I've tracked my spending and have created a budget, now what do I do with it?
"I'm reminded of a conversation I had regarding food. I used the word 'diet' and got pushback, as I meant it in sense of 'what one eats'. That's what a diet is, what you eat in an average week, month, year. That list has no hidden agenda unless you want it to. If your finances are in good shape, debt under control, savings growing, etc, a budget is more of an observation than a constraint. In the same way that my bookshelf tells you a lot about who I am, books on finance, math, my religion, along with some on English and humor, my budget will also tell you what my values are.  Edit - In a recent speech, regarding Joe Biden, Hillary Clinton said ""He has a saying: ‘Don’t tell me what you value. Show me your budget and I will tell you what you value.’ "" - nearly exactly my thoughts on this.  For the average person, a budget helps to reign in the areas where spending is too high. $500/mo eating out? For the couple hacking away at $30k in credit card debt, that would be an obvious place to cut back. If this brings you happiness, there's little reason to cut back. The budget becomes a reflection of your priorities, and if, at some point in the future, you need to cut back, you'll have a good understanding of where the money is going." Having been in exactly this position (not in a debt hole, built a budget to get a better view of what spending is), I can say what the greatest gift it brings is: it's a decision tool. When you are spending out of only one account, you often make decisions based on the total money in the account. “Should we go out for dinner? Can I make this impulse purchase?” This is terrible, because many, if not all, of those dollars are already intended for certain future expenses like groceries, bills, etc. You can't see how many of those dollars are discretionary. A budget is like having many accounts. Instead of looking at your real account(s) to make spending decisions, you look at your budget lines. You to want impulse buy a gadget — do you have money remaining in a relevant budget line? If yes, the decision is yours, if no, the budget is telling you that you don't have dollars for that.* Similarly for more prosaic purchases — you want to splurge on some non-staple groceries to make a fancy dinner or try out a new recipe, and the budget line for Groceries will tell you if you can do that. Instead of looking at (e.g.) $6000 in a chequing account, you're looking at $600 (assigned) − $146.86 (spend) = $453.14 (available) in a monthly groceries budget line. Just like you can now see where your money has been going, by maintaining and using your budget lines, and having every single dollar you spend go through the budget (to show your totally assigned, total spent, and total remaining), you can continue to see where your money is going in near real-time. You're no longer looking at bills and statements to figure out what's going on and plan, you're looking at money flows and future intentions, as you should be. This approach to budgeting has completely changed our finances. So that's what a budget is for: real-time spending decision-making control over your money, which for us has translated into a lovely mix of painless austerity in spending categories where austerity is smart, and guilt-free spending in more indulgent categories because we have already determined exactly how much we can afford and wish to spend. * A budget line with insufficient funds doesn't actually take the decision entirely away from you though. If a budget line doesn't have funds to spare for a given purchase, you can still make the purchase — but now you're also making the decision to go and revise your budget, taking dollars away from other budget lines to adjust the line you've overspent, to keep the budget accurate. I think the answers you're going to receive are all going to be a bit subjective. Looking at it from a high-level point of view, having this budget nailed down lets you analyze: Now you've got your budget, stick to it! This is really the most important part. You've done your homework, now make sure you don't exceed it without a good reason. If you're under budget in any given month, have a plan on what to do with the excess funds. If you go over budget on a certain area, you can react accordingly.  I, personally, recommend hiring a financial planner. Ours has been a huge help with looking further down the line than we had been originally. If you show up to your first meeting with an FP and have this budgetary breakdown ready to go, you'll probably get a high-five. Well done, you! "Whether you use a professional financial planner or not, the basic steps are the same. It seems like you have done some detailed work on step 1, perhaps less detail (but not necessarily insufficient detail) on step 2, and concluded that you don't need to change anything in step 3. That's fine - if you concluded that you don't need to change anything, then you don't need to change anything! What you need to do from now on is There is nothing complicated or difficult about any of this. To paraphrase Charles Dickens, ""Income greater than expenditure - result, happiness. Income less than expenditure - result misery.""  