Daily Budget - an App review.

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I occasionally post my financial musings and updates here on FatWallet, sometimes at the request of others and sometimes not.  For the past several years I have written about my net worth, my expenses and my lack of job security.  While I am still gainfully employed, I did have a scare that has made me more interested than ever in curbing the family expenses, or at least maximizing our savings while the salary is abundant.
 
I track my expenses using account aggregators such as Mint or Personal Capital, and I also use computer-based software.  However, since so much of the tracking is done automatically, I don’t find these tools particularly useful for managing (i.e., reducing) our expenses.
 
Recently, I toyed with the idea of “envelope budgeting” for one category of expense, "Dining out".  With envelope or category budgeting, you set aside $x for the tracked expense and as you spend on that category you subtract from the particular envelope.   You can do this sort of budgeting with an actual envelope, or more conveniently, using Mint.com or an app such as “goodbudget”.  My goal was to spend less than $270 a month “dining out”, which turns out to be $148 per month less than we’ve averaged for the past three years.   While this proved to be doable,  assuming we managed to do it for an entire year, we’d “only” be reducing our expenses by $1,776.  However, to start budgeting for “groceries”, “entertainment”, “clothes”, etc., was going to be more of a pain in the ass than I wished to subject my wife and self. 
 
Rather than budget for a bunch of categories using an “envelope” system, I stumbled upon an app called “Daily Budget”, on my iPhone.
 
The premise is simple:  Identify your monthly income, fixed expenses, and savings goal. The "Daily Budget" is calculated by deducting the monthly savings and expenses from monthly income, and dividing the result by the number of days in the month.  (If you prefer, you can skip the monthly savings and instead input the amount you wish to save as part of your monthly "expenses."  I treat our auto piloted 529 contributions as an expense, for example.   Similarly, the yearly IRA contributions are treated as a monthly expense (so I save enough for next year's January contributions).   
 
I signed up for a level payment plan with our utility company and cut back my 401(k) contribution rate so that I will max out at the end of December rather than the middle of April.  This will smooth out my expenses and income for planning purposes.
 
Each day as we spend, we hit the minus sign, enter the amount and category. (If you get extra income, hit the plus sign.) The app then updates how far over or under budget you are that day and projects the next two days deficit or surplus based on the average deficit or surplus of the preceding days. 
 
For my FSA health account, I am reflecting reimbursements as "income" on the days I have the expenditures.  For my FSA transit account, I reduce the fixed monthly expense by the $255 a month that I put aside.  This is to avoid having large expenses impacting the budget when we have already set aside monies for payments. 
 
The App lets you distribute income and expenses over time as well, which is nice because if we charge $300 for a trip in 30 days, we don't have to show a $255 deficit on day one ($45 daily budget less $300), and can instead spread it out over 30 days so it deducts only $10 a day leaving $35 to be spent on those days. 

So, hypothetically, if you have $45 to spend every day on variable expenses, that comes to $1,395 in a 31 day month.  Some days you spend less than $45 and some days more. If you stay on budget you wind up saving the amount you chose when calculating the daily budget (or having an amount saved for your monthly saving "expense", if you set it up that way).
 
Using the App has made us very conscious of our daily spending, because it shows just how quickly we go over budget in any given day.  It also incentivizes us not to spend so that we can see the daily trend move up rather than down.  Who doesn't like to see an uptrend?! Even when I am hungry, I don't buy anything for the train ride home. Saving money and calories is a win win. 
 
I believe the App calculates the average "overage" and "underage" over the previous days and projects that amount over the next three days. I am not sure yet how useful these projections are, but as I noted above, it is nice to see an upward trend in this department.
 
Of course, when budgeting for expenses there are those that are actually paid during the month (mortgage, Fios, CBlue Apron, etc.) and those that accrue to be paid later (property tax, life insurance, auto/homeowners insurance, etc., including "spread out expenses" or savings goals).  Therefore, if we have $1,278 in future expenses accruing this month and we stay on budget, we still have to make sure that $1,278 is available when the bills become due (and not re-enter the expense when actually paid since they've already been accounted for).  We are using a separate savings account to hold the "accrued expenses" just to be tidy. Obviously, if you are over budget that means you didn't save enough to pay for those future bills and the hoped for savings for which you budgeted.  In that case the conservative course would be to fully fund the accrued (future) expense amount. 
 
