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A Simple & Easy Budget Plan for People Who Hate Budgeting


Simple and Easy budget planNot everyone loves budgeting like my buddy J. at Budgets are Sexy.  If you loathe budgeting like most of us, then today is your lucky day. I’m going to share my simple AND easy budget plan with you. Check it out and let me know what you think.

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Joe’s Simple & Easy Budgeting System

Here is my simple & easy budget plan.

I have a monthly budget of $4,800. Then I check at the end of the month to see if we met that goal by spending $4,00or less.  If we meet that goal, then great!

Simple and easy, isn’t it? Okay, you have some questions. I’ll answer them.

How did I come up with $4,800?

I have tracked our monthly expenses for almost 10 years now. In 2016, we spent about $4,500/month. In 2017, we averaged about $4,100/month. Last year was a particularly good year because we didn’t have to pay for preschool anymore. That gave us some financial relief. Anyway, these records gave me a good guideline for setting up our monthly budget.

From 2014 to 2017, our budget was $4,500/month and we’ve been able to stick to it for the most part. This year I increased our monthly budget to $4,800 because we were planning a trip to Iceland. I knew that trip was going to bust our budget for a few months. I also felt like our cost of living was increasing. Groceries were getting more expensive. RB40Jr signed up for extracurricular activities. Our medical expenses also increased as we aged.

Anyway, that’s how I came up with our monthly budget. It is based on past spending experience. Personally, I think it is essential to track your expenses pretty closely. Most people have no idea where their money went every month. If you track it, then you can cut out unnecessary spending and start to improve. It will give you a chance to increase your saving rate and invest more. Tracking your expense is the first step toward financial independence.

How do you track your expense?

I’ll give you a quick recap and you can read more detail here – Track Your Expenses!

Old school tracking

There weren’t any cool apps when I first started so I went with the old school method – tracking everything on a spreadsheet. I used Excel, but if you don’t have it, then you can use a free spreadsheet like Google spreadsheet.

I put each expense category in the column and an expense line item in the row.

Spreadsheet track expense

Here is a link to a template I made on Google Sheet – RB40’s cash flow tracking spreadsheet. You can start with this and customize it.

It will be tedious to get the spreadsheet set up just the way you like it. Once you’ve got it up and running for a few months, it will become much easier. Every month, I manually go through our checking account and credit cards and enter each line item on the spreadsheet. This takes about 2 hours, but the act of typing things in forces me to remember what we spent our money on throughout the month. This is a good thing. If it’s all automatic, you won’t have to recall what you spent $17 on at Target. Was that Nerf gun frivolous or was it a good buy?

Accounting software

I love the spreadsheet method and I think everyone should use it when they are starting out. It is perfect when you have one checking account and a few credit cards. However, most of us develop more complicated finances as we build wealth. I now keep track of 3 bank accounts, a money market account, 4 credit cards, a brokerage account, i401k, rollover IRA, Roth IRA, real estate crowdfunding, Junior’s 529 plan, and Mrs. RB40’s accounts. It’s still possible to keep track of everything on a spreadsheet, but it isn’t easy anymore. In this case, using a spreadsheet is tedious and it can be a big barrier for some people. Luckily, we live in the 21st century and there are other tools out there.

The alternative is to use accounting software like Quicken, Personal Capital, or Mint. I haven’t used Quicken, but I heard it is a good option. These days I use Personal Capital to get a quick overview of our spending. Personal Capital and Mint are free and I think they are very useful for most people. Check them out if you don’t have an account yet.

Sign up with Personal Capital through this link. It’s Free!

You can link all your financial accounts in Personal Capital’s site and it will aggregate all your cash flow information. At the end of the week, I go to the “Spending” section at Personal Capital and check how much we spent. If any category looks too big, then I’ll try to rein it in a little. Generally, everything looks fine because we are set in our ways now. We live moderately and rarely break character.

Personal Capital Cash Flow

Things are good for the most part this month. Last month looked a little out of control, but it was due to the $2,800 estimated tax to the IRS. That really should have been paid from my business checking account. I’ll fix it next time.

What if you go over budget?

