Discretionary spending

[quesyrah]

There used to be a lot of budget posts on MM and this question feels super old school MM.


How much do you have each month for discretionary spending? So after you’ve paid rent/mortgage, utilities, etc. what’s leftover?

Do you budget that money into categories like dining out, entertainment, etc. or do you just spend until it’s gone?

[quesyrah]

This question was sparked by a comment from a sibling about our tight budget.

For us we have about $200 which doesn’t seem like a lot but also do we really need a lot of money to just blow?

We do have a lot of sinking funds that get auto deposits from DH’s paycheck every week, so the $200 is what’s left.

[wanderingback]

Do you mean discretionary spending for "fun" stuff or for things like groceries, clothing, etc?

I think this varies so much! I’ve been better about tracking spending but I cannot micromanage everything down to small categories.

We pretty much have separate accounts for non household bills. I’m better at having a set budget of X amount on "fun"stuff for me which is usually things like lunch at work, pedicure, maybe a facial occasionally, make up, etc. I usually transfer about $500 a month to my capital one checking for that stuff. I want to eventually go back to saving that amount monthly so I can go on a solo trip next year but I haven’t been disciplined enough yet haha.

Our joint Amex is where we spend for shared discretionary spending.

[sadlebred]

It's not thousands of dollars (wish it was)! A few things have their own line item: Massage, horseback riding lessons, eating out. The last one is highly variable. One week it might be $50 and another week it might be $125. The rest tends to get shifted to other things. On a week I eat in more or go to Costco/Whole Foods I spend more than I budget for groceries. It all evens out by end of the month if I track. I consider those budget line items estimates. Sort of like utilities. Peak months (Nov-March and June-Sept) are more, but off months can be 30% less. My line item is for peak months.

I don't budget for entertainment except eating out...but ya'll know if you read ML that I had to cook. Except a special occasion I stay with quick serve places and can still eat healthy. I get maybe 1-2 pedicures a year. Hair comes out of that month's discretionary spending. I probably need a monthly line item for it.

[bee20]

For me there is a big difference between "what's left" after paying my mortgage and bills and what I actually spend on "discretionary" items like eating out, activities, clothes, self-care. My mortgage and utilities are 22% of my take-home so I have space to spend or save as I'd like, but I usually choose to save. I spend about $275/mo on fun, eating out, self-care, clothes, "household" stuff which is non-groceries and could include fun stuff like bath stuff or just a new vacuum because the old one broke beyond repair. Vacations are another category and is around $200/mo if I average it. Neither of these have a hard budget but I record all my spending and pay attention to if a category is growing or underspent (I went on vacation in December because I had PTO expiring and was well below my pre-covid averages). 

Your sibling is being a little rude to comment on your budget, but if your sinking funds are for "wants" like a vacation, house project, or whatever you're probably just budgeting differently than they are. If you only had $200/mo left over after covering your housing bills that would seem tight to cover everything else you need (food, transportation, etc.), but that doesn't sound like it's the case.

[lolalolalola]

We have a lot - $1000 each but it covers a lot of things. Clothes, entertainment, dining, hair/self care, hobbies, non-family trips,etc. I don’t need that much and always have money left over but DH uses every penny and then some because he has an expensive hobby.

[quesyrah]

Mar 9, 2024 8:07:30 GMT -5 wanderingback said:

Do you mean discretionary spending for "fun" stuff or for things like groceries, clothing, etc?

I think this varies so much! I’ve been better about tracking spending but I cannot micromanage everything down to small categories.

We pretty much have separate accounts for non household bills. I’m better at having a set budget of X amount on "fun"stuff for me which is usually things like lunch at work, pedicure, maybe a facial occasionally, make up, etc. I usually transfer about $500 a month to my capital one checking for that stuff. I want to eventually go back to saving that amount monthly so I can go on a solo trip next year but I haven’t been disciplined enough yet haha.

Our joint Amex is where we spend for shared discretionary spending.