Talking to a financial planner might encourage you to spend less (though of course you just acquired a new expense, ""buying financial planning advice""), just like joining to Weight Watchers might encourage you to eat less or exercise more. But in the end, it's you who have to take the action - other people can't do it for you." "Use the budget to drive down spending so you can save (for retirement, for college, for expenses) and so you can pay off your mortgage early.  Some, (Dave Ramsey, for example) advocate for an ""Envelope system""...  If your budget says 100 a month for restaurants, then at the beginning of the month, you put 100 into that envelope.  Once you've spent that much on restaurants that month, you're done for the month.  On the other hand, if you don't spend the 100, then you have two choices:  either you can adjust the budget downward and put the money somewhere else (like your Mortgage) or you can build up cash in that account so you can afford a really expensive restaurant in a few months."
What you are describing is called following (or going over) a budget. There is no debt or loans in the scenario you are describing. Simply put a budget is when you allocate a certain amount of your income for expenses in various categories, and a certain amount for savings.  So lets say you earn $100 a month. If you budget $50 in expenses every month, then that means you try not to spend more then $50 a month, and the rest you save. In any given month, you may go over your self-imposed budgeted amount for expenses. That simply means you are over the budgetted amount for that month, but that does not make you 'in debt'. It just means you didn't meet your goal for that month (or whatever time period you created). However, if you do this habitually then you clearly don't have a realistic budget, because the idea behind a budget is a plan that you can realistically meet on a consistent basis. Sometimes you may have to break it, but it should be made in such a way that if you work at it, it is consistently achievable. If not, then you need to rethink your budget. Instead of thinking in terms of taking loans from yourself, I would encourage you to think in terms of saving up for goals and only spending money from those 'goal funds.' In this way, you are not arbitrarily spending money that would instead go into savings, but rather explicitly setting money aside for those goals. This will also help you to see where exactly your money is going and also help you to prioritize your financial goals. I have also tried Mvelopes in the past, and my experiences match yours. I currently use the desktop version of YNAB:You Need a Budget (YNAB 4), and I like it much better.  Where we failed after a while with Mvelopes, we are succeeding with YNAB, and have been now for the last 3.5 years. I don't want this to sound like a commercial for YNAB (I will give important caveats about YNAB later), but here is why I believe we have done better now with YNAB than before with Mvelopes.  I hope that these reasons will be useful to you when you are evaluating your next options. As you said, we also found Mvelopes' interface to be slow and glitchy.  YNAB 4 is a desktop app (with synching capabilities) that we found to be much quicker and easier to work with than Mvelopes' Flash-based interface.  (That was 4 years ago; hopefully Mvelopes has redone their interface since then.)   We also struggled with Mvelopes' connection with our banks.  With YNAB 4, there is no connection to the bank: everything has to be entered manually.  I initially thought this might be worse, but for us it has been better.  I can either enter transactions as they happen on the mobile app, or I can hold on to receipts and enter them every day or two in the evening, categorizing as I go.  We always have an up-to-date picture of our finances, and we don't have to mess with trying to match up downloaded transactions that have been screwed up, duplicated, or are missing. We aren't really using YNAB much differently than we were using Mvelopes, but we have learned a few tricks that I think have contributed to our success.  One of the things we do differently is that I don't obsess about the cash accounts too much.  Cash accounts, for us, are the hardest to keep track of, because most of our cash transactions don't have a receipt: we are paying a friend or family member for something, or leaving a tip, or something like that which we forget about when it comes time to enter into the software.  As a result, the cash account balances get off.  I periodically enter a correcting transaction to get the balances right, and have a budget category specifically for this that we have to put money in for these unknown transactions.  Fortunately for us, our cash spending is a small percent of our total spending (we usually pay with a credit card) so this bit of untracked spending isn't that big of a concern. With YNAB, the current month's budget is right in front of you as soon as you open up the app, which makes it easy to adjust your budget during the month, if necessary.  