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Fiscally Responsible People

N

Neurorelay

Platinum Member
I have a theoretical question: on average, how much of a percentage of your income should you plan as discretionary? Obviously, after all bills are paid, out of the money you have left over: some you invest, but how much do you plan on for just pocket change?
 
I have most of my stuff paid for since I'm going to school during the school year living in the dorms nad living at home during summer. But whatever i make, I save about half of it. Currently saving more since I have to pay for medschool apps and possibly some interviews.
 
After living with roommates for a long while and having the rent and bills split up many different ways a large percent of my income was discretionary, probably around 50-55%. So I have been able to save quite a bit and enjoy things. However next month I will be moving out on my own into a one bedroom place so all bills will be my sole responsibility now the extra money will be reduced to around 20-25%. I'm not too sure what you mean by pocket change but I try and save all the money I can thats extra. Too many variables in life with the ever changing job market and other things, I feel better knowing I have a little nest egg I can fall back on just incase something bad happens.
 
I don't think using a percentage is the right approach. It is going to depend on your income. And I think the percentage system can encourage people to spend more than they need to.

The definition of "discretionary" can vary a lot too. Some people will spend $50 on dinner and say that counts towards the food budget, others would say that's discretionary spending.
 
Originally posted by: kranky
I don't think using a percentage is the right approach. It is going to depend on your income. And I think the percentage system can encourage people to spend more than they need to.

The definition of "discretionary" can vary a lot too. Some people will spend $50 on dinner and say that counts towards the food budget, others would say that's discretionary spending.
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Good point, however I try to set myself up with a allowed food limit and anything over would be discretionary like for example I go with some buddies for beer and hotwings one friday night.
 
I'm very poor with money (any tips?) so I generally don't leave myself anything left over at all 🙁 I pay my bills and whatnot, but if something bad were to happen and I needed money I would be screwed.
 
Originally posted by: Sraaz
I'm very poor with money (any tips?) so I generally don't leave myself anything left over at all 🙁 I pay my bills and whatnot, but if something bad were to happen and I needed money I would be screwed.
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Here's all you need to do.
1. Decide that you want to get control of your money.
2. Work out a budget for different budget areas - food, rent, utilities, car payment, insurance, etc. Include 10% minimum for savings in addition to your retirement savings. Look at your recent spending to help guide you.
3. Arrange with your bank for an automatic withdrawal or transfer to get your savings money out of your checking account, so you aren't tempted to spend it.
4. Monitor your spending to make sure you are staying in your budget.

It's really easy once you decide you want to manage your money.
 
I just like to put it in perspective like this:

For every $1 I spend on things I don't need, I am actually spending what would be $10 in the future. At the very least it stops me from impulsive shopping and makes me think a bit. And since I am young and don't make a whole lot, it's even more critical that I cut out as much discretionary spending as possible.
 
Originally posted by: Sparke
I just like to put it in perspective like this:

For every $1 I spend on things I don't need, I am actually spending what would be $10 in the future. At the very least it stops me from impulsive shopping and makes me think a bit. And since I am young and don't make a whole lot, it's even more critical that I cut out as much discretionary spending as possible.
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I like that idea, a dollar saved is ten earned. 🙂

 
Originally posted by: Sparke
I just like to put it in perspective like this:

For every $1 I spend on things I don't need, I am actually spending what would be $10 in the future. At the very least it stops me from impulsive shopping and makes me think a bit. And since I am young and don't make a whole lot, it's even more critical that I cut out as much discretionary spending as possible.
Click to expand...

And that way if you get hit by a bus tommorow you'll die having a whole lot of money in the bank, and never having done anything... :roll:

Life is about balance... spend enough so that you are enjoying life, while saving enough to make sure you can enjoy life later...

-Max
 
Originally posted by: Doboji
Originally posted by: Sparke
I just like to put it in perspective like this:

For every $1 I spend on things I don't need, I am actually spending what would be $10 in the future. At the very least it stops me from impulsive shopping and makes me think a bit. And since I am young and don't make a whole lot, it's even more critical that I cut out as much discretionary spending as possible.
Click to expand...