Prior to using the App, we never budgeted and never really planned for the big expenses--we just paid for things as they came up.  The consequence, I believe, was overspending -  especially on the everyday little items that creep up on us. 
 
Now, we are more focused spending within our means (with our means being reduced by our desired savings goal or our "savings expenses") and more focused on saving for those big expenses.  Overall, use of the App has encouraged us to delay spending.  On the other hand, we still bought two tickets to a broadway show, and four tickets to the Circus. Those expenses are being "spread out" together with several others, and I am beginning to see just how much those big expenses impact our daily spending limits
 
I look forward to seeing how this plays out over the span of the year to see how our expenses changed between 2016 (unbudgeted) and 2017 (budgeted and with a sizable increase in income). 
 
There is a free version and a paid version. Obviously, try before buying. What sold me on the paid version is the ability to seamlessly and automatically synchronize with my wife's phone, through Dropbox, and getting more categories for the expenses. 
 
The paid version offers several reporting options, but they are not particularly robust and it not a substitute for quicken, moneydance or mint. (Several don't work at the moment, except on the beta version).  The App does not link to your accounts, which can be a benefit and a drawback.  I have enough programs that link my accounts and find that putting the expenses and tracking of expenses on autopilot means it is easy to spend without thinking.  Having to manually enter the expense every time we open our wallets keeps us more mindful of the expense and its impact on our budget. The app also makes it easy to account for cash expenditures.  I find mint to be too cumbersome for that.
 

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I think any way to track will result in more controlled spending. That's why some people use cash because it's psycholog... (more)

Shandril (Feb. 15, 2017 @ 7:34p) |

One more thing, what is your feeling about the use of the app almost as an educational tool for kids or young adults who... (more)

Shandril (Feb. 15, 2017 @ 7:49p) |

I am similarly flawed with the all or nothing attitude toward change. Most would be better off if they simply made small... (more)

DavidScubadiver (Feb. 16, 2017 @ 7:12a) |

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I use mint.com

soulzeng said:   I use mint.com
  Me too, however, it does not give you a daily budget figure.  

I think you're making it more complicated than it needs to be. You only need to account for and budget a few categories that may be out of control like groceries, restaurants, entertainment, travel, clothes, and daily miscellaneous expenses. You don't need to include income, FSA, 401k, Roth, mortgage, property tax, FiOS, utilities, etc, because those numbers are pretty much fixed and known in advance. You're probably not going to use less electricity, gas, or water (although you should, that's a whole different subject) to spend more on clothes, and you're not going to spend more on entertainment if you saved money on FiOS.

For me, groceries and restaurants are the only categories in a daily budget. Entertainment, travel, clothes, and the like are annual -- for me it doesn't make sense to project them to daily if I take 2-3 trips a year and shop for clothes once every blue moon.

You mentioned six categories to track. I am not actually tracking Fios per se. It is a fixed expense that must be accounted for when determining what I have left to spend.

Granted, I can ignore all of my fixed expenses and look at the variable expenses only. But that would give me an incomplete picture and not give me any idea of how much I can save/spend in a given month.

scripta said:   You're probably not going to use less electricity, gas, or water (although you should, that's a whole different subject)
  Why should I ?    If I can't afford to budget to keep my house comfortable, then wouldn't the more prudent action be to downsize the house rather than make it less hospitable?   Why is using utilities to make it the most comfortable possible not a good prioritization?  I prioritize a comfortable space over a larger space filled with junk I've purchased and don't use.