Yeah, I meant after everything you need in a month. So after mortgage/rent, utilities, groceries, daycare, etc.

Just the money that you have left after all needs are covered.

[quesyrah]

Mar 9, 2024 10:46:00 GMT -5 bee20 said:

For me there is a big difference between "what's left" after paying my mortgage and bills and what I actually spend on "discretionary" items like eating out, activities, clothes, self-care. My mortgage and utilities are 22% of my take-home so I have space to spend or save as I'd like, but I usually choose to save. I spend about $275/mo on fun, eating out, self-care, clothes, "household" stuff which is non-groceries and could include fun stuff like bath stuff or just a new vacuum because the old one broke beyond repair. Vacations are another category and is around $200/mo if I average it. Neither of these have a hard budget but I record all my spending and pay attention to if a category is growing or underspent (I went on vacation in December because I had PTO expiring and was well below my pre-covid averages). 

Your sibling is being a little rude to comment on your budget, but if your sinking funds are for "wants" like a vacation, house project, or whatever you're probably just budgeting differently than they are. If you only had $200/mo left over after covering your housing bills that would seem tight to cover everything else you need (food, transportation, etc.), but that doesn't sound like it's the case.

I admit my feelings were a little hurt last night when I posted. I was feeling like my sibling was much better off than we are and was feeling a little insecure.

But I talked about it with DH and thought about it and you’re right. This sibling has no retirement savings, no emergency savings and tons of CC debt.

So they feel like they have more money than we do because they’re just spending it all and could not handle a small emergency let alone a larger one.

I am feeling much different this morning and
may just delete this post lol.

[heygrey]

I budget differently than a lot of people. We save all of our paycheques in a given month to budget/spend the next month. We have very few reoccurring bills so "what's left over" is significant. Most of it goes to savings which is a combination of long term and sinking funds. I don't break those down much either.

I budget $500/week for groceries/eating out/gas/small misc. This is a comfortable amount for us and if we stay around this number I know our other financial goals are on track.

H and I each get $50/month in cash for things like coffee. I would be fine just using the credit card occasionally, but H would literally never buy himself anything and he's the one who likes to get a treat before work. Putting $50 in his wallet gives him freedom to do that. I tend to save my cash and/or spend it on DS or the house.

I'm not sure I actually answered your question, but it sounds like you have a similar idea where you pay bills and pay into your savings goals, then have a little bit left for fun stuff. Sure your budget wouldn't be so "tight" if you weren't saving, but I'd much rather limit my discretionary spending and put more in savings. If something comes up and we want to splurge on a fancy meal or whatever, we can absolutely pull from savings for that.

[wanderingback]

Mar 9, 2024 11:58:21 GMT -5 quesyrah said:

Mar 9, 2024 8:07:30 GMT -5 wanderingback said:

Do you mean discretionary spending for "fun" stuff or for things like groceries, clothing, etc?

I think this varies so much! I’ve been better about tracking spending but I cannot micromanage everything down to small categories.

We pretty much have separate accounts for non household bills. I’m better at having a set budget of X amount on "fun"stuff for me which is usually things like lunch at work, pedicure, maybe a facial occasionally, make up, etc. I usually transfer about $500 a month to my capital one checking for that stuff. I want to eventually go back to saving that amount monthly so I can go on a solo trip next year but I haven’t been disciplined enough yet haha.

Our joint Amex is where we spend for shared discretionary spending.

Yeah, I meant after everything you need in a month. So after mortgage/rent, utilities, groceries, daycare, etc.

Just the money that you have left after all needs are covered.

Ahh ok got it.
I def wouldn’t compare yourself to friends or family member’s as every situation is different.

We spend differently on groceries every month and 1 month we might have to buy diapers vs the next month not. Plus both me and my partner’s salaries differ each month. Mine is always a minimum of X amount but I also pick up per diem work and consulting work So it’s really hard to come up with an exact number of how much is left over each month. Hence, why you shouldn’t compare yourself to someone else

[fortnightlily]

We don't really budget, but I am trying to track our expenses a little more closely so I can try to get more accurate projections for spending so I can entertain switching jobs to something that makes me happier, which likely entails a pay cut. And also project retirement spending.

