Ask me anything about zero-based budgeting and our monthly budget

[Statsquestion1]

I love budgeting. I have always done it. Been meaning to post here for a while.
I do a based budget, so everything is accounted for. I have posted on many “money matters” topics but thought it might be different to post an AMA.
I am currently revising the budget as I do it every 6 months or so.
as it currently stands its

Me 3100
DP4100
CB 280
Total 7480

Housing
Mortgage: 1900.
Insurances(life, house): 150
Property tax: 50
Total Housing: 2100
Utilities
Electricity 150
Waste collection: 25
Broadband & TV: 70
Mobile phones x3: 60
Total Utilities: 305
Food & Groceries
Groceries & household food: 500
Dining out / takeaways: 200
Total Food: 700
Transportation
Fuel: 150
Car insurance & tax: 150
Maintenance & NCT: 100
Public transport / Parking: 20
Total Transport: 420
Education & Kids
School books, uniforms, fees: 50
Activities, sports, clubs: 55
Pocket money/treats: 60
Total Kids & Education: 165
Entertainment & Lifestyle
Family outings, hobbies, gifts: 250
Subscriptions: 20
Miscellaneous expenses (haircuts etc): 60
Personal spends:250x 2 = 500
Clothing: 200
Total Entertainment: 1030
Savings & Miscellaneous
Emergency fund / Savings: 2,000
Holidays (monthly allocation): 500
DC Savings: 150x 2= 300
Total Savings & Misc.: 2800
TOTAL MONTHLY SPENDING: 7,480

Both definitions can apply of course, but I am surprised at how many people aren’t capable of deciphering between the two depending on context.

The solar panels are being paid out of long term savings. We opted to keep cash as a back up in case of job loss etc. we don’t have enough to pay off the full mortgage.
yes we have 40k put aside so far for university.
we could last probably 3years if we cut out a lot of unnecessary spending
The pandemic was fine. We actually saved quite a lot. We were both working.

DH and I have been keeping a budget since we got together in 1990. During most of our working life, our income never exceeded £30k but careful budgeting (and paying into savings first) allowed us to retire 10 years early.
It's worth doing.

Brilliant 🙌🙌 I love this!

That's not what zero based budgeting is. It's a very specific concept in Accounting of doing a budget from scratch every year rather than adding 5% to the previous year. It started in the 70s.

https://en.wikipedia.org/wiki/Zero-based_budgeting

@Brainstorm23 fair enough, thanks for that everything I’ve every seen for home use has called it this. Anyway, it’s budgeting.

I think we’re talking about the same thing. Accessible savings are pretty low interest at the moment though. My spending money earns the same interest split between different instant access accounts with the same rate as it would if it were in just one; for savings, I keep a fixed amount (£2k) in a savings account as an emergency fund, and invest the rest to combat low savings interest and inflation. The whole system is much more efficient than using Excel.

You do get that not everyone is broke right

I doubt you will. It’s €607 per week for a couple (net, minus certain expenses) that’s the cut-off for eligibility. You’re making far more than that.

Yeah probably not. We shall see 👍

If I had £7480 every month I’d find it very easy to save too - I take home considerably less and manage. Your post is totally tone deaf and doesn’t include any tips! My tips to you: read the room, and don’t spend such a ridiculous amount on takeaways and you’ll save more.

That's not budgeting, it's just expenditure? Budgeting is trying to cut costs and keep spending to a minimum, being thrifty etc.

Well it’s euro so that works out about £1000 less. Still a lot.

Right because people seem to be getting confused let’s have a look at the Oxford Dictionary definition of budgeting:

the fact of being careful about the amount of money you spend; the process of planning to spend an amount of money for a particular purpose

That is exactly what the OP is doing.

Still plenty to budget with. I really can’t see what tips the OP is making. Surely it’s just live within your means?

Isn't zero based budgeting just called 'managing life' by those of us without capacity to save large sums on a regular basis? You could also call it that even if you're accumulating debt if you're going by OP's definition.

Have you actually run different scenarios to see which gets you the best outcome?
For example if you stuffed all your savings into your mortgage (which given your repayments can’t be huge) and continued to make the same monthly payments adding what you would have saved each month, how long till you’d paid off your mortgage altogether? How long till your saving were replenished and how much money would you save yourself going forward?
Its those sorts of calculations that are “budgeting” not just recording.

I've never heard of zero based budgeting for personal finance.

I only know it as a method for setting budgets in large organisations, where it means deciding what the budget of each department/project will be from scratch each year. It's usually described as an alternative to the more traditional incremental method, which starts with what the previous budget has been and adds or takes away from it.

na, pots are too simplistic you can’t really model projections or do any detailed accounts with them. They just split off your savings / balance visually. Digital envelopes or piggy banks really. I know what you’re saying about the interest though .

No it’s not. It’s having a budget - ie planning what you spend money on. That’s why the government’s intentions for spending each year is called the ‘Budget’ .

Good lord.

The main difference is she allocates everything in advance - rather than what most people do which is saving whatever’s left.

This approach means that people often fall victim to lifestyle creep - their spending goes up as their income rises and they don’t protect their savings.

It’s why millions of people live paycheck to paycheck and wonder why…

I don't understand how anyone can say this isn't budgeting? It's exactly that - planning where your money goes to and then spending according to the plan.

Everyone should do it - and yes, that also includes people who have higher incomes. Sometimes people don't realise that it's often those with high incomes that are deepest in debt. They think they earn well enough to not plan expenses, and just splash out on everything and anything on credit - cars, holidays, designer clothes, private education, furniture, jewellery, ponies, you name it. Expenses can easily get out of hand if nobody is keeping an eye on things, or budgeting and planning how much should be / is spent and on what, and putting some breaks on when accounts are flashing red. Credit companies just keep extending credit limits higher and higher, why wouldn't they, in good times these are relatively low risk and high profit customers!

Anyway, I digress. Since this is an AMA, I actually do have a question. You say that investing opportunities aren't very good in Ireland. I'm intrigued by this, how is this the case? I thought anyone anywhere in the world can just invest in all world index funds for example?

Not complicated at all. You work out the average and take that as a fixed ‘salary’ every month.

We thought about it but to be honest we just don’t feel comfortable ploughing all of our cash into the mortgage right now.

Car / boiler / appliance breaking down.