bad idea. So getting yourself used to saving for things is the key so it's less of a 'shock' when you get out on your own.


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## Canadian (Sep 19, 2013)

GreedIsGood said:


> ...I have deposited everything into RBC because it's a hassle moving money between banks. Don't know if it's actually a hassle but I've never done it before.


I think a PC account can be set up as a bill payment at most banks - register using the PC account number. When you make a "payment" from the RBC account, the funds will be transfered to the PC account within 2-3 business days.


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## Money We Have (Mar 20, 2014)

Personally I use a pay myself first budget.

Basically I pay expenses first but I also have auto payments setup to auto withdrawal from my accounts towards long term savings. Anything left over is for spending guilt free. I've met my savings goals so spending that left over money is just fine with me.


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## realist (Apr 8, 2011)

Set a budget and spend a few months tracking every penny you spend. (I actually enjoy doing this, for other people its work. I even project it forward about a year so that I can see "Hey if I go on this baseball weekend with the guys I'll be broke in three months" or vice versa "Yay I can totally afford this trip!") Where is your money ACTUALLY going vs where you think its going? For me one of my biggest optional expenses is eating out during the work week because I don't get my act together to bring lunches. How much I care about that depends on when you ask me but because I have budgeted for all my important stuff - including savings and extra mortgage payments - and "fun stuff" each month, that ends up coming out of my fun stuff budget and not hurting the important stuff. Birthdays and Christmas happen every year, budget for that! 

Shorter version - budget a certain amount of money per month for entertainment/fun stuff and as long as you spend within that you're fine.


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## Pluto (Sep 12, 2013)

I'm curious about the guilt part. It implies a morality, even though, it is your money. If it is your money, and you spend it, where is the guilt coming from? There is a book called the 7 laws of money. You may be trapped in the second law. There are worlds without money, and we need to enjoy those too. I suppose you might be feeling guilty about spending on recreation related things while knowing you might be out of a job in the fall. 

We often define needs as food and shelter. It's too narrow a definition. Humans need recreation and other non money non basic needs related things. Buy the cards and have fun with your friends. Eat drink and be merry, for tomorrow we die.


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## GreedIsGood (Dec 4, 2013)

Pluto said:


> I'm curious about the guilt part. It implies a morality, even though, it is your money. If it is your money, and you spend it, where is the guilt coming from? There is a book called the 7 laws of money. You may be trapped in the second law. There are worlds without money, and we need to enjoy those too. I suppose you might be feeling guilty about spending on recreation related things while knowing you might be out of a job in the fall.


Maybe guilt is too strong of a word but I can't think of word that means "mild guilt". I do agree with your last statement. I'm spending money on recreational things when my first priority should be building a good financial base so I can move out. Like I said in my previous posts, I dwell a lot on "big" purchases. I thought about the tennis stringing machine at $750 for a full year before I purchased it (might not be big to others but it is to me).

Maybe once I get a FT permanent job and learn how to budget appropriately, I can spend whatever I have left over.


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## Barwelle (Feb 23, 2011)

I don't have much to say that hasn't already been said... make sure all your needs are covered first... bills, retirement, etc... if you have a couple of big items to save for (travel, house, car) then I'd suggest opening a HISA at somewhere like tangerine or PC financial, and setting up automatic transfers to these accounts.

But that tennis stringing machine popped out to me. How often do you restring a tennis racquet? It would take you 15 times to break even. What about charging other players a small fee to do theirs, to help recoup the cost?

There's a guy in the local motorcycle community who bought a tire mounting machine, probably cost him around $1,000. Charges $10 to mount a tire. Sure it's great to swallow the whole cost and do it for free for your friends, but if you're worried about money.... you get paid back, and they get their racquet re-strung for cheap. Win-win. Just gotta make it clear up front that you're charging, so they don't get miffed because they were expecting it for free.

If you want, you could keep track of how many times you do it, and stop charging after you get the upfront cost back.


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## GreedIsGood (Dec 4, 2013)

^ None of my friends play tennis. It's only for my brother and I.

I got the machine around two months ago. Since then, my brother has broken strings four times and I have broken mine twice. We play 5-6 times a week in the summer, 1.5 hours each session. The only additional cost are strings. I look for deals on amazon. I bought a reel of string recently (enough for about 16, _maybe_ 17 rackets) for $20. Usually they go for $100-$200.

Tbh, I should have bought it a couple years ago.


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## jserrg (Apr 17, 2013)

The more you will do budgeting - the more you will see how to do it for your own benefit: what categories to use, detailed vs. high-level, weekly/monthly/ annual, etc.
Goals are different for everybody. But budgeting is merely a tool that helps to achieve these goals. Somebody needs to be reminded to put money into savings, others (including myself) use budgeting to make sure Entertainment category is not forgotten.
My advise would be: think about yourself in 5 years, 10 years. What lifestyle, what assets do you plan to have. Do you need to start saving for house down payment? Define your goals. This will define your budget.

I also prefer simple categories - Entertainment, Fixed Bills, Charity. If I want to see how much I spent on utility bills comparing to insurance - I go to transaction level. It is all bills, it is all inevitable - so Fixed Monthly expense.

As for the budgeting tool - you need some kind of personal finance software or Excel/Googledocs spreadsheet. If you go with a spreadsheet - find one where you can upload your bank statements. Manually entering transactions will kill anybody's desire to budget. People usually mention Mint - works like a charm, no transaction entry, but you need to give them all you online banking passwords, YNAB. I use Moneyble - it is free, it has statement upload, and it's budgeting dashboard is pretty flexible.

Think positive when tracking your finances - and it will pay off.


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## kcowan (Jul 1, 2010)

We have a budget for gifts. We also have a "mad money" budget. Sometimes we go over but most of the time they are on/below target. We do not feel guilty about anything we do. We also have a budget for education and training.


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## KaeJS (Sep 28, 2010)

Greedy,

I don't mean to be rude, but I think you are being a little bit finicky.
Your income is $2700 net/month. Expenses are $500/month. So that leaves you with $2200/net and you are concerned about spending $250 (1/11) of your monthly income? 

Dude - buy the magic cards and the voice recorder. It's only $250. In the grand scheme of things, $250 is a drop in the bucket.

As for myself, I set out a budget on what I _must_ save each month. I must save $350/month in pure cash. Combined with my stock additions ($250/mo) the equity in my home ($500/mo) and overpaying my property tax ($100/mo), this rounds out to a savings of about $1200/month. Technically, I am saving less than you (houses and gas are expensive).

This allows me to spend (should I wish to) $400/month on food and entertainment. If I want to save more, I can cut my food and entertainment down to $200, for example, and save a total of $550/month cash, or $1400/month total for net worth increase.

Remember that money is there to buy things with. 

Enjoy playing magic.


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