We’re not perfect. Just like everybody else, sometimes we spend too much. When that happens, I go over the cash flow spreadsheet more carefully and identify what caused the problem. If it’s a one-time expense like a big trip, then I usually let it go. However, it’s trouble if it’s recurring expense like eating out, I’ll have a chat with the team (Mrs. RB40) and we’ll work on reining it in.

How do you track cash spending?

I track the ATM withdrawals and put it in the “cash” category. That money is considered spent.

Will this system work for me?

I don’t know. If you’re disciplined with money, then this should work. However, if you have a spending problem, then you probably will need a different system. Try the envelope budgeting system and see if that works.

Do you ever hide your expense from your spouse?

Of course not. I never hide anything from my lovely chief editor.

Okay, that’s it for my simple & easy budgeting system. I hope this is helpful for someone. Even if you don’t like my system, don’t ignore your spending.

Remember this: the first step to financial independence is to track your expenses! You need to control your spending even if you make a lot of money.

Let me know if you have any questions.

*Try a free account at Personal Capital to help manage your net worth and investment accounts. I log in almost every day to check on my accounts and cash flow. It’s a great site for DIY investors.

Photo by Valeria Zoncoll

If you loathe budgeting like most of us, then today is your lucky day. I’m going to share my simple AND easy budget plan with you.
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Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.

For 2018, Joe plans to diversify his passive income by investing in US heartland real estate through RealtyShares. He has 3 rental units in Portland and he believes the local market is getting overpriced.

Joe highly recommends Personal Capital for DIY investors. He logs on to Personal Capital almost daily to check his cash flow and net worth. They have many useful tools that will help every investor analyze their portfolio and plan for retirement.
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{ 51 comments… add one }
  • Ernie Zelinski July 30, 2018, 12:40 am

    As for me, I have never had a budget. Even when I lived under the poverty line (less than $15,000 a year), I still gave $500 a year to charities. That was when my net worth was MINUS $30,000 due to student loans. I have always had a sense of how much I could spend without having to track my expenditures and establish a budget. Of course, this is much easier when one operates out of the opinion that practically everything is a “want” and not a “need.” Here is the bottom line: All your needs have always been provided for – otherwise you would be dead. This philosophy helped me save over 50 percent of my income once I started making a good income. Given that today I make a great income, I certainly don’t to budget in any way, shape, or form. My net worth keeps going up by at least $100,000 a year.

    • retirebyforty July 30, 2018, 9:12 am

      It’s very admirable to help others when you’re having a tough time. Good going.
      Good point about want vs needs.

  • Accidental FIRE July 30, 2018, 2:37 am

    I never had a budget and reached FI in my 40’s. I’m not against them per se, but I just loosely tracked things in my brain and knew when I started spending too much. I also used a credit card for everything to get points and did look at the credit card reports with scrutiny every month to make sure I wasn’t off the rails.

    • retirebyforty July 30, 2018, 9:18 am

      I used to do that before I got serious about FI. It worked fine because we had good income and lived modestly. I become much more frugal once I started tracking spending closely, though. That sped up the FI process.

    • Dr. RebirthAt45 August 3, 2018, 9:15 am

      Pretty much with you on this accidental fire. Although I never really did budgets, I was always careful with spend. I watched everything on my credit card when paying the monthly bills. And for this very reason, I never set up autopay on my credit cards. Just so I get to log in at least once a month and skim through all the expenses of the month.

  • Caroline July 30, 2018, 3:20 am

    I have been keeping track of all my expenses in more detail since last September. It has been really helpful to see where my money is going and where I can/should cut back.
    I think keeping track of your expenses is critical if your finances are out of control. It doesn’t have to be complicated.

    • retirebyforty July 30, 2018, 9:19 am

      That’s great! I’m glad you started. It helped us a ton.

  • Tom @ Dividends Diversify July 30, 2018, 4:01 am

    Hi Joe, I have 15 years of monthly expense tracking in excel. It is really helpful to know where you spend your money and if you are spending more as time goes by. I just started trying Personal Capital. It’s pretty slick, but I do like my spreadsheets. Tom

    • retirebyforty July 30, 2018, 9:20 am

      I can’t give up my spreadsheet either. It’s like meditation to me. 🙂

      • David @iretiredyoung August 10, 2018, 3:50 pm

        Spreadsheet for me too. I know it’s more work to put the information in, but doing so makes me more conscious of my expenditure.