Question - do folks track retirement contributions and payroll taxes as spending, or are you just tracking out of whatever net hits your bank account?

[quesyrah]

Mar 9, 2024 14:47:30 GMT -5 fortnightlily said:

We don't really budget, but I am trying to track our expenses a little more closely so I can try to get more accurate projections for spending so I can entertain switching jobs to something that makes me happier, which likely entails a pay cut. And also project retirement spending.

Question - do folks track retirement contributions and payroll taxes as spending, or are you just tracking out of whatever net hits your bank account?

I only track what hits my checking account.

We struggled with budgeting in our early broke years so we started using sinking funds and now I just can’t quit them lol. They just work so well for us.

So what hits checking is just what we need for the basics with a couple hundred left over.

[sarahsays]

I don't really budget to an extreme. I get paid once a month and all of my fixed expenses are paid that same week and a fixed amount is transferred to savings for a variety of things (travel, pet health, home improvement).

I have around $1,000 left after that but it does have to cover groceries. It may seem like a lot in comparison but I'm single, make good money, and my fixed expenses are relatively low.

I would really try not to compare yourself to others because every situation is different and everyone has different priorities.

[ohgillian]

Mar 9, 2024 12:02:12 GMT -5 quesyrah said:

But I talked about it with DH and thought about it and you’re right ... This sibling has no retirement savings, no emergency savings and tons of CC debt. So they feel like they have more money than we do because they’re just spending it all and could not handle a small emergency let alone a larger one.

I edited this quote with elipses but still let me know if you want me to delete it. But this point right here ^^^ is what H has told me a million times when I'm all "how are they affording all of that???"

[sadlebred]

Mar 9, 2024 14:47:30 GMT -5 fortnightlily said:

Question - do folks track retirement contributions and payroll taxes as spending, or are you just tracking out of whatever net hits your bank account?

Nope, anything pre-tax I don't track. It's fixed for me. I budget what I take home for net pay. The only thing I track is the contribution to my ROTH every paycheck.

[quesyrah]

Mar 9, 2024 18:21:52 GMT -5 ohgillian said:

Mar 9, 2024 12:02:12 GMT -5 quesyrah said:

But I talked about it with DH and thought about it and you’re right ... This sibling has no retirement savings, no emergency savings and tons of CC debt. So they feel like they have more money than we do because they’re just spending it all and could not handle a small emergency let alone a larger one.

I edited this quote with elipses but still let me know if you want me to delete it. But this point right here ^^^ is what H has told me a million times when I'm all "how are they affording all of that???"

Logically, I know this person’s finances are a a mess because they are very open about. But emotionally…it’s hard when they make me feel less than even though I know we are better off than they are.

Not that we’re rolling in it or perfect with money, but saving for retirement and planning for emergencies and future large purchases sucks up a significant portion of our income. But also, we likely won’t ever be up a Creek without a paddle.

We could eat out, shop and travel more the we do but it would come at the sacrifice of financial stability. Having been broke and in debt early in our marriage, I will choose stability over weekly pedicures every time.

But it’s hard to remember that when they make snide comments.

[sakoro]

I am a single woman with no kids so my spending is probably different than most of the people on the board.

I have to track my budget pretty closely because I bought a condo two years ago and it has needed quite a bit of maintenance. Also, if I lose my job, there is no husband to fall back on.

I divide my budget into fixed and variable expenses for my take-home pay (I don’t budget my retirement or HSA contributions because it is deducted from my paycheck.) Fixed is mortgage, auto-investment, HOA, auto and homeowners insurance, property tax, gym membership, cell phone, internet, electricity, subscription to streaming/ newspapers etc. Some of those items are discretionary i.e. I could drop my gym or streaming membership if money was very tight.

