How strict are you guys with your budget?
What are some major things that have helped save some $$$?
We do well, have a home and a couple reliable vehicles, but the extra money seems to be getting less and less. I guess I'm just reaching out to confirm that we are in fact not in the minority hahahaha.
I had the tremendously good fortune of financially savvy tutors in my family who got me started on
The Richest Man in Babylon early, helped me apply the lessons early, start working early, and thus enjoy compounding interest and financial freedom to the fullest for the vast majority of my life to date.
Over the decades I've warped and simplified my financial philosophy and basically put my budget on autopilot. This has helped me both to save money, appropriately set lifestyle expectations (budget), and ensure peace of mind for my family and myself. The key that I've found, is to automate as much of your finances as possible, out-of-sight, out-of-mind, and it becomes a habit. Note that this particular strategy may not be feasible to suddenly enact at your stage in life, as it is somewhat dependent on living well below your means from the onset. That being said, it is entirely scalable for your income level as long as you have the discipline to stay the path.
My wife and I prefer to keep our non-retirement and non-family moneys in our own accounts. But this can be applied to joint accounts as well, your spouse just has to share the same vision and discipline.
- Maximize retirement investment off the top every month, employer direct deposits. For my longterm retirement accounts, I now use a robo-investor with medium-low risk tolerance. Schwab's Intelligent Portfolio is a great low-cost, reliable return option. I maintain one play account, it is entirely self-funded by the successes of the trades in the account, initial investment aside, and I do not EVER put more cash into this account. Do not make the mistake of looking at your investments too frequently, you must trust the process and time to do their thing.
- With the remaining take home money, immediately subtract your portion of the monthly bills (mortgage, utilities, groceries, insurance, childcare, etc.) off the top. This money is used for these expenses only, and remains a set amount per month as dictated by your families needs/situation.
- Split the remaining portion of your take-home in half, then designate 50:50 split to savings:checking.
- Of the portion allotted to savings, put it to work multiplying for your family. My current split is 66.66% of these funds go into high-yield (4.3%), easy to liquidate, online savings account that is a dual purpose emergency/big purchase (vehicle, hunts, etc.) fund. Set a minimum safety net that will cover X months of your expenses laid out in #2, my number is 12 months. This account can never fall below this number unless SHTF. Of the remaining 33.33%, I split it 50:50 again into my wife-and-I's joint savings account (family vacations, home projects, etc.) and the remaining into my 6 month old daughters custodial UGMA/UTMA & 529 accounts.
- The portion allotted to checking is mine to do with what I please. Hunting gear, truck upgrades, you name it.
One of the cornerstone principles of this strategy is that, large purchases aside, if I cannot afford to buy it outright with the cash on-hand in checking, then I simply don't buy it. This completely fluctuates based on my past spending. Some months I live a pauper, others a king, with my checking money. As well, I put everything on CC's (OPM) and accrue as much cashback as possible, but never in excess of what I can pay down to $0 balance from checking each month.
I'm not going to share my personal numbers, but I can tell you that having set myself up for success with this strategy since childhood, my peers will never, ever catch me financially, and my family will never, ever have to think about money.