As an extreme example, I just don't understand people who keep their house at 85 in the summer and 50 in the winter to save just a few $ (if you average out the extra $X00/mo for 3 summer months over 12 months) at all.  Usually they are spending loads more money for the rest of the home's costs.  Unless they're cold-blooded lizard-people and really can't tell a difference.  (I'm very warm-blooded and get very uncomfortable at 75 or above if I'm not moving/doing things.  Outdoors a larger range is acceptable.  And below 65 will dry out most people's sinuses too much and cause issues.).

Great post with fresh (to me) ideas.  

Thanks OP

Bend3r said:   scripta said:   You're probably not going to use less electricity, gas, or water (although you should, that's a whole different subject)Why should I ?    If I can't afford to budget to keep my house comfortable, then wouldn't the more prudent action be to downsize the house rather than make it less hospitable?   Why is using utilities to make it the most comfortable possible not a good prioritization?  I prioritize a comfortable space over a larger space filled with junk I've purchased and don't use.

As an extreme example, I just don't understand people who keep their house at 85 in the summer and 50 in the winter to save just a few $ (if you average out the extra $X00/mo for 3 summer months over 12 months) at all.  Usually they are spending loads more money for the rest of the home's costs.  Unless they're cold-blooded lizard-people and really can't tell a difference.  (I'm very warm-blooded and get very uncomfortable at 75 or above if I'm not moving/doing things.  Outdoors a larger range is acceptable.  And below 65 will dry out most people's sinuses too much and cause issues.).
I didn't mean make your home uncomfortable, I meant use resources more efficiently -- insulation, energy star appliances, LED lights, smart thermostat, rooftop solar (+battery+electric car), tankless water heater, low GPF toilets, low flow faucets and shower heads, native landscaping, drip irrigation, pool cover, etc. Many of these things never actually pay for themselves or take a long time to break even, so they're best considered when the older and less efficient unit needs replacement. Personally I'm a big fan of LEDs (specifically the Cree TW-series: warm white, high CRI, dimmable, instant-on), but not a big fan of low flow shower heads.

DavidScubadiver said:   You mentioned six categories to track. I am not actually tracking Fios per se. It is a fixed expense that must be accounted for when determining what I have left to spend.

Granted, I can ignore all of my fixed expenses and look at the variable expenses only. But that would give me an incomplete picture and not give me any idea of how much I can save/spend in a given month.
This doesn't make sense to me. The fixed expenses are fixed and should have no bearing on your spending decisions in any other category. As I mentioned above, if you save some money on FiOS this month for some reason, it doesn't / shouldn't mean that you can spend more on clothes that month.

Let me try to clarify.

1) I DONT want to track six expenses and budget for them individually because I have no idea what I "should" be spensing on so many categories and because I don't want to be measuring against six numbers. That is more complicated.

2) I DO want to know how much money I can spend to save a specIfic amount of money each month. If I take home $13,000 a month and don't identify what my fixed expenses are, I can't figure out what I have left to spend and save. I am not "budgeting" for he mortgage payment in the sense of trying to spend less on mortgage, but only to know what is unavailable to spend.

3) My fixed expenses also include many things that are discriminatory, so it helps to be able to see them in one place.

If it works for you OP, that's what matters. Long write-up for an app that seems inferior to Quicken figuring out your expenses and coming up with what you can spend a month and then divide by 30.

Some people need this, or envelopes. I track everything in Quicken, but have self control and save quite a bit. If I spend $500 a year at restaurants I would be shocked.

Good for you OP.

Cool that you have something that works for you, but I couldn't find the app on Android to sync between platforms (via dropbox).

EradicateSpam said:   If it works for you OP, that's what matters. Long write-up for an app that seems inferior to Quicken figuring out your expenses and coming up with what you can spend a month and then divide by 30.

Some people need this, or envelopes. I track everything in Quicken, but have self control and save quite a bit. If I spend $500 a year at restaurants I would be shocked.
 

1) I too track everything and, I *know* what I spend because it is tracked.  Thus, for example, Restaurants average $436 per month.
2) I too save "quite a bit".
3) However, "coming up with what I can spend and then dividing by 30" does not help very much If I "can spend" $45 a day but then have an expense of $120 that pops up.

