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Ask HN: How do you manage and budget your monthly income

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Ask HN: How do you manage and budget your monthly income

#1

Post by ipop »

My resolution for this year is to better manage my money in order to start saving for a house.

I have only one income source and that being the monthly salary (100 units).

My plan is to divide the salary into smaller budgets in order to save or invest.

For example: - pay out the existing debt (around 350 units) - put money aside in 3-6m deposits (around 1.8-3.2%/year), not much, but they might cover for the inflation - buy government bonds (currently 3.5-4.5%/y) - invest in short-medium term p2p loans (eg. mintos, peerberry, 8-12%/y) - put a small amount of money aside, just to have some cash

My problem: how do I start this? How to decide how many units to invest/save where?

Thank.

Re: Ask HN: How do you manage and budget your monthly income

#2

Post by sobriquet9 »

I don't have a budget in traditional sense (Excel table with spending categories and amounts allocated for each, with regularly updated actual spent amounts). I just look at the balance of my checking account when I get the statement. If it goes down month over month, I know I need to cut spending.

Everything else is automated: scheduled transfers to savings, recurring mortgage payments, autopay for credit cards, etc.

Re: Ask HN: How do you manage and budget your monthly income

#3

Post by nathias »

I think its an error to think of it in terms of relative shares, absolute quantities matter a lot in terms of specific thresholds when something is worth it or not. The question is very specific to the absolute amount you can save each month, and your tolerance for risk.

Re: Ask HN: How do you manage and budget your monthly income

#4

Post by wsc981 »

I just have a weekly budget set to 11.000 THB. This money is used for food, small trips, clothing, groceries, etc... (10.000 THB is about 333 USD right now).

I pay my health and car insurance once a year and also health insurance for my girlfriend and daughter. That might equal another 90.000 THB total.

I try to maintain a 10.000 USD (about 300.000 THB) buffer in my TransferWise account. For emergencies or periods with no income.

Everything above I am free to invest in stock and crypto (mainly Bitcoin).

Re: Ask HN: How do you manage and budget your monthly income

#5

Post by joe_91 »

After paying off existing debt the next best thing once you have an emergency fund covered is stocks and maybe a little crypto if you're feel like future proofing yourself.

The yield on government bonds is really low at the moment and p2p loans can be finicky at best (I've lost more money than I've made from Mintos...).

Stocks have been giving great returns over the last few years and while there's almost certainly going to be a correction at some point its the only real place where you can get proper returns at the moment. You could invest in ETF (Exchange Traded Funds) which track certain buckets of funds like the S&P500 or invest in stocks individually.

Get yourself setup with a trading account - this varies by country and they have different fees etc but google should be able to sort you out here.

Re: Ask HN: How do you manage and budget your monthly income

#6

Post by cheese_van »

Not an answer to your question, but rather an observation regarding budgeting:

I daily document my account balance to the penny, which unexpectedly acts (for me) as a brake on superfluous spending.

Simply the act of penny-wise documentation compels the need to be aware of spending. Having merely a spreadsheet and a budget app, that framework encouraged me to compare my current day balance with the previous month's day, and provided a visual reward when my balance was higher.

In sum, maintaining granular data about my account led to good things.

Re: Ask HN: How do you manage and budget your monthly income

#7

Post by theorymeltfool »

If you're struggling to pay for basic necessities, then you need to examine your spending habits and cut out unnecessary things in order to increase your savings rate.

After a base-level is established, you can have more "freedom" to either spend it on luxuries, or invest.

I personally am able to save/invest about 60-70% of my income/month, and I have about a 10% buffer each month available for "extras/fun/emergencies". If I have an expensive month (for example, December, which included a lot of travel and gift buying), then I just temper January's spending so that I can save more that month.

Re: Ask HN: How do you manage and budget your monthly income

#8

Post by dyeje »

Paycheck is automatically deposited into various savings, what's leftover is spending money.

I think your investment strategy is pretty off. Don't bother with CDs, just get a high yield savings and keep 6 months expenses in it (it's an emergency fund and it should be liquid). The rest should go into mixture of index funds and bonds (the balance of which depends on your age and risk tolerance) in tax advantaged retirement accounts.

Once you've maxed out your tax advantaged accounts, the rest can go wherever. Personally, I do mostly index funds with a little bit of crypto and individual stocks for fun.

I recommend the book The Simple Path to Wealth. I didn't know anything about finances before that book and it provides a simple, set-and-forget strategy with ample reasoning behind each decision.

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