My variable expenses are items that occur monthly but change based on circumstances. These are gas, groceries, eating out, gifts/ donations, entertainment. These are somewhat discretionary— I could cut back a bit if I needed to, but I still need to eat and get from point a to point b.

I also have an annual expenses category for things like vacations, Christmas presents, clothing, and household maintenance items. This is the hardest category to budget for and keep reasonable. (My 15 year old washer broke this month and it isn’t worth repairing. Since it’s stacked in the closet with the dryer, they have to be replaced together so….. surprise! $1800 expense this month.)

At the end of a typical month, assuming I have tenant income from renting out my spare bedroom, I have about $2000 left over. I try to put that away in savings, but I keep needing to dig into savings (see: surprise washer/ dryer purchase).

[sakoro]

Mar 9, 2024 10:46:00 GMT -5 bee20 said:

… if your sinking funds are for "wants" like a vacation, house project, or whatever you're probably just budgeting differently than they are. If you only had $200/mo left over after covering your housing bills that would seem tight to cover everything else you need (food, transportation, etc.), but that doesn't sound like it's the case.

Has anyone figured out how to do a sinking fund for expenses that are truly unknown? For example, I know I’ll have to spend ~$15K to replace my HVAC system eventually and probably ~$2K to replace my refrigerator. Those estimates could be off though because I’ve never gotten an estimate. In an ideal world, I would wait as long as possible. But if they break tomorrow, I’ll have to take care of it because those are essential items. But I would also like to do a girls’ trip to Peru next year too. I’m procrastinating on making a decision. Any suggestions on how to set these budgets?

no retirement savings, no emergency savings and tons of CC debt.

I’ve been hosting travel nurses in my spare room for the past 2 years or so and ask for credit reports. There are a surprising number of people who live like this despite making a good salary. I was raised by silent generation parents who had a weekly “business meeting” to go over income/ bills/expenses.

I fall short of the financial recommendations myself (for example I only have 2 months of living expenses in liquid savings right now and probably shouldn’t consider a big Peru trip until I have 6 months. But I want to go while I’m still young and healthy enough to hike.)

[quesyrah]

Mar 9, 2024 23:20:31 GMT -5 sakoro said:

Mar 9, 2024 10:46:00 GMT -5 bee20 said:

… if your sinking funds are for "wants" like a vacation, house project, or whatever you're probably just budgeting differently than they are. If you only had $200/mo left over after covering your housing bills that would seem tight to cover everything else you need (food, transportation, etc.), but that doesn't sound like it's the case.

Has anyone figured out how to do a sinking fund for expenses that are truly unknown? For example, I know I’ll have to spend ~$15K to replace my HVAC system eventually and probably ~$2K to replace my refrigerator. Those estimates could be off though because I’ve never gotten an estimate. In an ideal world, I would wait as long as possible. But if they break tomorrow, I’ll have to take care of it because those are essential items. But I would also like to do a girls’ trip to Peru next year too. I’m procrastinating on making a decision. Any suggestions on how to set these budgets?

no retirement savings, no emergency savings and tons of CC debt.

I’ve been hosting travel nurses in my spare room for the past 2 years or so and ask for credit reports. There are a surprising number of people who live like this despite making a good salary. I was raised by silent generation parents who had a weekly “business meeting” to go over income/ bills/expenses.

I fall short of the financial recommendations myself (for example I only have 2 months of living expenses in liquid savings right now and probably shouldn’t consider a big Peru trip until I have 6 months. But I want to go while I’m still young and healthy enough to hike.)

We don’t have central heat and air so no HVAC system to worry about, but my constant fear is needing a new roof (ours is 20 years old).

My plan for anything 5 figures is see if we can do a smaller fix to get us through to a point where we can do the major repair/replacement. If that were to happen we would pause some of our sinking funds and divert those funds as well as throw any extra money into savings to cover it. We do have a fully funded emergency fund (6 months of expenses) so we could also put that toward it. And then build it all back up.