I too have self control, in the sense that I am able to save quite a bit.  On the other hand, I spend quite a bit as well, and I am finding for now, that this app helps me keep better control on my spending because every expense is manually entered and requires me to at least acknowledge that I am incurring the expense rather than simply seeing it show up as a charge.


 

PhDeez said:   Cool that you have something that works for you, but I couldn't find the app on Android to sync between platforms (via dropbox).
  The developer said an android beta version is in the works. I PM'd you with more details.

I use YNAB v4 and it works great.

I might have posted this before. I have heard of the tool Every Dollar - https://www.everydollar.com/., there is an app too. I have to admit I don't used it, but I listen to Dave Ramsey - http://www.daveramsey.com/. He recommends it and it is free.

That app is rated rather poorly for some reason. It looks like it is a straight forward tracking app but without the daily budget features. Looks ok to simply track expenses.

DavidScubadiver said:   Let me try to clarify.

3) My fixed expenses also include many things that are discriminatory, so it helps to be able to see them in one place.

This is a bit confusing to me. Did you mean discretionary instead of discriminatory?

The second thing that sticks out for me is the definition of fixed expenses. I think the best example is BlueApron. By setting it to fixed expense, you're bypassing the whole budgeting idea. You thus never look at whether you could be saving money - above and beyond other current methods - by using alternative methods of filling the need in that specific category. It's a dining out option disguised as dining in. Or a grocery-dining out hybrid. But despite being in the same food/dining spending category as dining out, by setting it as fixed expense, you're removing the possibility of not using it in favor of cheaper alternatives. That seems like a budgeting shortcut to me.

My budgeting benchmark would be starting at something like: Ok I've lost my main sources of income, how do I cut back my budget to its bare minimum to keep the household running? That'd force me to re-evaluate regularly whether some of my predictable expenses are still acceptable value propositions.

In that category of expenses which are predictable and recurring but actually discretionary, I could see cable TV, phone plans, gym/sports club memberships, kid activities/lessons, various memberships and subscriptions like AAA, Netflix, etc., and possibly charitable donations. Putting those on the budget doesn't mean at all that you will cut them all out but at least they are also on the table for spending cuts and you'll make a more conscious decision about keeping them.

Granted it would get more complex for a daily spending app because you'd have to spread more predictable discretionary monthly charges over 30ish days. But I think it'd be more thorough.

Edit: I didn't want to come off as overly critical. This thread is very useful for promoting a discussion on budgeting strategies for various needs. Keep it coming.

Discretionary is what I typed, I swear it.
Fixed expenses are those which recur regularly. You can certainly choose to make fixed expenses those which recur and are non-discretionary. For me, that would take out the following:

1) Any mortgage prepayment.
2) Contributions to 529 accounts.
3) Contributions for IRA accounts.
4) Life insurance payments.
5) Fios
6) Housekeeper
7) Amazon Prime
8) CBlue Apron
9) Cell Phone
10) Netflix

Fortunately, the App makes it super easy to export to Excel, so the first thing I had done after putting in my fixed expenses, including the ones noted above, was identify which were discretionary and which were not. I also included those expenses which are actually paid every month, and those that are accruing, so I know how much I need to keep on hand if I intend to pay the accruing expenses.

However, for ease of use, I like how they have it laid out, and I like having my "fixed expenses" include the various discretionary items because it truly lets me know what is "left" after the expenses I am actually incurring, not just what is left after the expenses that I actually "must" incur in the event of an emergency. If I took out all of the above expenses it would make my "daily budget" much much higher and require me to raise my budgeted savings by an equal amount. The math is exactly the same. The advantage to listing the expenses is that they are actually easier to see if they are under fixed expenses than if they are removed and simply lumped together as additional savings.

