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making ends meet – the art of reverse budgeting


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This article will tell you how to budget for your household, or more correctly, how to reverse budget your household.  This means that instead of figuring out how much you can spend, you tell yourself how much you have left to spend.  The clock is ticking, and you will be aware of the tradeoffs you make and the implications in your budget.

The steps to reverse budgeting are:

#1 – Figure out your total income

#2 – Figure out total unavoidable expenses.  This includes items such as rent, you cell phone bill, medical expenses that you have no control over whatsoever.  Your income minus your unavoidable expenses will be your Gross Income

#4 – Put aside a small savings.  Build your savings by putting aside a small, set amount of money.

#5 – Plan ahead – put aside some small amount of money for future expenditures.  Put some money aside for the holidays, save money in order to anticipate emancipation costs for your children.  Always include a small cushion of money in case the unexpected happens.

#6 – Spend what you have left.  Whatever is left over at the end of the month, rolls into next month’s spending money.  Use this money to pay for your expenses, weigh if you can afford to go to a movie, or else keep the money and save for an iPod.

For example: If I make ₪ 6,000 a month:

₪ 3000 is put aside immediately to cover rent, electricity, phone, internet and medical expenses.

₪ 300 is put into savings

₪ 200 is put into planning ahead.  I know that the Tishrei will be here in a few months and I will have to pay shul fees, buy a lulav etc.  Also, I want to have some money set aside in case something terrible, God forbid, should happen.

This leaves me with ₪ 2500 to spend on food, transportation, and having fun.

Now let’s say I am deciding to buy a new shirt and tie.  If I do, then that means there will be less money for other items.  If someone can give me a ride to a destination that normally costs me ₪ 20, then I have ₪ 20 more that I can spend.  The important thing is to know how much you have left as all times.  I like to carry around a piece of paper with a number and ever time I spend money I cross out the number on the paper and replace it with how much I have remaining.  This helps me to keep in mind the cost of my spending and  its impact.


  1. Sarah says:

    In item #2, unavoidable expenses, where is food? clothing and shoes for the kids? And what about when you never make it to #6 (“spend what you have left”), because there is already nothing left? The low salaries in Israel make it impossible to manage the high costs (rent and food are not cheap, and are getting more expensive all the time!). How are people managing? Our entertainment budget is zero–we DO live like paupers, and work hard as well, but there is WAY too much month at the end of the money, leading to ever-mounting debt. How do people manage to have sufficient income in this country?

    • jonnydegani says:

      Hi Sara. I understand your frustration; I am currently facing the same issue.
      In terms of budgeting:
      in #2 – unavoidable expenses, you should, once you have an idea of how much, include a minimal food and upkeep amount. The difference between a minimal food amount and a complete food amount is the food amount without the luxuries (ie cookies).
      The low salaries in Israel are a major problem, and in the long run you can only cut back on what you spend or find another source of income. If you are working the maximal amoun, then its time to look into cutting back expenses by, buying lower quality clothes, buying items second hand, and doing whatever you can to save a few shekels here and there. Its a little, but it adds up. (as an aside, I am going to post about how to save when food shopping in a few days.)
      As for paying off bills. I would reccomend the following. Each month, pay the smallest outstanding bill, so that you have less and less bills. Also, call up the companies and ask for an extension in payment. Remember, in Israel, “no” means “not unless you yell”

  2. dov epstein says:

    A recent survey showed that 70% of israelis need overdraft to finish their month. I did better than the 30k overdraft people. I limited my OD to 1200sh/mo, and I always go past, with letters and calls forthcoming. then i have to scramble to pay. These are only for utilities. However…budgeting only works when there is money to budget. If it isn’t there, there’s nothing to talk about.also, reducing one’s financial footprint is limited by necessity. I hardly use heaters, no A/C (what’s that?). Still the bill is high, note that the electric co. raises its rates. try and keep up. Incidentally, my wife who is an expert cook, does just that, creating ex nilos. But , in order to cook, instead of buying prepared foods, one must use gas or electricity. It’s still a trade-off. Our food bill is identical now to what it was 10 years ago, when we had (insert double-digit) all our kids home…:why? because inflation, the biggest lie our gov’t promulgates, has drawn prices upward(I love the gov’t posted annual inflation rates as being under 5%–who are they kidding?)Cutting expenses? No one can cut as much as we have. There is NO disposable income to draw on. Nothing to save. Plying the ‘game” here, meaning “stall, stall, stall” is the only alternative, but at some point crowds with pitchforks and torches will slowly descend on the gov’t , Nat’l Insurance, and all the rest of the sanctioned rip-off artists.

  3. jlajr says:

    As earlier comments do, I think we should look carefully at #2, unavoidable expenses. If you are having trouble making ends meet at the end of the month, then cell phone and internet products and service are absolutely avoidable, as is, for example, owning a car, especially if you bought it with a loan.

    Also, #6, in my opinion, is poor financial advice. I think that considering that money, in your example, NIS 2500/month, as being available to spend is the wrong perspective. Spend as little as possible on food, transportation, and having fun (which does not have to cost any money, by the way), and save and invest as much as you can of that amount.

    The goal should not be how much money you can spend, it should be how much you can save/invest for financial independence, retirement, or whatever you want to call it.

    • jonnydegani says:

      Looking back (it’s been nearly 6 years since I looked at this post), I am become more of a “live and let live as long as you have some kind of budget” kind of guy. Back when i wrote this, I was thinking more about the psychological aspect of needing to live and therefore advise spending the money you have planned for it. Some people like to save more and that is obviously better for retirement, goals etc. The point is that as long as you have son kind of plan you’ll probably be okay, but don’t forget to live in the meantime.

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