  • Ms. Frugal Asian Finance July 30, 2018, 4:30 am

    Hubby and I have a very similar system. We track our expenses through our credit cards. Our monthly expenses are about 5k or less (daycare and mortgage are a little less than 3k/mo).

    If our expenses are below 2k, it’s great news to us. If it’s significantly above, we will look at the big ticket items. Usually it’s maintenance, repair or travel related.

    • retirebyforty July 30, 2018, 9:21 am

      Ugh, I hate those big-ticket items. But if it averaged out, then it’s okay. Some years are just more expensive than others. This year is one of those for us. 🙁

  • Lazy Man and Money July 30, 2018, 4:48 am

    These are good ways for most people to budget.

    I generally just don’t buy stuff and review the overall numbers the next month. It’s a poor way to budget if you can even call it that. While it might not be the best way to save money, it works for us.

    • retirebyforty July 30, 2018, 9:22 am

      That works if you’re pretty good about not spending. 🙂

  • Buy, Hold Long July 30, 2018, 4:59 am

    Thanks for sharing. I have a similar idea but budget things from fortnight to fortnight as that is when I get paid. Anything that remains after a set amount of expenses goes into savings/invested. Cheers

    • retirebyforty July 30, 2018, 9:37 am

      That’s pretty good. Have you considered saving before spending? That seems to help many people. We do that with our 401k first. Then anything left goes into the general fund for more investing later.

  • TJ @Half Life Theory July 30, 2018, 5:22 am

    Love this! It’s exactly how we track expenses as well.
    I think once you get to a point where you are comfortable with money and spending reasonably, this is the best way to go about it.
    Do not stress over tracking every single line item. Just have general guidelines and make sure you hit it every month.

    • retirebyforty July 30, 2018, 8:16 pm

      We go over the budget some months. There are bound to be big expenses, but it’s okay. As long as it averaged out, it should be fine.
      It sounds like you’re doing well. 🙂

  • Nicoleandmaggie July 30, 2018, 5:34 am

    I hate budgeting. So we keep our regular expenses (including average “emergencies”) less than our income with a generous cushion. When the check register is low enough that we have to transfer from savings, I pay more attention.

  • Lily | The Frugal Gene July 30, 2018, 5:57 am

    Oh cool, we accidentally do something similar! There’s $3000 total per month. Maybe a little over for us to spend depending on property tax and month specifically. More than half of that is mortgage anyway. But $3k overall is a really easy mental framing to lazy budget on!

  • Mrs. Groovy July 30, 2018, 6:13 am

    We never used a budget but we track expenses meticulously. We use a spreadsheet with several tabs. In one we keep a running list of expenses by category. In another we keep track of fixed expenses. We’ve used auto pay for monthly expenses and auto investing from our paychecks when we were working. This method has been good for us but I think the key is that we’re not huge consumers.

  • Angela @ Tread Lightly Retire Early July 30, 2018, 6:28 am

    I can’t tell you how many times I’ve tried to do a traditional budget in the past, but I’ve never stuck to it well. Since November though I’ve been tracking every single expense in a simple Evernote sheet, and the mindfulness of putting it down on paper line by line has done for me what a budget never has. Key to figure out what works best for you 🙂

  • Helen July 30, 2018, 6:51 am

    Hi Joe, great topic. Spreadsheet is a good and simple way to track down expenses.

    I have a monthly budget number. Similar to what you did, I came up with that number based on my expenses during the last several years. To me, I don’t enjoy spending, and it’s not hard to live within the budget. I only track the total spending, not by categories. It worked pretty well.

  • Jim @ Route To Retire July 30, 2018, 7:32 am

    I love Quicken and I do track our expenses, but I’ve never had the need for budgeting. It seems like our frugal nature seems to just take care of things for us.

    I agree that tools like Mint or Personal Capital can be great though for those that do need to or want to budget.

    — Jim

  • Xrayvsn July 30, 2018, 7:40 am

    I hate to admit it (and will confess) but I have never really budgeted my entire life. It definitely got me in trouble early on because I know I would have really attacked my debt more if I visually saw the #’s and especially interest payments. At the current stage I think I am such a big saver and have a low cost lifestyle that budgeting won’t move the needle too much in either direction in terms of wealth. I track my net worth with Personal Capital and get a larger overview of things. As long as things are tracking upwards I know I’m on the right track.

