Advice for monthly budgeting

[Noob to WCI]

I was looking over my yearly expenses on my Mint.com account and was shocked about some of the spending amounts going to random places.  I keep monthly budgets and am usually close to my expected expenses.  I guess the numbers just look different when you see what you spent over an entire 12 months. The bulk of my shopping is usually at Kroger and Costco.  Maybe I need to cut down on the Amazon prime, haha.  The annual totals make me think I can do better and I need to make sure to avoid lifestyle creep. I'll be finishing fellowship this July and my income will obviously make a large jump.  Suggestions from the more experienced WCI crew for ideas on controlling monthly expenses and better budgeting?

[Peds]

https://www.whitecoatinvestor.com/budgets-are-for-rookies/

[ENT Doc]

Good for being proactive. Is it just you or you and a spouse? What is your savings rate? I wouldn't care so much about where the money is spent - I'd care about the amounts in each category. I'd probably need to see an itemized breakdown before lending specific advice. However, in a broad sense, setting your budget helps you achieve your goals while sticking to a budget requires discipline.

[wideopenspaces]

Are you living within your income as a fellow? If so, just keep spending as you are now for a few years and you'll be fine. I'm not sure you actually need to be more strict with your budget if you're happy right now.

[hightower]

Noob to WCI wrote:

he annual totals make me think I can do better and I need to make sure to avoid lifestyle creep. I’ll be finishing fel

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I know how you feel in terms of being shocked by your spending.  When I first started looking at these numbers I was blown away, especially with how much we spend on food alone (we go out to eat way too much).  We've had a hard time sticking to any sort of strict budget.  But, the thing that has helped us the most is continuing to pay attention to our spending habits as often as possible.  The more you look at what you're spending, the more likely you'll "think before you swipe."  It's kind of the same concept as mindfulness meditation.  Paying attention to what you're doing and feeling helps you control your behavior.

I would encourage you to just keep looking at those numbers each month and every time you go to swipe your credit card, you'll be thinking about the amount of spending you're doing.  This will eventually help you control yourself a little better.

[Miss Bonnie MD]

I highly recommend YNAB if you want to take full control of your budget. It is completely different than Mint which just shows "what happened" vs. tactical budgeting. If you're a woman physician, there is a support group for YNAB on Facebook.

[Hatton]

I highly recommend you start expense tracking.  I use Quicken for Mac but Mint is similar.  I think looking at this does allow you to see where your money goes and to think twice before you spend.  The other 2 things it does is you pick up fraudulent charges sooner and you can figure out how much money to shoot for to be able to retire.

[Ryan]

Noob to WCI wrote:

I was looking over my yearly expenses on my Mint.com account and was shocked about some of the spending amounts going to random places.  I keep monthly budgets and am usually close to my expected expenses.  I guess the numbers just look different when you see what you spent over an entire 12 months. The bulk of my shopping is usually at Kroger and Costco.  Maybe I need to cut down on the Amazon prime, haha.  The annual totals make me think I can do better and I need to make sure to avoid lifestyle creep. I’ll be finishing fellowship this July and my income will obviously make a large jump.  Suggestions from the more experienced WCI crew for ideas on controlling monthly expenses and better budgeting?

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You're already in a "savers" mindset. Perishable Kroger/Costco purchases aren't going to significantly reduce your savings rate (see Mr. Money Mustache for an alternative viewpoint-- killing your $1000/mo grocery bill). Keeping to a budget on those expenses may not be worth the effort, just don't go too crazy. Lifestyle creep hurts more for people buying luxury cars, fancy toys or  lavish vacations without working on killing debt and building assets.

[Lithium]

I would go through all your expenses and start by looking at things you can replace for a lower cost with minimal extra effort and inconvenience.  For instance, I use a Verizon MVNO and Sling TV in place of cable (I also mooch off family's Netflix and HBO Go).  Those run me about $60 a month; cable + Verizon would easily be $150 a month.  I've also started using the library rather than buy books online (after which they'll accumulate dust and create extra clutter).

[jfoxcpacfp]

Here are a few tips we have used:

• Sometimes it can help to follow a budget only for one or two categories at a time. Maybe begin with the Kroger/Costco, for example. A hot category for many of our clients is eating out. If you can get one or two areas under control, it may be easier to move on to a comprehensive budget.


• Another idea is to create a spending account for each spouse. The joint checking account is still used as the main account, but include a monthly allowance for each of you to spend on "extras" in your budget.


• Agree on an amount that requires joint permission for spending, whether it is $500 or $5,000.


• Finally, setting aside a time each quarter to go over your budget together helps you to carve out a safe space to discuss money. Otherwise, whoever is "in charge" of the finances will call a meeting only when there is a problem, which often leads to a hostile atmosphere. When you've both agreed to have this meeting, it's not personal, it's business. And take turns being the CFO of the meetings, either year by year or quarter by quarter. It's important for both spouses to understand the finances of your "marriage business", even if only one of you handles the money on a regular basis.

[Donnie]

What are your expenses and what is your income?

As in the WCI post linked above, I don't think high income earners should need to budget.  Budgets are like guard rails: good for minor course corrections, but not necessary for people driving straight down the center of the road and no good for people canon-balling straight into them.  Cutting down on groceries and other things by a few thousand dollars a year by budgeting isn't really going to make a difference in your long term net worth outcome.

[VagabondMD]

Donnie wrote:

What are your expenses and what is your income?

As in the WCI post linked above, I don’t think high income earners should need to budget.  Budgets are like guard rails: good for minor course corrections, but not necessary for people driving straight down the center of the road and no good for people canon-balling straight into them.  Cutting down on groceries and other things by a few thousand dollars a year by budgeting isn’t really going to make a difference in your long term net worth outcome.

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I totally agree with this. Someone with a high income and good financial sense should not need to scrutinize grocery store spending. Chances are, dining out dwarfs spending at the supermarket and is a more logical target for making cuts (if necessary).  Doctors do not run into financial trouble because they spent too much on groceries.

[Noob to WCI]

Thanks for the posts. I think a lot of my issues comes from sticker shock of seeing my annual expense breakdown. This was the first year I actually tracked all my expenses/income with any detail.

My wife is also a physician. But is only working part time during my fellowship and taking additional time off for maternity leave this year (We will be having kid #2).  Total income for 2017 was around 160k. Saved about 15% in 401k's. Put another 15% towards my student loans.

Only debts at the moment are my student loans. Largest variable expenses were groceries/food (18k), shopping (12k), Cars (11k. 5k was paying off car loan and the rest was gas, tires, repairs, ect.)

My main goals are to have expenses under control so I can make the most of my attending salary once I'm done with fellowship in July.  Plan is to pay off student loans ASAP (9k/month and have it paid off in 1.5 yrs) while maxing out 401k and backdoor Roth IRA.

 

[wideopenspaces]

Yeah, you are going to be juuuuuust fine. You have a great plan in place. I would stop worrying right . . . Now ;-) Congrats on the new baby!