And that way if you get hit by a bus tommorow you'll die having a whole lot of money in the bank, and never having done anything... :roll:

Life is about balance... spend enough so that you are enjoying life, while saving enough to make sure you can enjoy life later...

-Max
Click to expand...

There are plenty of ways for me to enjoy life that don't cost a lot. I play lots of disc golf at the public park (free), I play sand volleyball (free), basketball (free), go out bowling with friends (~75 cents a game on Sundays), eat out (normal prices), but also cook for myself (less money). I won't argue against your point, but don't judge me because I don't go spending thousands of dollars that will work for me later. I feel I have great balance in my life. Spending $25 on some filet mignion won't make me feel any better than 25 cent wing night at my favorite bar.
 
Originally posted by: Sparke
Originally posted by: Doboji
Originally posted by: Sparke
I just like to put it in perspective like this:

For every $1 I spend on things I don't need, I am actually spending what would be $10 in the future. At the very least it stops me from impulsive shopping and makes me think a bit. And since I am young and don't make a whole lot, it's even more critical that I cut out as much discretionary spending as possible.
Click to expand...

And that way if you get hit by a bus tommorow you'll die having a whole lot of money in the bank, and never having done anything... :roll:

Life is about balance... spend enough so that you are enjoying life, while saving enough to make sure you can enjoy life later...

-Max
Click to expand...

There are plenty of ways for me to enjoy life that don't cost a lot. I play lots of disc golf at the public park (free), I play sand volleyball (free), basketball (free), go out bowling with friends (~75 cents a game on Sundays), eat out (normal prices), but also cook for myself (less money). I won't argue against your point, but don't judge me because I don't go spending thousands of dollars that will work for me later. I feel I have great balance in my life. Spending $25 on some filet mignion won't make me feel any better than 25 cent wing night at my favorite bar.
Click to expand...


All great points, it is all about balance. What I am trying to rectify is while I am great at budgeting and know where everything goes; I still spend more then I should and spend money I don't have (credit cards). I have always paid my bills and have great credit, but alot of debt, coming up on 29 this month and want to change that pattern.
 
Originally posted by: Sparke
Originally posted by: Doboji
Originally posted by: Sparke
I just like to put it in perspective like this:

For every $1 I spend on things I don't need, I am actually spending what would be $10 in the future. At the very least it stops me from impulsive shopping and makes me think a bit. And since I am young and don't make a whole lot, it's even more critical that I cut out as much discretionary spending as possible.
Click to expand...

And that way if you get hit by a bus tommorow you'll die having a whole lot of money in the bank, and never having done anything... :roll:

Life is about balance... spend enough so that you are enjoying life, while saving enough to make sure you can enjoy life later...

-Max
Click to expand...

There are plenty of ways for me to enjoy life that don't cost a lot. I play lots of disc golf at the public park (free), I play sand volleyball (free), basketball (free), go out bowling with friends (~75 cents a game on Sundays), eat out (normal prices), but also cook for myself (less money). I won't argue against your point, but don't judge me because I don't go spending thousands of dollars that will work for me later. I feel I have great balance in my life. Spending $25 on some filet mignion won't make me feel any better than 25 cent wing night at my favorite bar.
Click to expand...

Hey I'm glad you're happy, but for me, that would be a waste of life. Money is just a means, in the end you can't take it with you. I'm not saying be stupid... I'm saying those people who say save every last penny so help you god, are missing out on so much life.

-Max
 
Originally posted by: Doboji
Hey I'm glad you're happy, but for me, that would be a waste of life. Money is just a means, in the end you can't take it with you. I'm not saying be stupid... I'm saying those people who say save every last penny so help you god, are missing out on so much life.
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One of my major goasl in life is to maximize the money I get in my life. And to spend the last penny of it on the day I die.

Neither of these extremes meets my goal: (1) spending every penny I get the instant I get it or (2) saving every penny I get forever.

