Do I need a budget? (no really, do I??)
Recently, this is a question I have been asking myself, because...I don't really have one!
I mean, I have fixed expenses (rent, for example), and I have a vague idea of how much I want to spend on groceries.
But other than that, I generally am operating on a spend-as-minimally-as-possible plan, which is not really a plan per se.
Is this a problem? I don't even know!
These two post-divorce years have been the first time in my adult life that I have had my financial life all to myself. 🙂 I am a single head of household; I'm the earner, the spender, and the manager.
Since it's just me, I guess I haven't felt the need to hammer out a budget. It's not like I need to compromise with anyone. It's not like I need to prioritize what someone else wants.
And since I am the way that I am (frugal to the core), it's not like I need to rein in my spending (a common reason for budgeting). I also do not need to have a plan in place to rein in anyone else's spending. 😉
So. I routinely spend less than I earn, even without a budget. I have no debt, I have cash on hand, and I am saving for retirement.
So, I don't need a budget to help me be responsible. But I do wonder if perhaps a budget would help me to spend some of my money. Like...what if I had a travel category? Or an Occasional-Out-To-Dinner category?
But do I even need a whole budget to make that happen? What if I just set up a few savings accounts and labeled them with their targeted use?
I don't know; as you can see, I have significantly more questions than answers on this topic.
What do you think?
Do you think that it would be beneficial for me to set up a budget? Or do you think I'm fine carrying on as-is?
And if you do think a budget would be helpful, what benefit do you think it would offer me?
Thank you in advance for your opinions! 🙂
We don't have a budget, but I do track what we spend which I think—since I am frugal at heart—helps keep spending in check.
One thing that I am trying to think about more thoroughly is where I get the highest ROI on spending. For example, on our current trip I am learning that spending out on coffee is a great boost to the experience. I'll gladly skip a sit down dinner and eat a grocery store sandwich or salad... but I love sipping a yummy coffee somewhere. I have zero desire to buy any new jewelry, but I need a new pair of white "fashion" sneakers that I can wear with dresses and shorts. Other years, I would have spent months looking for the right pair second hand. This time, I am going to head to a few stores, hopefully find something on sale, but I will buy new. Because I know I'll wear these shoes into the ground.
Not sure if this comment is actually answering your core question. In your case, I think it has less to do with a budget and more about determining what categories of spending out give the highest return in terms of joy/relief. For example, I think your hiring out lawn care is brilliant! You don't seem to mind cooking most meals at home from scratch, so that's not a place to spend out. But what is something that brings you real joy that CAN be purchased, whether it's in time back in your pocket (like lawn care or a car detailing), or a tangible item (a cute Snoopy sweater).
What an excellent question! I lean towards "yes" but with very, VERY broad categories so you don't have to spend a lot of time tracking i.e essential vs non-essential and you get to determine what falls under those two categories. You could even do quarterly reviews instead of weekly or monthly to lessen the burden. I've been tracking my spending since grad school (2009!!!) and for me and my mind palace it's been a source of reassurance and/or accountability. Also, if one day you want to take a different role, cut your hours, or work in a very different healthcare setting I think a budget gives you the freedom to determine if that switch is feasible. Whatever you choose, it'll be absolutely fine because you are doing AMAZING!!!
I write out a budget on a Google Doc and revise it once or twice a year. I look at bank statements to get a general idea of what we are bringing in and how I'm spending it each month or quarter, then I write out fixed expenses and other (i.e. clothing, eating out) that's more flexible.
It helps me to pull up the pie graphs online on my bank account and credit card to see how I'm really spending. It also helps me when I want to save for something, or pay something off, I figure out how much time I want to take to accomplish this and I put it in the budget.
Something about writing it all down in one place is motivating for me.
Also, since the time my mom had a stroke and we had to figure out her bills, I now print it out every year in case something happens to me and someone might need to do my bills for a while.
Another trick I do when I want to pay something off or save for something is that I pay for a lot of things with my credit card. When I get paid (once a month), I pay that first, and whatever amount is remaining on the day before my paycheck is depositing minus the credit card bill, gets transferred to the loan or savings account.
One of the main reasons I track spending is to get a concrete idea of our annual cost of living, so that I can project that out for retirement planning. I also like to see the cadence of unexpected but sort of expected expenses like appliance repair/replacement, roof repair, car repair. I have a spreadsheet that maps out expenses at a month level for retirement with my current investments feeding into it, and at that level, it's nice to see how much you have for "cost of living" stuff and how much you're able spend on vacation and other pleasures.