DavidScubadiver said:   Fortunately, the App makes it super easy to export to Excel, so the first thing I had done after putting in my fixed expenses, including the ones noted above, was identify which were discretionary and which were not. I also included those expenses which are actually paid every month, and those that are accruing, so I know how much I need to keep on hand if I intend to pay the accruing expenses.
I guess that's one way to do it. You basically decide at the beginning which discretionary and recurring items you would not go without for your lifestyle and left them out of the more variable expenses of your budget where'd you'd choose to focus control of spending. There's definitely items in there that you would not touch unless some major life event happened: like life insurance, mortgage, or 529/IRA contributions.

Also for most spending categories, it's not a huge issue because you have mostly only one expense (basic utilities especially). I just find it more difficult for spending categories that have both fixed and variable components like food (groceries + dining out) or entertainment (Netflix, movies, night outs, TV programming). But I guess there is a personal comfort trade off point there. And definitely,if the main goal was to be more aware and curb specific categories, leaving most other spending categories out, simplifies the task a lot.

Question: where do you fit unpredictable expenses (say car and household maintenance, medical bills, etc) in this budget and in the app? Do you pad the fixed expenses with annualized average expenses for those categories from previous years report (like you'd get from Quicken expense reports)?

The options for unpredictable expenses are similar to the predicable. You can budget for them separately as you suggest (for example, $400 a month for housing maintenance, and treat that as a fixed expense), or add it to the amount you want to budget for general savings. The advantage to identifying the expense and budgeting for it, rather than simply adding it to the monthly savings goal is the same as what I noted above -- it is easier to visualize what your you are saving for each goal. On the other hand, I don't necessarily need to see what I am budgeting for each potential expense -- for example, if I am looking to have an "emergency fund" equal to x months of my expenses, I don't care so much if I have saved $x for medical and $y for house maintenance, since those expenses can be paid out of the emergency fund or general savings fund, which can be replenished as appropriate.

Psychologically, I prefer to see bigger savings than to budget for the unpredictable expenses, so ultimately I decided not to deduct the irregular expenses like maintenance and medical. Also, unless I have a separate account to house the budgeted maintenance and medical expenses, I think it might be confusing to budget for them separately, as I won't really know what I am saving in those categories unless I come in on or under budget. And, even then, I would need to earmark those funds somehow to keep track of them if tracking them were important to me.

We constantly spent what we made until this year. We wrote everything out (where we owe money, what average bills were, etc) and came to a reasonable conclusion we could survive on $200 a week for gas/food/clothes/anything the wife wants or we need. It's taught us discipline and responsibility, but also saved us a fortune. I handle the utilities, debt, savings; she handles all the cash. If we want to go on vacation or w/e, we save up.

The best part is when I have to ask her for cash to get her a present (eg, valentine's day) and she gives me a look like, but... if I give you money, I'm basically buying my own present

TL:DR - we just use weekly cash amounts and it works fantastic. 
 

soulzeng said:   I use mint.com
  
I used Mint for a while then switched to Personal Capital last year. 

Personal capital is a must if you have investments. Not at all adequate for tracking cash expenditures.

DavidScubadiver said:   The options for unpredictable expenses are similar to the predicable. You can budget for them separately as you suggest (for example, $400 a month for housing maintenance, and treat that as a fixed expense), or add it to the amount you want to budget for general savings. The advantage to identifying the expense and budgeting for it, rather than simply adding it to the monthly savings goal is the same as what I noted above -- it is easier to visualize what your you are saving for each goal. On the other hand, I don't necessarily need to see what I am budgeting for each potential expense -- for example, if I am looking to have an "emergency fund" equal to x months of my expenses, I don't care so much if I have saved $x for medical and $y for house maintenance, since those expenses can be paid out of the emergency fund or general savings fund, which can be replenished as appropriate.

Psychologically, I prefer to see bigger savings than to budget for the unpredictable expenses, so ultimately I decided not to deduct the irregular expenses like maintenance and medical. Also, unless I have a separate account to house the budgeted maintenance and medical expenses, I think it might be confusing to budget for them separately, as I won't really know what I am saving in those categories unless I come in on or under budget. And, even then, I would need to earmark those funds somehow to keep track of them if tracking them were important to me.

