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

yes we can buy ETFs tracking global markets (MSCI World, FTSE All-World, S&P 500, etc.). The problem is that in Ireland, many ETFs are subject to tax rules that can be less attractive than standard capital gains treatment elsewhere. We have exit tax and we must sell after 7years I think.

Well this is AMA so the idea is people ask first…

Well the car expenses has a maintenance budget included. So that’s that covered.
boiler cover is included on our house insurance.
appliance breaking down well we would probably bank roll that from our personal savings accounts and pay half each.

I didn’t know about deemed disposal - have just read about it. What a dreadful policy!

Yep it’s awful! There has been talks of getting rid of it though.
Now we have shares from our workplace that we can sell tax free after 3 years. We use our bonus to buy them. But I have stopped doing this and I just put it all into my pension instead.

A question - where to start when you know nothing about investing?

Investing is one thing I don’t know about as I don’t really do it tbh. I have shares in work by default only. Maybe someone else on here might be able to help on that. ☺️

I'm.doing a very detailed breakdown xls of our spending this month. It's always good fun in the first two weeks. But gets my hairy as the mo nth goes on. But we have nothing to share to save right now. Will probably see a deficit actually

“Feeling” isn’t a great way to plan. Do the maths then decide based on actual data.

Ok, back to budgeting. How do you separate those amounts in reality? Eg Do you transfer to and pay out of different accounts? How do you stop frivolous overspend or know what your 'fun money' limit is without having to do daily checks? How do you use your credit card(s)?

i can see all my money in my banking app. I know that a third goes on the mortgage, a third on bills and a third is to spend or save. Not sure why I’d need to know any more than that? I’m clearly spectacularly missing the point of the OPs post but I just don’t see what tips she’s sharing. Especially as she earns way more than she needs to run her home.

Well this doesn't come across as budgeting, it really is just a list of outgoings.

We all have these in some form, it's noting family finances.

I stand by my response that this isn't relevant to helping people to budget, as you must know.

It would be if you were to highlight how you cut back to improvise savings. I can't believe I've responded, I'm a bit tipsy and bored.

@Statsquestion1 I don't have a question but just wanted to say I actually saw your breakdown on another thread earlier in the year and have adopted it 😁
I've "budgeted" for years with spreadsheets to no avail as although I was tracking what i was spending - diligently - something just never really clicked and I always had too much month at the end of my money, as someone said upthread (great expression). Doesn't help that money burns a hole in my pocket 😖
I've found splitting the headings out the way you do it really works for me - I now have an annual budget using that template and am finally making some headway on my massive debt. Early days yet but each month I'm getting better.

So it's a big thanks from me for posting it

Fun money for personal spending is put into my personal account. That is where I do my “fun” spending comes from. I don’t have a credit card.

Ah wow I love this!! You are welcome! I’m so so glad it’s working for you 🙌🙌

Look towards the end of the list, that’s when it becomes budgeting, when there are pots for activities.

Honestly finding it hilarious that people are so affronted by the OP’s income they’re trying to rewrite the definition of budgeting. Imagine being so bitter.

If you’re working for a US company, make sure you’re declaring your dividends with your Irish tax return as you have to pay tax on foreign assets, as well as reduced tax to the US. You can be liable for interest penalties.

There’s also implications for death taxes - I think ??? it’s in excess of $60k if you died and your spouse inherited they would get no tax relief on that as non US citizens. You can of course just sell your shares to stay under the threshold. Just something to keep an eye on.

Paying off mortgage early draws penalties so while it can feel good, it often isn’t as financially sensible as people think. And given that you’re both in pharma, and with that the orange buffoon in office, keeping a cash cushion sounds much more sensible. It’s better to maintain the ability to pay the monthly mortgage.

Not a US company thank god. Thank you

For me, I find pots useful because when I've moved funds from my main account to the pots, I know it's off limits and I can't spend it except for the purpose it's intended for. Even if I know on a spreadsheet how much I could spend, if money is in my main account I fall into the trap of thinking "oh I've got plenty left, I can buy this" because I don't check my balance as often as I should.

Then I log into my bank and think I've been a victim of fraud when in actual fact I've been a victim of stupidity 🤣

Having a high income doesn’t mean you don’t need to budget.

There are hundreds of threads where people with a lot of money coming in have no idea what happens to it at the end of the month. This is a familiar story; you think you are doing well so spend freely. And then boom there’s nothing left for savings etc.

By using zero based budgeting you clearly and intentionally prioritise what you want to save and then what you want to spend.

Then suddenly “I’ve got 7k every month I’m loaded - let’s go out!” turns into ‘I allocated £100 for eating out and we’ve already spent that so let’s see what’s in the freezer’

Its absolutely valid.

The reason OP can save £2k a month is partly because she budgets like this. If she didn’t, I would expect £1k could easily be swallowed in impulsive spending.

I've actually used the "pots" system for years but unlike you, I never had the discipline to not borrow from them 🙈 I would just think "ah I'll put it back in when I get paid" but then inevitably the next month something unexpected happens etc etc.

Take the cb for example (I'm also in ireland) I'd always use it to pay the big things my dc needed as they came through but due to the way the payment falls in comparison to my salary payment date anything left over would just get put in to say, going towards the food bill or something.
Using the headings on an annual budget, I could actually see what cb could and should be paying for on an annual basis if I could manage to not let it get swallowed up.
Now I'm planning ahead for the year I know that I need to put it all away, straight away, and then use a bit towards clothes, a bit towards school expenses or whatever.

I'm probably not explaining it very well! But its a game changer for me 😂

How do you know she hasn’t done the maths AND doesn’t feel comfortable doing it?

Managing money isn’t just about hard facts. It’s about your own aversion to risk and your personal long term goals. What might be a ‘good’ decision for someone would be a bad decision for someone else because it keeps them up at night. You have to factor all of this in to your financial decisions.

You seem quite bitter about OP’s position tbh!

yes, to begin with it really is all about discipline. You have to be realistic with the pot too if possible there has to be a little bit of leeway in them, even if it’s an extra 5quid and if that’s not possible then you really have to pull on your discipline.

Not everyone is struggling. Those that aren’t should just shut up then?

I asked her if she had and what that looked like because she’s come to a plan and this is AMA so I was interested in her decision making process. I would disagree and say that managing money STARTS with hard facts. I’m not bitter about OPs position (?wtf?) and am not really sure what you mean by that?