On Budgeting

“Hi Mechanic,” my friend’s voice played over the voicemail, “I am going to Japan for six months, and was wondering if you had any advice on how to handle finances while abroad,”

My heart beat faster, excitement coursing through me. Three of my favorite things: Travel, finance, and giving actually solicited advice! Is this real life? I had to stop myself from playing the message a second time before calling her back.

I answered some questions about travel credit cards, how to get money out, how much cash to bring, and shared some stories about the worst things happening.

There was the time I didn’t realize my card had expired while in the edge of rural Nepal. Another time, an ATM machine ate my only card in Spain and passersby walking a wide berth around the strangely frantic foreigner outside of the bank. Hopefully these stories inspired her that you can get through these situations, which was my intent, though writing them up I’m realizing I might have just given more fodder for her to worry about.

“Okay, but how did you budget while traveling abroad? How did you know what you were going to be spending on groceries and everything when things costs different amounts?” She asked.

“B-b-budget?” The pesky “b” word. The thing I that hovered over me, something I knew I should be doing that I deftly side-stepped throughout my life. I admitted sheepishly that I had no idea how much I spent on my travels.

travel toy bus
I had no idea how much I spent on my travels

If you checked out The Ultimate Flowchart, you know that the first step to finance is to have a budget.

I have never had a budget.

With a stash always squirreled away, I attempted to follow a zero-based budgeting model, wherein I had to justify every purchase. I have never written down a goal-based budget like my roommate at the table, allocating amounts for food, gas, and entertainment. When it comes down to it, I think that even though it has worked out just fine for me, the idea of budgeting is extremely important. You should know where your money is going.

Recently I’ve been using Personal Capital to track my expenses. The three big competitors for budgeting tools are:


Mint was the first tool I used to link up my bank accounts and watch as it makes handy graphs and categories for your spending. It’s free and easy to use.

You Need a Budget

Many people sing praises for You Need a Budget. It centers around giving every dollar a job, so you can enter every purchase to keep track of your budget. Personally, I haven’t used it as I prefer the free tools available, as it is $7 a month.

Personal Capital

I settled on Personal Capital for all of my expense tracking. I love it for the big picture graphs, as well as the ability to see my overall allocations. I check up on it to review my expenses. It also has handy retirement tools, including one graph that shows how much of your money will be given over to fees. Tens of thousands of dollars were headed towards fees over time. I was motivated to re-allocate my money away from high-fee funds to low-cost index funds.

All three are great tools with tons of functionality, the ability to see trends over time. Since Personal Capital is what I use and recommend, here is a referral link if you want to try it out.

Expense Reports

I will start writing up monthly expense reports as an exercise on this blog to track my spending. I think this will open up areas I could save and can see if I can cut down in some areas (I already know that the grocery bill can go down with some effort and planning). This should help me with a frame of reference as well, what are average expenses in that area and how am I doing? Are there frivolous expenses (I already know the answer is yes, I eat out too much at lunch), and if there are, how will they affect my savings in the long run? How much will short term expenses affect my long term saving goals?

Do you budget? Do you use one of the three tools in this post or something else?

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  1. I use YNAB religiously, I started using it March of this year, which is when I began my FIRE journey. I’ve tried to budget before with mint.com, but seeing where my money WENT, not where it needs to go, never has worked well for me. Although I use personal capital for retirement forecasting and allocation overviews, I don’t think it would work well for my budget.

    Since I started using YNAB, my monthly spending has gone from over $2,800 to an average of $1,700. My goal is to get this down to $1,400 monthly next year. My mortgage is over half of that. I plan to add insulation and other energy-savers to the house this year, which will be an upfront cost that will help me save in the future.

    1. It’s great to hear from someone using YNAB. If it can cut your spending by ~60% then a $7 fee is measly and completely worth it. Why do you think it works best for you compared to mint and PC? Do you think it is because you need to stare down every purchase in the face knowing you will be logging it into YNAB?

      I have heard many people doing similar things using YNAB or Mint for short-term budgeting and PC for long-term which makes sense because PC really shines with long-term goals and allocations, but hind-sight viewing of spending isn’t really the same as budgeting.

      I like that you’re taking advantage of upfront costs that help you save in the future, YNAB is a minuscule upfront cost, and energy-savers added to the house are definitely worth it as well.

  2. We’ve never budgeted. Dragon Guy works in finance and budgets for a living, and I think is too burnt out to do one for us. We’ve always just been extremely frugal and lived far below our means. However, now that we’re both thinking of retiring, we think we might need a budget. When we travel, I often have a goal of spending less than a certain dollar amount for the whole trip. What I’m learning now that I’ve been reading FIRE blogs is that I need to have more awareness of what we are spending. This has definitely helped us cut a lot of expenses.

  3. I love this idea! Going over budget really stresses me out. Question though…how does this concept work with sinking funds? We have separate bank accounts for various sinking funds (categories that vary drastically throughout the year, including travel, gifts, health care, car repairs, etc). I’d love to implement this flexible monthly budget idea, but not sure how it would work with our allotted contributions (and occasional use of) our sinking funds.

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