  • Revanche @ A Gai Shan Life July 30, 2018, 9:44 am

    I enjoy budgeting but my methods change every few years. They evolve with how I grow in our money management style and our circumstances. As we get wealthier or build more assets, the more comfortable I am with releasing some of my old incredibly-nitpicky and down to the penny habits.

  • Dr. McFrugal July 30, 2018, 10:12 am

    We don’t really budget in our household because we don’t really buy anything!

    Nowadays, we don’t buy anything outside of food, baby stuff, and vacations…which is easy to track. And the baby stuff we really keep to a minimum or we try to get things for free (hand me downs, giveaways, etc.)

    We don’t buy gas (we have an electric car), we don’t buy clothes (we have enough), we don’t really buy any other consumer goods because we are pretty minimalist and relatively anti-consumerist.

    Our main expenses are housing (living in coastal California is super high) and taxes (again, another downside of living in California).

    All our expenses (mainly: housing, taxes, vacations, food, baby stuff) are easy to track. So we do track expenses, but don’t necessarily budget.

    • retirebyforty July 31, 2018, 10:01 am

      That’s great! I hope to get there someday. Not buying anything would be nice.

  • Jason in Vancouver July 30, 2018, 10:56 am

    We don’t “budget” to track towards staying under a spend target but we do estimate how much we’re going to spend each month based on historical spend and what non-regular spends are on the horizon. However, we track our spend because everyone needs to understand their cash flow situation and make adjustments if necessary. For tracking, we just use a spreadsheet because I want to have more control over the categorization and then manually transcribe spend from our credit card statements and bank accounts at the end of the month. For cash spend, we manually enter it daily which isn’t as painful as it sounds since we don’t use cash very much.

  • Susan @ FI Ideas July 30, 2018, 11:10 am

    It seems like most people are tracking but not budgeting. That is us too. For us, the more money we have accumulated, the better able to pay cash for things and absorb the big ticket expenses, repairs or trips that come at odd times. I always track those, and honestly, I think that is the whole thing about getting our finances together. It allows us to choose lower premiums and higher deductibles, getting hit harder but less often. We find it saves us money in the long run, but it is tough when bigger expenses hit at just the “wrong” time.

  • freddy smidlap July 30, 2018, 11:52 am

    we always used the bucket approach which is a budget i guess. a set amount each month goes to one savings account. that amount is divided among vacation/home repair, roth funding, overtime (not combined), taxes and fees for house, and mrs. smidlap’s art sales. these are known amounts but our income recently changed and it might be time to revisit soon and make sure we’re spending on what we value now that we have less income.

  • FullTimeFinance July 30, 2018, 12:03 pm

    I do something similar except I don’t really categorize. I just hold our spending around the same monthly number and if it seems to be pushing ahead of that number we cut back a bit. More often then not it’s not necessary as I generally know what a typical month looks like.

  • Damn Millennial July 30, 2018, 8:03 pm

    I have set a target dollar amount I will put away for the year. Every year I aim to increase that amount and have done that for the last 5 years.

    I feel that as long as I hit my savings goals, then the budget can be a bit looser. This has helped me to not stress the details. It is important to track your money but it shouldn’t turn into a consuming habit (in my opinion.)

    • retirebyforty July 31, 2018, 10:00 am

      That’s pretty good too. We have a target saving amount too. It’s a little conservative so we usually are able to save more than the target.
      I think 2-3 hours/month is acceptable. 🙂

  • Kevin Katzenberg July 30, 2018, 8:56 pm

    My button has loosened up considerably in recent years. Mine is just large categories of utilities, food, etc. I have a gap category of small expenditures like books or stuff like that. I see you track multiple bank accounts. Is each one of those accounts saving for a different purpose? I have one particular account which I use for travel. It has an attached ATM card, so if I lose the card or it gets stolen on vacation, they don’t have access to a larger chunk of funds.

    • retirebyforty July 31, 2018, 9:58 am

      Yes, the bank accounts serve different purposes. Checking and saving for normal usage. A business checking for business and a Fidelity checking for travel.

