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YSK that you can/should budget yearly for long term purchases (lemmy.world)
submitted 10 months ago by to c/youshouldknow@lemmy.world
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Most people don't really budget for things that are large on a yearly or even monthly scale, but you can and probably should.

For example, I know that I use my headphones a lot and being without them would be really annoying. Budgeting based on buying them asap because I need them is a really painful way of managing that cost because I can't do anything else at the same time and it is expensive. If instead I set aside a smaller amount while I still have working headphones it is much easier.

My formula for working out the cost is fairly simple. How much does it cost for an item to fill the need? How long do I expect that item to last in the worst case? How much would I therefore need to save per week for that cost to be saved before the current item needs replacement.

My headphones cost around $100. I expect to need replacement not sooner than about 16 months. So I should save $75 per year which works out to less than $2 per week. If I just save $2 per week I will hit my goal of $100 within the year and of something goes wrong earlier I can make the difference up the normal way. If I end up not needing a replacement by the time I hit my goal I can keep saving for a higher cost option or move that saving to another goal to boost that.

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[–] 62 points 10 months ago* (10 children)

What I guess I don't get with this advice is, if you have the ability to save $X per week, why do you need to know about your headphones, why don't you just save $X a week?

I understand that people seem to generally use up their expendable income immediately, but for me, I simply saved whenever I didn't need to buy something. So in the background, without even thinking about it, money just accumulates. And then, when my headphones break, I just use some of that money that accumulated for headphones.

That obviously only works if you have expendable income. But that's what the original advice requires anyway, it requires this ability of $2 savings per week, so the expendable income is already obviously there.

I just feel like it's so much work to do this for every single thing, when instead you could just simply save whatever is "over" your survival needs, and then draw from that fund whenever necessary without thinking about each item individually.

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  • [–] 23 points 10 months ago

    This. Budgeting is a nebulous topic which means a lot of different things in different contexts.

    For a household, if you don't have any surplus then skip "budgeting" and go straight to minimising costs and increasing income where possible. If you do have surplus then, well... save it for something.

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  • [–] 6 points 10 months ago (1 child)

    It is a good teaching tool for budgeting though, especially with kids or people who never have budgeted (which is most people I’ve worked with, sadly).

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  • [–] 3 points 10 months ago

    I didn't budget for much of my adult life because I had barely enough money to get by. That changed,.and I had to learn how to budget because I knew I would still be living hand to mouth if I didn't. No matter how much I made.

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  • [–] 1 point 10 months ago (3 children)

    Yes this post seems to come from a place where savings arent a thing or at least unusual.

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  • [–] [S] 3 points 10 months ago (2 children)

    I come from a poor background, so having any large pot of cash was always risky due to "emergencies" requiring those funds. I got out of that living situation and now finally have more money than my living expenses for the first time. None of my family were actually good with money, so that is the background for this post. So yes, correct.

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  • [–] 1 point 10 months ago (1 child)

    Thought so. Didnt want to sound judgy or anything, many people arent lucky enough to "learn about money" growing up and it sucks. Good for you to be able to afford more than you need for survival now. Dedicated cash pools for your goals or eventual replacements are a good step forward especially for people who arent used to having "spare money" and tend to spend it immediately.

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  • [–] [S] 2 points 10 months ago

    Yeah, lots of people from my background are sensitive about it but honestly, nobody around me understood money and therefore couldn't have taught me. I knew very little about money until later in my adulthood and at that point I didn't have more than I needed. Now I have a little bit of excess and managing that has been a great learning experience.

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