With Mvelopes (at least how their app worked 4 years ago), the budget was somewhat hidden after you funded your budget categories, and it was a bit of a pain to move money around between categories.  The ability to adjust your budget in the middle of the month is crucial; if you don't do that, you'll get frustrated the first time you find that you don't have enough money in a category for something you need.  YNAB makes it very easy to move money around inside your budget. That having been said, you need to be aware that the current version of YNAB is not a desktop application but a web-based app.  YNAB 4, the old desktop version which we have been using, is officially unsupported as of the end of 2016.  However, I see that it is still available for sale, if you are interested in it, the YNAB4 help site is still up, and the mobile app you would need to work with it on your phone (called YNAB Classic) is still in the app store.   As I said, the current YNAB is now a web app, complete with automatic downloading of transactions from your bank.  I have no experience with it (other than playing around with it a little), and so I can't tell you how quick the interface is or how well the auto-downloading of transactions works. As an alternative, another web-based solution is EveryDollar, from Dave Ramsey's company.  (I have never tried it.)  The advantage of this one is that it is free if you choose not to link it to your banks; the automatic downloading of transactions is a paid feature. I wrote an answer a couple of years ago in which I describe two different approaches that budgeting software packages tend to take.  I'm not familiar with Buxfer, so I don't know which approach it takes, but perhaps that answer will help you evaluate all of your software options. On the behavior side of things, besides the relaxing of the cash accounting I mentioned above, we also involve my wife a little less in the budgeting process than we used to.  (This is by her choice!)  I am the one who enters all the transactions into the software (she hands me all her receipts), I reconcile the accounts at the end of the month, and I set the budget for the next month.  We have been doing this long enough now that she knows what the budget is, and we only need to discuss it if we want to do something different with the budget than we have been doing in the past.  She has the YNAB app on her phone and can see where we are at with all of our budget categories. Since you ask.... How do I do it? My frugality doesn't come from budgeting or even half so much from keeping money away from myself (though mostly-one-way retirement accounts help). It's a matter of world-view. Spending and shopping for things you don't need is a vice. Limit your indulgence in it. I've also made wasteful purchases in my life. When I find myself considering buying something that I don't really need, I ask myself whether it will end up like... like the stupid eyeglass cleaner gadget from the Sharper Image that I used twice. Or the Bluetooth earpiece that spent 98% of its time lost and .02% of its time in my ear. Or the little Sony VAIO laptop which was great on the train, but probably cost 8 times as much as an EeePC and didn't do way too much more. (In my defense on that one, it was just before netbooks were really taking off... but I still felt bad about it the next year). I've also got two savings goals. The first is responsible and very big (financial stability: a year's expenses plus money for a down payment on a house. a California house. in a good neighborhood.) The second is personal and just medium-big (a large musical instrument). I've decided not to spend money on the second until I'm financially stable and I have enough money to take care of the first... so that makes me more willing to scrimp and save to pursue the first than I would be otherwise. Advice for others? Ask yourself: Why are you buying that thing? You can survive without it, can't you? You didn't need it a week ago, did you? Does the old one have holes in it or something? Or will you at least use it regularly, for years? Why aren't you buying the cheaper kind? Or buying it used? "Debt cripples you, it weighs you down and keeps you from living your life the way you want.  Debt prevents you from accomplishing your goals, limits your ability to ""Do"" what you want, ""Have"" what you want, and ""Be"" who you want to be, it constricts your opportunities, and constrains your charity. As you said,  Graduated in May from school.  Student loans are coming due here in January.  Bought a new car recently. The added monthly expenses have me concerned that I am budgeting my money correctly. Awesome! Congratulations.  You need to develop a plan to repay the student loans.  Buying a (new) car before you have planned you budget may have been premature. I currently am spending around 45-50% of my monthly (net)income to cover all   my expenses and living. The left over is pretty discretionary, but things   like eating dinner outside the house and expenses that are abnormal would   come out of this.  My question is what percentage is a safe amount to be   committing to expenses on a monthly basis? Great!  Plan 40-50% for essentials, and decide to spend under 20-30% for lifestyle.  