Thank you, you make a really good point about spending money on oneself. I have often dealt with the problem of thinking I could save every last dime (and I managed to do it for awhile but at the cost of a relationship). Now I try to use my money a little more but it brings me back to the issue of how do I know when I should be saving that money and when I should let loose a little?

In regards to your comments about saving for eventualities, I currently rent and I don’t own a car so that cuts down on 2 major expenses. And I should look into insurance but I’m generally of the mind that I could lose most of my stuff and still be ok (really the only things I could lose that would upset me would be stuff no amount of money could replace anyway).

Lastly, I like your idea of a charitable donation. I have been kicking around the idea of starting up a small scholarship fund since I know how hard it is for those with little funds (although it’s a little strange since I have just started going back to school for part-time courses).
Anyway, like Wealthy Barber and Automatic Millionaire authors both suggested, what goes around comes around.

This is actually a really good question, but my bigger question is why is there extra money?

I would typically go through the usual plethora of questions:
- Are you saving enough money for “eventualities”? Lots of people don’t sock money away for things like home repairs and car repairs. There’s kind of grey line between “emergency” fund and “eventuality” fund, but you get the idea. It’s one thing to money left at the end of the month, but a different thing to have money left at the end of the year.
- Are you saving enough money to meet your long term goals?
- Are you adequately insured? Do you enough money in an account to cover all of your deductibles?

If the answer is “yes” to all, then honestly, do whatever the heck you want with the “extra” money. I mean that’s what it’s there for right?

Take a trip, play with some “fun” investments, take some non-work related courses, take some unpaid time off to pursue a hobby, make a charitable donation (get your name on a plaque somewhere :), rent a hall and host a party for your friend “just because”, buy a great gift for a friend in need. Heck maybe it’s not that much money, and you just do small stuff: take a friend out for lunch/dinner every week (rotate for fairness), have an extra Starbucks or two (latte factor be damned), try a new food that you never bought b/c it cost too much, get a monthly 1-hour massage ($50-60), expand your musical horizons and buy one new CD every month (tons of on-line sites offer suggestions).

You don’t get to take any of it with you. So “extra” money is there to be spent. If you don’t have any plans for it, sharing it seems to have maximal effect (whether that be treating friends / family or just giving it to charity).

@Ben: no doubt that change wrecks the process. If we had a kid, I would likely be back to Quicken (or Mint.com here in the US) just to get a handle on the bills.

My wife and I are not there yet – so we need a tool to help us.

We used Quicken religiously for a number of years, and really all we were getting good at was entering the expenses. We did not really end up using it as a learning tool. That is why I ended up setting up my own spreadsheet – so I could customize it to what I needed to see. As it turns out, what I needed to see is that we were spending more than we made.

By setting up a spreadsheet that worked for us, my wife and I can have discussions where we really look at our spending and where we could make cuts to move in the right direction. I hope that by doing this, we “get there” as well.

I do find that our financial circumstances seem to change quite often. Over the past number of years, my wife and I have moved from two incomes to one (she now stays at home with the kids), I have changed jobs a few times, and we have had our mortgage come up for renewal. In all of these instances, having a tool (such as my handy spreadsheet) has been extremely valuable in helping us make the right decision and see what we needed to change about our spending in each of the above circumstances.

Me, I used Quicken for 10 years and then stopped. No spreadsheets, no GNUCash or Mint or Wesabe, just done.

Why?

Time, technology and learning.

It’s like your diet log-book. When you start writing down your diet and exercise routines, you learn a lot. You “see” calories and you start holding yourself accountable. You see fitnees progress, you want to track the changes and improvements.

But then something happens.

One day you wake up and realize that you’ve pretty much got the process down. Where maybe you would weigh everything you ate and count calories, now you just write down what you ate. You don’t need to weigh food or sum up calories anymore b/c you get a pretty good idea. You just scan the workout listing, the food listing and you know if you were over or under that day. You’ll stop analyzing your fitness plan and instead you’ll just print out your next set of workout plans and fill in the blanks.

My wife and I found the same thing with Quicken. It’s not that we don’t write it down, it’s just that we’re reducing our overhead. Watching the details is great, but it’s attention-consuming. At some point, the spreadsheets just become a hobby instead of a tool.

We got there.

We figured out our monthly bills and food budget, pooled together our annual fees, gave ourselves entertainment allowances and the rest just works from there. Everything’s automatic, we already know our “budgets” so we basically just sit down once / month and decide on our purchases savings.

Don’t get me wrong FT, your suggestion is excellent. But for the truly zealous, it’s worth noting that spreadsheets are hell for some people. If you get “normal” people asking for PF help, showing them the wrong tool can be as much a hindrance as a help.

Moving seems to carry some pretty big expenses with it!

http://www.gnucash.org/
http://en.wikipedia.org/wiki/Category:Free_accounting_software

I buy most of my purchases using CC and my bank provides downloads of bank activity so at the end of the month I can download both and then match everything up to see where I’m at.

My one problem is that technically I should do this every day to see where I’m at and then double check at the end of the month. However, I can’t seem to get motivated enough to do that because I only spend money sporadically on groceries and the occasional dinner out.

This leads me to a question: I use “pay yourself first” but often have money left over at the end of the month. In this situation do you guys put this left over into investments or leave it as semi-emergency fund?

One notice was for a ‘threshold balance’ in my savings account (so I know when to transfer money) and another was to tell me that I had exceeedd my dining costs for the week. It auto logs all the transactions, is a lot easier to set up naming rules etc than Quicken, and provides a ‘drill-down’ into each category.

I still stick to Excel for long term projections etc.

DC’s Expense Tracking Excel Spreadsheet

Basically just Date, Transaction, Credit and Debit.

It can be a bit buggy at times, but no worse than anything else i see being used here. The latest version has great budgeting and realtime spending tools that come in handy. I also like that it can take my current situation and extrapolate it forward to show how broke i’ll be in say 15 years. ;)

The only thing that throws me off is that one of my CCs doesn’t have a download in ‘QIF’ format option (Damn you CITI!). I just tend to use the ‘Split Transaction’ function to properly categorize those transactions that go to this card.

Unless I am misunderstanding (keep in mind I am new to google docs) it appears I need email addresses to share the document.

I am happy to do this, or email the original if anyone wants to muck around in it. Let me know if there is a way to share without inputting email addresses.

Each week I take $x out of my bank account and its my spend money. I find that now I’m asking myself the question – do I really need that. I’ve gone over my planned spend a couple of times – but have been able to handle it with my accumulated surplus.

I track everything in excel on my Treo, and at the end of the week update Quicken with the actuals. Its really helped me get a better grip on where my money goes.