  • GYM July 31, 2018, 12:00 am

    I like your simple budget! I’m not a budgeter. Except for maybe big trips and even then I don’t really strictly follow the budget.
    I do just move money out and try and not spend it by spending what I have leftover.
    But you are right, it involves a lot of tracking to know what my spending pattern has been. Tracking your net worth/ spending is very important and is a key element to growing net worth.

    • retirebyforty July 31, 2018, 9:57 am

      We make an exception for big budget items too. Usually, it averages out by the end of the year, but I’m not sure about 2018. We had 2 big budget items this year – new HVAC and Iceland.

  • Eric @ Flip N' Finances July 31, 2018, 11:25 am

    Hi Joe,

    I love your spreadsheet that you shared with everyone. I have a similar spreadsheet like it where we track groceries, gas, entertainment, and house expenses. Then we make a larger monthly spreadsheet on paper and have a family council once a week to review our finances together 🙂

  • Steve @ familyonfire.org July 31, 2018, 2:50 pm

    We budget similar to you religiously on a spreadsheet. Our monthly budget though is dynamic as i’m working within a set percentage of our net worth. Our budget though is a bit more than you mainly due to the cost of health and dental through ACA (approx $1000 a month). Also our son goes to private Montessori school due to trying to match his learning style which is expensive.

    I always used to be a big cash user so I didn’t over spend, but now almost everything goes on the credit card in order to categorize at the end of the month.

  • sendaiben July 31, 2018, 5:29 pm

    I’m far too lazy to budget 🙂

    I just make sure we save/invest a certain amount at the beginning of every month, and then don’t worry about what we spend. If there is anything left over at the end of the month we often save that too.

    Helps that our big expenses (housing, transport) are small and we don’t really buy much.

    • retirebyforty July 31, 2018, 11:17 pm

      That’s really good too. Saving first is the key.
      It’s great that your big expenses aren’t too bad. Our big expenses are pretty expensive here in the US.
      We won’t be able to reduce it for a while yet.

  • BusyMom August 2, 2018, 10:33 am

    We are like you – We don’t exactly budget. We track expenses using mint, and look at the totals at the end of the month. It works for us.

    We have tried budgeting, doesn’t work. It just makes me stressed, and I feel bad when I don’t spend the entire amount allocated to something (even if I have overspent in other areas). Tracking works better for us.

    • retirebyforty August 2, 2018, 9:24 pm

      Right. Budgeting is tough. Tracking is much easier. Once your spending is under control, I don’t see a need for budgeting.

  • The Poor Swiss August 2, 2018, 11:22 am

    I have had a budget for many years. But I don’t really set hard limits to my categories. It’s more a tool to know where I am. With that I can know when I need to cut down on some things. Or when I can actually spend more on some things.

    I think even a very simple budget is very important for most people. Simply tracking expenses should be the bare minimum for everybody.

    • retirebyforty August 2, 2018, 9:25 pm

      That sounds like a pretty good system. I could work with that. You don’t have to work on the budgeting every day, just once or twice per month. 🙂

  • Ms ZiYou August 4, 2018, 11:12 am

    I absolutely love your approach Joe – I do exactly the same, except my number is £1666 (nothing like a bit of superstition in your budget!). And no big deal if I go over – it will balance out with months I’m under.

    But I think I’m lucky to not be a big spender – this approach is probably too flexible for those who enjoy spending. I most definitely do not enjoy spending money on things that are not fun to me.

    • retirebyforty August 5, 2018, 9:26 am

      Wow, your budget seems very low. Nice job for London.

  • Isaac Braun August 22, 2018, 9:39 am

    We are similar to many others that have commented on here. We dont “budget per say, but we ferociously track spending. We not only track monthly spending, but we also track spending in particular categories over time. The only “Expense” that we budget for each month is savings. This is our holy grail. Every thing else is just tabulated as it is spent. When we see a category trending up over time, for example if we notice that our food expense is rising at 10% per month, we will dive in to see if food prices are going up, or if our habits are changing and we adjust accordingly. I like your approach Joe, and it sounds like your strategy has shifted a bit since retiring, which makes a lot of sense. Great article!

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