I guess that may work if you don't have lots of miscellaneous unpredictable expenses. Otherwise, if it's all part of large savings, what you save on one expense type (say dining out) could be completely swamped by other things (gardening supplies). Sure it'd probably smooth out over long periods of time but daily, it could mess your calculation big time. Say you need to go to the dentist for a filling. For me, this is a $150 cashflow expense, not an emergency fund one. But that would mask a lot of savings everywhere else, no?

That's why I'm not convinced by the envelop app system compared to checking things in a more statistically-averaged report from automatically downloaded transactions into Quicken. I get it that using a daily budget-like app would work at making you more aware of every little expense, a bit like paying cash does. But constantly entering tons of microtransactions all the time seems like busy work when my credit card does this for me anyway and categories are automatically assigned by merchant in quicken. My perspective is that I don't care about instantaneous daily savings as much as I care about intermediate-long term ones. So what is the major advantage of daily budget vs. monthly, quarterly and annual reports?

We don't dine out and we pack lunches so I'll take the example of grocery shopping which is an expense category that I track. It's a surprisingly steady expense when you look at it monthly or even better quarterly. You'd think that between sales on various items, and fluctuating prices of seasonal produce, there'd be large differences, but actually for our family of 5, I'm talking about ~$50 standard deviation vs. average monthly expense. In this case, it's pretty easy to notice statistically significant increases or decreases in costs and track them down from the report (such as impact of changing supermarkets or change in diet). And it seems more relevant to me than whether I spent $80 last week because we had lots leftover from the previous week then $150 this week simply because I stocked up on something that was on sale and will last us 2 months or we entertained guests that weekend so I had to buy some extra. So I'm wondering if the method to track your budget does not depend somewhat on what your expenses are for the expense categories in which you'd like to realize savings.

For dining out, could you simply pull a monthly report in that expense category, sum up how many times you've gone and what it added up to. Then cut down in frequency accordingly the following month, see if that works in the next report, and so on?

Shandril said:   
DavidScubadiver said:   The options for unpredictable expenses are similar to the predicable. You can budget for them separately as you suggest (for example, $400 a month for housing maintenance, and treat that as a fixed expense), or add it to the amount you want to budget for general savings. The advantage to identifying the expense and budgeting for it, rather than simply adding it to the monthly savings goal is the same as what I noted above -- it is easier to visualize what your you are saving for each goal. On the other hand, I don't necessarily need to see what I am budgeting for each potential expense -- for example, if I am looking to have an "emergency fund" equal to x months of my expenses, I don't care so much if I have saved $x for medical and $y for house maintenance, since those expenses can be paid out of the emergency fund or general savings fund, which can be replenished as appropriate.

Psychologically, I prefer to see bigger savings than to budget for the unpredictable expenses, so ultimately I decided not to deduct the irregular expenses like maintenance and medical. Also, unless I have a separate account to house the budgeted maintenance and medical expenses, I think it might be confusing to budget for them separately, as I won't really know what I am saving in those categories unless I come in on or under budget. And, even then, I would need to earmark those funds somehow to keep track of them if tracking them were important to me.

I guess that may work if you don't have lots of miscellaneous unpredictable expenses. If  you have lots of miscellaneous and unpredictable expenses you probably have a lot of areas where savings can take place.

Otherwise, if it's all part of large savings, what you save on one expense type (say dining out) could be completely swamped by other things (gardening supplies). If I have $50 a day daily budget in order to save $3,000 a month, and I stick to the budget, it really doesn't matter whether my savings in one category swamp the expenses in another category. There is no real need to track categories except for informational purposes.

Sure it'd probably smooth out over long periods of time but daily, it could mess your calculation big time. Say you need to go to the dentist for a filling. For me, this is a $150 cashflow expense, not an emergency fund one. But that would mask a lot of savings everywhere else, no?  Whether you call it an "emergency fund", "unexpected expense fund",  or a "cashflow fund", you need to have enough in it to cover expenses whether you consider them to be "emergency expenses", "unexpected expenses" or "cashflow expenses".   