One of our sinking funds is home maintenance so we’re always saving for home repairs.

We ended up in a ton of debt years ago (bad with money and then a series of unfortunate events) and it took a lot of work to get it paid off and to a point of financial stability, so financing home repairs would be our absolutely last resort. I am so afraid of debt anymore.

[jewel]

In the words of the great Countess Luann:

Money Can’t Buy You Class

Just sing that to anyone who comments on your money or budget. It’s rude. It’s none of their business. And IMO, they probably know you’re in a better financial position, making better decisions, and are just trying to deflect.

[chpmnk1015]

I'm in a weird spot now where we are spending more than we have in the past. Going to different events and games more than in the past, going to dinners more. Trying to love a little more vs just save save save. We still save a portion of paycheck most months. So feeling ok

[brooke77]

We budget about $400 a month for dining out (family of 3), which averages to about once a week and a couple of coffees.

I budget about $100 a month in “fun” $ - which could be drinks with friends, race entries, makeup, clothes, gifts, etc.

Anything not budgeted is saved for a specific purpose or used to pay down our mortgage. Most of our spending is fairly mindful - vacations, home improvement/home setup, child related.

I don’t budget a ton of discretionary spending, but I think that’s totally fine. It works for us. We are pretty boring 🤣

[sarahsays]

Mar 9, 2024 23:20:31 GMT -5 sakoro said:

Mar 9, 2024 10:46:00 GMT -5 bee20 said:

… if your sinking funds are for "wants" like a vacation, house project, or whatever you're probably just budgeting differently than they are. If you only had $200/mo left over after covering your housing bills that would seem tight to cover everything else you need (food, transportation, etc.), but that doesn't sound like it's the case.

Has anyone figured out how to do a sinking fund for expenses that are truly unknown? For example, I know I’ll have to spend ~$15K to replace my HVAC system eventually and probably ~$2K to replace my refrigerator. Those estimates could be off though because I’ve never gotten an estimate. In an ideal world, I would wait as long as possible. But if they break tomorrow, I’ll have to take care of it because those are essential items. But I would also like to do a girls’ trip to Peru next year too. I’m procrastinating on making a decision. Any suggestions on how to set these budgets?

I, like you, am single and only have myself to depend on so I deal with this by essentially just saving a lot of money even if there is no large expense on the horizon. I have separate savings buckets for things like home improvement, vacations, pet care with the knowledge that if something truly catastrophic happened, I could pull all of those accounts together to make it work.

Mostly, having the separate buckets helps me feel like I have "permission" to use money for things like travel since it has been saved for that explicit purpose. 

[heygrey]

Mar 9, 2024 23:20:31 GMT -5 sakoro said:

Mar 9, 2024 10:46:00 GMT -5 bee20 said:

Has anyone figured out how to do a sinking fund for expenses that are truly unknown? For example, I know I’ll have to spend ~$15K to replace my HVAC system eventually and probably ~$2K to replace my refrigerator. Those estimates could be off though because I’ve never gotten an estimate. In an ideal world, I would wait as long as possible. But if they break tomorrow, I’ll have to take care of it because those are essential items. But I would also like to do a girls’ trip to Peru next year too. I’m procrastinating on making a decision. Any suggestions on how to set these budgets?

Get an estimate on the HVAC. We bought a house with a 27 year old air conditioner. In the negotiating phase I was able to get some ballpark quotes over the phone just knowing the size of the current unit and the square footage of the house. They had a large range from $4-10k, but it gave me a savings target on the higher side, while hoping we'd be closer to the lower side. We spent $4,800 a year later. Before I got estimates, I was mentally preparing for much more. This was one of the home projects that cost way less than I anticipated. 

The fridge would be easy to shop online and see what it costs for the size and specifications you want. I would narrow it down to a couple good options and try to snag a sale before my fridge died and it became an emergency. 

[wildrice]

quesyrah, it sounds like you are in a much more stable position than your sibling who made the comment, so they can judge all they want but it sounds like you are better off! Of course it's more fun to live beyond your means, but someday that will catch up to them and they will wish they had managed their money better when they can't retire.