I think you need to consider what your priorities are in life (early retirement, buying a house, travelling, skiing, helping the kids etc) and review your budget with this in mind. As you are not a big spender you could think about investing more for an early retirement, or maybe you want to see Lisey in Hawaii more or travel more. I feel this approach would appeal to your frugal heart as it would be a considered, values driven way to spend more (if that's what you decided was needed). Looking forward to seeing how you approach this. Steph
We are in the same boat you are naturally frugal with no reason to rein in expenses. I don't think you need one. Your deficit now is time. So do you want to use your time creating a form that you will then have to add to your mental load to fill out? Why ?
There may come a time where there are other financial tasks that you may need or want to take on that fall under the vague term of wealth management but otherwise give yourself a break. Use your time in more fruitful ways.
There are people who find tracking their money comforting. If that is you it is worth it and completely understandable. But it seems that, at this stage of your life it is not where you are nor where you need to be.
I really like that you've framed the question around the current pain points and whether budgeting makes it better or worse!
As to my advice, I would advocate for creating a travel fund that you regularly feed and save the rest of the budgeting thoughts for when school is done.
I was thinking along the same lines, to be honest, for the present time!
Lol, I retired at 50 and I never had a budget. When I was young and had a low income my "budget" was "don't spend" and as my income grew, I naturally had a surplus so there didn't seem to be any point in defining how much I should spend for each category. Like Elisabeth (HI ELISABETH!) said, I track my spending just so I know where it goes and have a rough idea of how much money I need, but it's all very flexible.
I think that people who have ingrained money skills are pretty much running on "financial autopilot" so there is probably not much benefit to trying to switch to a manual budget process. I think that now that you have a surplus, instead of focusing on money you might be better off focusing on quality of life/fun. You're already doing this with your fun budget and by getting someone to mow your lawn, and I think that you will continue to find areas in your life where it makes sense to spend money instead of effort/time.
We also don’t have a budget. I used to track every penny when we were first married (I’m an engineer and I love a good spreadsheet). But almost 20 years in and five kids later, I just don’t have time to write down every little thing we spend and analyze it. Thankfully we are both savers. For example: I stopped tracking groceries two years ago. I was always well within budget and I haven’t changed my spending habits, I still make all my meals at home, so I’m sure I’m still within budget. I have other things to spend my mental energy on. The same goes for kids clothing and school supplies. I shop sales and secondhand like I used to, but I buy what they need when they need it and don’t stress about the rest.
(I do check out bank and savings statements several times a month and I have a general idea where all the money is going - and as long as money is still flowing into our savings and retirement accounts, then I’m not going to begrudge my husband a coffee or lunch out with friends every once in a while - could we save more? Yes, a budget would probably help us save a few more dollars here and there, but it isn’t worth the energy to do it at this stage of life).
Maybe I’ll go back to a budget when we get closer to retirement and are empty nesters so I have a better idea for retirement if our needs. But for now I’m enjoying the freedom of not thinking too much about it.
A budget is really just a spending plan. Eventually, 100% of your money will get spent, it’s just a question of for what and when. If you feel like you’re having trouble spending money on things you value, then yeah, it makes sense to make a budget that reflects your current values. Are you living the way you want to live? If yes, no need to change anything. If no, this is the perfect time to reevaluate.
My situation is very similar to yours in that I am in sole control of my money and I have no debt. I don't have a budget, either, but I do track my spending. That way I can see trends in how I use my money and can adjust behavior. One thing I changed a few years ago is switching to using my debit card almost exclusively. Even though I was paying off my credit card every month, I found I wasn't as mindful of what I was spending on.
As long as you're investing for your future while you're still paying all your bills, you're fine. Making and then inputting spending info into a budget, whether digital or on paper, can either be easy or an absolute time sucker. I vote go with what works for you. You're very busy at this point in your life and have an excellent hold on your spending, so I'm betting you're also saving for specific purposes such as travel, an emergency fund, and whatever is important to you. Skipping the extra work of entering data could be a good thing. You're good 🙂
I should probably get better at budgeting so I'm more aware of what I'm spending and how much I want to spend. You seem very aware of that already, but perhaps the budget for eating out and similar categories could act as a reminder of money to spend on fun. Having a budget might act as more of a reminder than a savings account - or maybe a savings account would be just as good! I think it depends on personality.