That's why I'm not convinced by the envelop app system (just confirming daily budget is not an envelope system) compared to checking things in a more statistically-averaged report from automatically downloaded transactions into Quicken. It is certainly nice to know what we spend on a given category of expense at any given interval of time.  However, knowing what we have spent doesn't save a penny of expense, because, well, the money has already been spent.

I get it that using a daily budget-like app would work at making you more aware of every little expense, a bit like paying cash does. This is true.  But constantly entering tons of microtransactions all the time seems like busy work when my credit card does this for me anyway and categories are automatically assigned by merchant in quicken.  ​I think that if you are constantly entering micro-transactions all the time, there is probably a lot of room to save (and the "busy work" of entering those transactions may actually slow down one's spending either because you have to take the time away from shopping or because you think twice about whether to make that transaction at all).

My perspective is that I don't care about instantaneous daily savings as much as I care about intermediate-long term ones. Every morning, I look at the overview analysis and see what my projected savings are for the month.  I am currently at $2,824.28 with $284 left in my budget.  I recognize that things are going to be tight and I will likely not save what I had budgeted.  Still, seeing from the main screen that I have negative $172 today and will have negative $102 in two days (based on average spending) encourages me not to spend unnecessarily.

So what is the major advantage of daily budget vs. monthly, quarterly and annual reports?  The daily budget focuses me on spending less. It is something I can attend to every day. Something that can be improved every day.   An annual report provides zero opportunity to save because, well, it reports on money already spent.

We don't dine out and we pack lunches so I'll take the example of grocery shopping which is an expense category that I track. It's a surprisingly steady expense when you look at it monthly or even better quarterly. You'd think that between sales on various items, and fluctuating prices of seasonal produce, there'd be large differences, but actually for our family of 5, I'm talking about ~$50 standard deviation vs. average monthly expense. In this case, it's pretty easy to notice statistically significant increases or decreases in costs and track them down from the report (such as impact of changing supermarkets or change in diet). Kudos to you if you are able to do anything about your grocery spending based upon seeing you monthly expenditures.  I don't usually do the food shopping, but I believe that the reasons our food expenses are so high are due to the frequency of going to the market and because we buy a lot of organic food. CBlue Apron doesn't help in the expense department either.  Of course, if you could reduce the average expense by $50, you'd save $600 a year.  Not a lot of money, in my opinion, compared to the amount being spent on food.  We enter the amounts spent on food (as we do everything else), but I am not sure we are effectuating any savings by doing so.  At first, it seemed as though less trips to the store were being made.  I'll need more time to see if that is actually the case.

And it seems more relevant to me than whether I spent $80 last week because we had lots leftover from the previous week then $150 this week simply because I stocked up on something that was on sale and will last us 2 months or we entertained guests that weekend so I had to buy some extra.  In isolation this may be true. But if you regularly make a habit out of "saving" by buying in bulk, you do have to make sure you are not wasting food too.  In my house, we could go a long time eating the food in our freezer and pantry before having to buy food.  We don't.  But, I bet I could save hundreds of dollars quite easily if we forced ourselves to eat what we previously purchased before purchasing more.

So I'm wondering if the method to track your budget does not depend somewhat on what your expenses are for the expense categories in which you'd like to realize savings. Not sure I understand the statement - but, other than dining out, I had no particular desire to save from a particular category.  That's why I did not find the envelope/category budgeting to be useful.

For dining out, could you simply pull a monthly report in that expense category, sum up how many times you've gone and what it added up to. Then cut down in frequency accordingly the following month, see if that works in the next report, and so on?  Last year, there were 206 times that we charged food from a restaurant or other source besides the grocery store.  In total, we charged $5,286 averaging $439.60 per month.  In January I decided we should budget ourselves to $270. We spent $240.    As I said, restaurants were the only area I felt comfortable spending less at.   

 

  In the end, I wish to see if the discipline of manual entry of the expenses results in our spending less. If we wind up saving more than what we wind up saving on restaurants, I will have a pretty good idea of what the answer is.