Be frugal here and you could allocate 30-40% for financial priorities. Budget - create a budget divided into three broad categories, control your spending and your life. Goals - a Goal is a dream with a plan. Organize your goals into specific items with timelines, and steps to progress to your goals. You should have three classes of goals, what you want to ""Have"", what you want to ""Do"", and who you want to ""Be""; Ask yourself, what is important to you. Then establish a timeline to achieve each goal.  You should place specific goals or steps into three time blocks, Near (under 3-6 months), medium (under 12 months), and Long (under 24 months).  It is ok to have longer term plans, but establish steps to get to those goals, and place those steps under one of these three timeframes. Example, Good advice I have heard includes keeping housing costs under 25%, keeping vehicle costs under 10%, and paying off debt quickly.  Some advise 10-20% for financial priorities, but I prefer 30-40%.  If you put 10% toward retirement (for now), save 10-20%, and pay 10-20% toward debt, you should make good progress on your student loans." I use iBank for Mac to keep track of my expenses. I also use the iPhone version since they can sync over Wi-Fi and I can capture expenses right on the spot instead of trying to remember what I spent on when I turn on my laptop. Determining how much you should budget to spend on any area of your budget is one of those hard topics to find good information about.  Part of the problem is that everyone has different priorities and needs, and incomes and expenses vary greatly depending upon where you live and your career choices. The best thing you can do is track your spending for 1-3 months (you can use the envelope system if you need to, to track and control how much you spend on miscellaneous things like lunches, coffee, etc).  The precision is important, though you probably dont need to measure to the penny, however you should capture all the areas where you spend money (even if you later gather them into more broad areas). Split your spending into three broad areas, and try to limit the spending for each of those areas to the stated percentages (adjust for your preferences). You state net Income $2600, and you stated you have $1731 of known expenses, so you are spending another $870 on groceries, debt payments, restaurants, unplanned expenses, and emergencies. Essentials (50%,$1300) - rent, transportation, food, utilites Total $972+groceries (you probably spend $400-600 on groceries, so your essentials are higher by $100-300 than you can afford.  You should try to cut your electricity usage ($30-50), and you may be able to find cheaper car insurance (save $20). Financial Priorities (30%,$780) - savings, debt payments Total $376, nearly 15% before you pay for credit cards and savings.  Please focus on paying off your debts (credit cards, window loan, student loans).  You are spending almost 10% of your income on student loans, and you cannot afford much other debt. Lifestyle (20%,$520) Total $279, over 10% of your income on communications!  Please try to cut cellphone, and DirectTV costs, at least until you have reduced debt. Since you have internet, your wife could use a voip provider (vonage, ooma telo, etc) or get an ipod touch and use skype or similar, at least until you get out of debt. You might consider trying to find a way to earn extra money, until you have paid off either the loan for windows, your credit card debt, or one of your student loans. "These sort of issues in structuring your personal finances relative to expenses can get complicated quickly, as your example demonstrates.  I would recommend a solution that reduces duplication as much as possible- and depending on what information you're interested in tracking you could set it up in very different ways. One solution would be to create virtual sub accounts of your assets, and to record the source of money rather than the destination.  Thus, when you do an expense report, you can limit on the ""his"" or ""hers"" asset accounts, and see only the expenses which pertain to those accounts (likewise for liabilities/credit cards). If, on the other hand, you're more interested in a running sum of expenses- rather than create ""Me"" and ""Spouse"" accounts at every leaf of the expense tree, it would make much more sense to create top level accounts for Expenses:His:etc and Expenses:Hers:etc.  Using this model, you could create only the sub expense accounts that apply for each of your spending (with matching account structures for common accounts)." The easiest way to get started on a budget is just to track where you spend your money. If you have set bills each month I would make a category for each of those to make sure you have enough to pay. You can try and split up the remaining income into categories but the easiest way to start is just to track your spending for a month or two. This gives you a birds eye view of what is actually realistic. Start with that total as your preliminary budget and then adjust as you go along to meet other financial goals. We use neobudget.com for tracking our income.