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.