DavidScubadiver said:   
In the end, I wish to see if the discipline of manual entry of the expenses results in our spending less. If we wind up saving more than what we wind up saving on restaurants, I will have a pretty good idea of what the answer is.

I think any way to track will result in more controlled spending. That's why some people use cash because it's psychologically harder to spend than credit cards. Manual entry would create a hassle factor that may prevent some impulse purchases, that's true. So I'm sure you'll cut down your dining out expenses. By how much and along with what acceptable changes in lifestyle are about the only unknowns.

To clarify, what I meant about the results may vary depending on categories tracked, I meant it depends on how much savings you can get out of various expense categories. For example, in our case, we go grocery shopping once a week. I have a shopping app in which I can track prices of stuff I regularly buy so it serves as a shopping list and instantly tells me whether something is well priced or expensive that week. It helps shopping at two stores 90% of the time too so you know how much stuff is usually. My freezer is basically a buffer for if I purchased too much or too little. If it gets too full, I just plan more meals around stuff we have frozen (I plan meals weekly before going shopping). But my point is, that's about 8 transactions/month for almost all our food expenses. Aside from changing diet and products purchased, the quantities of food are constant, the prices statistically change very little at same stores, so that expense category is very hard to realize much savings on. Which is why if your spending is similar, tracking it day-to-day may be of limited help.

Also as far as monthly reports not being actionable, I think that's YMMV depending on your needs. I look at it that way. I'm not in a financial situation where I need to dramatically alter my spending. It's in control for the most part but may need minor tweaks when some expenses inflate abnormally. Reviewing that info monthly is enough so that the next month, I can devise a plan of action to correct the course.

For dining out, say we went out a dozen times per month, that's 3 times a week. Well, easy enough, next month, we can agree to only go twice a week. That's not a tremendously difficult thing to track especially if you plan the night outs in advance. I guess it could get hairy if your total expenses come from tons of small transactions because mentally keeping track of them would get overwhelming. Then, I could totally see where an app that tracks spending vs. a Target would be more valuable. That's a question of trade-off hassle of using the app vs. how hard it is to self-discipline without it in between monthly reports. Basically the more transactions and expenses to track of, the higher the frequency of the reports.

Anyway, so practically how does it work in terms of using the app in decision making? I know for myself, I don't do well with slight changes in lifestyles. I never smoked, but I could probably not quit by going gradually rather than cold turkey overnight. If I need us to save money, I'll go very aggressively at it at least until my goal is reached. When I got mad that our cable bill was so high for how much we were getting out of cable TV, I could have cut down a bit but the thought process of cutting down lead to simply cutting it completely out to maximize savings. So for the case when you want to roughly cut spending by half in a spending categories with many transactions per month, does using the app lead you more to decrease frequency or to decrease the cost per meal, or a bit of both (going less often to the more expensive restaurants compared to the cheaper ones)? I'm just curious if you'll try to keep things balanced towards $0 through the month (constant moderate savings) or if you wait until your "allowance" gets high enough to go to which restaurant you really want (delayed gratification)?

One more thing, what is your feeling about the use of the app almost as an educational tool for kids or young adults who are not very familiar yet with the idea of how a budget works? From what you described, it sounds like it's relatively newbie friendly so I'm wondering if it could be useful for kids starting in high-school or so.

I am similarly flawed with the all or nothing attitude toward change. Most would be better off if they simply made small changes in order to achieve their goals, weather financial or health, but that is another story.

You have no doubt heard that one way to save on impulse purchases is to curb impose a waiting period between wanting and buying. Sometimes, we change our mind or become so busy we forget about the purchase. Sometimes we just realize we don't need it. I think that the daily budget imposes the discipline of delayed gratification. Especially if you are behind the budget.

It really takes no time to use. Half way thru the month and I have about 38 transactions. That is less than three a day, which takes about 40 seconds a day on average to enter.

I suggest downloading the free version and take it for a spin. I think it certainly helps the first time all earners get a handle on income and expenses and to live within their means.



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