The ideal way for me is to enjoy life fully but do it cheaply now, so that I have seemingly endless wealth to enjoy later in life.
 
Originally posted by: Neurorelay
I have a theoretical question: on average, how much of a percentage of your income should you plan as discretionary? Obviously, after all bills are paid, out of the money you have left over: some you invest, but how much do you plan on for just pocket change?
Click to expand...
You are thinking about this backwards. Don't ask how much you have to play with and invest the rest. Instead, ask yourself how much you need to invest to have the lifestyle you want and play with the rest.
 
Originally posted by: dullard
Originally posted by: Doboji
Hey I'm glad you're happy, but for me, that would be a waste of life. Money is just a means, in the end you can't take it with you. I'm not saying be stupid... I'm saying those people who say save every last penny so help you god, are missing out on so much life.
Click to expand...
One of my major goasl in life is to maximize the money I get in my life. And to spend the last penny of it on the day I die.

Neither of these extremes meets my goal: (1) spending every penny I get the instant I get it or (2) saving every penny I get forever.

The ideal way for me is to enjoy life fully but do it cheaply now, so that I have seemingly endless wealth to enjoy later in life.
Click to expand...

The time value of money is incredible. Just the sheer appreciation of net wealth from when you are 55-65 is probably greater than total contributions and appreciation when you are 25-50. At least going off of projections and not including any major crashes or life events.
 
Originally posted by: dullard
Originally posted by: Neurorelay
I have a theoretical question: on average, how much of a percentage of your income should you plan as discretionary? Obviously, after all bills are paid, out of the money you have left over: some you invest, but how much do you plan on for just pocket change?
Click to expand...
You are thinking about this backwards. Don't ask how much you have to play with and invest the rest. Instead, ask yourself how much you need to invest to have the lifestyle you want and play with the rest.
Click to expand...

QFT Make a rule... once you invest the money somewhere DO NOT TOUCH IT... then spend as much of what you have left as you please... if you see an investment you want to make.. understand that you'll have to tighten your fun belt in order to make it.
 
Originally posted by: vi_edit
Originally posted by: dullard
Originally posted by: Doboji
Hey I'm glad you're happy, but for me, that would be a waste of life. Money is just a means, in the end you can't take it with you. I'm not saying be stupid... I'm saying those people who say save every last penny so help you god, are missing out on so much life.
Click to expand...
One of my major goasl in life is to maximize the money I get in my life. And to spend the last penny of it on the day I die.

Neither of these extremes meets my goal: (1) spending every penny I get the instant I get it or (2) saving every penny I get forever.

The ideal way for me is to enjoy life fully but do it cheaply now, so that I have seemingly endless wealth to enjoy later in life.
Click to expand...

The time value of money is incredible. Just the sheer appreciation of net wealth from when you are 55-65 is probably greater than total contributions and appreciation when you are 25-50. At least going off of projections and not including any major crashes or life events.
Click to expand...

Meaning that if you start investing early (in your 20's) you will be very, very glad later.

The example I've seen is if you invest a fixed amount a month starting when you're 20 years old, and stop investing totally when you are 30, you will have MORE money when you retire than the person who started at age 30 and invested the same amount every month until he was 65. (assuming same rate of return for both.)

Those extra years really matter.
 
10% if you have a pension plan
15% if you don't
25% if your a business owner or self employed
Don't touch til you retired.

Spend the rest on whatever
 
I find that the more I make, the more I spend.

I don't budget. I know I make more than I spend though so that's good enough.
 
One thing I try to do is keep enough money invested to support me for six months with no income. You never know when you might be out of work for a while or have some medical bills hit you.

Also, as others have mentioned, an automatic draft is the way to go. You won't even miss it. If you have a 401(k) available to you, that should be one of the first places to invest. Be sure to get the most of your employers match (HR will be able to explain the details). If you are good on the 401(k), look into a ROTH IRA after you have your emergency cash saved up.
 
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