To answer your question, I have roughly half our take home pay budgeted as "discretionary" but for us that means anything that isn't a fixed amount each month, so it includes groceries, gas, clothing, repairs for things, household items, etc. I used to try to break that down further but I would end up just feeling frustrated when inevitably the groceries cost more than what I had designated or we had a more social month than usual or something else that would come up and throw everything off. For me I find it less psychologically stressful to just throw everything into one bucket and try to reign in optional stuff (like getting takeout or buying something fun) when I see that we're trending too high on other spending for the month. Admittedly, this has gotten easier as we have increased incomes because our discretionary fund is plenty of money to cover necessities and many of the other things we need or want to do.

Because I budget this way, typically we just cash flow anything like vacations, car repairs, etc unless they run into the thousands, then we pull from savings (vacations are usually paid for bit by bit as I book things so spread out over several months). So I haven't really found the need to do a sinking fund for non monthly expenses.

[niq]

We have line items for gym memberships, "personal care" (spa services and haircuts), and then a lot of other stuff just gets dumped into either "hobbies" or "shopping" without any more categorization.

We separate food into "groceries", "restaurants", and "coffee/snacks". Sometimes we cut back on restaurants and coffee/snacks.

Sometimes we've had a set "fun money" budget, like msniq & I each get $500/month to spend on shopping or doing stuff, but it's been hard to stick with. What actually happens is at some point I have a mild panic about how much money we're spending and then we just cut way back on Buying Stuff.

[flygirl]

We budget to the last cent of take home pay. I know many people track much less than this but it works for us because we have a saver and a spender. H needs to see where all the money goes each month or he won’t believe there isn’t more to spend. lol
We have about $2k left after we pay all of our bills and this is for anything that comes up, groceries, gas, etc but does not include the $200 spending money for each of us.
Also quesyrah, we get a lot of crap from family members because we have the most stable house financially and they think we should pay for family stuff (food mostly) but I try not to let it bother me because as you said, I’m comfortable with our situation and just because someone else is “live for the now” and doesn’t save is not my problem.

[quesyrah]

Mar 11, 2024 11:22:32 GMT -5 flygirl said:

We budget to the last cent of take home pay. I know many people track much less than this but it works for us because we have a saver and a spender. H needs to see where all the money goes each month or he won’t believe there isn’t more to spend. lol
We have about $2k left after we pay all of our bills and this is for anything that comes up, groceries, gas, etc but does not include the $200 spending money for each of us.
Also quesyrah, we get a lot of crap from family members because we have the most stable house financially and they think we should pay for family stuff (food mostly) but I try not to let it bother me because as you said, I’m comfortable with our situation and just because someone else is “live for the now” and doesn’t save is not my problem.

To the last part of your comment…

We’ve helped this sibling out financially in recent years and I think that’s part of my frustration for sure. I finally had to start saying no because as DH gently pointed out I wasn’t really helping I was enabling. So I think some of their comments come from anger that I stopped paying for things.

[mlkgls]

I budget down to the dollar, not necessarily because I have to, but because I like to ‘see’ where the money is going and I’m a planner. Having distinct sinking funds helps me feel more secure than one nebulous savings account. Discretionary spending is broken down into subcategories such as hobbies, kid activities, restaurants, but I really don’t get bent out of shape if I’m over. I assume it’ll even out in the end with some months being over and some under. Except for restaurants lol, I may need to consider raising that amount. 

I also have a spender and a saver in my house. Many years in and he finally understands that I’m not just trying to rain on his parade. 

[simpsongal]

Our money largely goes to the renovations and debt repayment from the renovations (with bumps here and there for kid activities). I think most people would think we have a parsimonious budget if you look at our minimum expenses, ~$7K/mo, compared to our take home, like $16K/month.

I'm hoping the spending shifts to nicer vacations and more eating out in a year or two.