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).
I think you are doing great!! I like your idea of having different accounts for saving/spending on travel, etc. I love that you find joy in the small things, and don't need to spend to make yourself happy! Maybe this type of account would encourage you to dream big also. Like a trip to Europe, or a cruise!
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.
I like the idea to record what bills you pay for a just-in-case scenario. Gonna start doing that!
I agree! I have a document for our representatives that lists all recurring payments, subscriptions and memberships that includes: 1) Who/What, 2) Contact Info, 3) When/Frequency, 4) How (example: automatically via credit card or checking account), and 5) Account # (if applicable).
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!
Yes, yes, yes 1000%. Great advice.
That is a VERY good point about the time issue. Do I want another task? NO.
Perhaps, consider it in the vein of … if this were an assignment in a class I was taking, would it seem like busy work or be of value?
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.
Love the term "financial autopilot"! That fits me to a T!
"Financial autopilot!" Very clever. That's me as well. All our money comes in and goes out of our bank account via EFTs and ACHs. It's been this way for years and I wouldn't change a thing.
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.
Well said, Tarynkay!
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.
Lisa S, I started doing this a few years ago also and find it really does help with mindfulness. I call it living in real time. Also once it’s spent I can let it go and not have the back of mind running total for the cc in my head. I’m all about lessening the mental load!
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.
I operate much as you do - and am a late divorcer (after 47 years, it was more than time). For me, tracking spending is most important. I've used Quicken for over 30 years. I do have specific savings accounts - currently for taxes, for general savings, and one for fun. Which I don't use very often!
You know what, I am so proud of you for starting over after that long. Good for you!!
I'm also single and do not have a written budget. I live life on the cheap, have paid off the house, the car and the roof and just go from month to month saving as much as I can. I have income from 3 pensions and 1 job, used to be 2 jobs, and I have investments as well. I know to keep my expenses as low as possible but all too often an oh-oh comes up. Last summer it was a damaged roof; this year it's a tooth that needs pulling; a few years back it was a totalled car. If I had a budget those things would wreck it I'm what Dave Ramsey would call a free spirit instead of a nerd and written plans don't fit my life. I just instinctly know what I need to do and how much to spend and how much to limit my spending.
On a different note, reading your comment about having to compromise and put your husband's priorities first make me glad I never married. Not sure I could live my life by committee! Sounds like what we talked about when we were discussing group projects at school.
If it ain't broke, don't fix it.
It might be helpful for you to have a sub-budget, such as for retirement or big purchases (Civic!), to help track and encourage progress. Other than that, unless you're missing goals, I can't see a reason to make a change.
As it happens, I'm the same way. "Spend less" is a perfectly functional plan - for me. During my broke (not poor, but broke) period I kept track of every penny but didn't need a budget to stay within my means, even as I was living paycheck to paycheck.
Oo, I love this question. I do not have a budget and haven't for about ten years. I think it's because in the early days of our marriage we had no extra money, and the frugal habits of that time have stayed with us. I keep a close eye on our funds and have savings accounts for the big stuff I know is coming (like summer camps and vacations). But otherwise I know about how much we should be spending in various areas and my husband and I have a sort of internal warning bell when we start spending too much. And we discuss purchases over a certain price. Works for us 🙂
Ah, I only answered the 'what do you think' question. I think you've been managing a household long enough that you know what works for you, and that by all indicators you're doing an excellent job 🙂
I feel like the lazy budget that we use does help with that occasional treat. My husband and I are lucky to be pretty well on the same page when it comes to spending. We typically do our household budget once a year if something big like rent or income changes. We plug in estimates for all fixed cost, and apply a decent buffer for utilities, groceries etc. Then we know how much money to transfer monthly into the household account (Savings go somewhere else). We don't really track ongoing spending, we just check bank statements to spot erroneous charges. Due to the buffer in our estimate, over time the household account tends to accumulate a nice balance, and seeing that number helps me to remember that it's probably time to book a little getaway, or that we can pull the trigger on something nice for the garden etc.
I don't really have a budget, but I have two accounts. One is my fun money account which I use for my hobbies and entertainment guilt free. The other one is a vacation account where I save up all year to take really nice vacations where I don't have to be super frugal. Vacations are important to me because I want to make memories while I still can with my family so I prioritize this account.
Hi Kirsten! I had a budget when I was single (and very cash-strapped!) because it helped me maximize my saving and also gave me a concrete understanding of whether my spending/saving/giving was actually supporting my values. I really like having a plan for things (not just money!) even if I wind up improvising or changing mid-stream. For me it's extremely comforting to sit down and plan out my decisions during a time when I am not stressed or under time pressure. I can think through trade-offs and make sure I'm hitting my true priorities. To me, that's the purpose of a budget, and I still make one every month even though nowadays I have a lot more margin when it comes to money. I find that nowadays budgeting helps me to breath easier when making big discretionary purchases that make sense now that my financial picture is different and that without the support of knowing my true numbers I'd just revert to my old frugal habits. For example, I bought tickets to a Broadway show for my kids and me while we're on vacation--a pretty large outlay of cash that would have been impossible until now. It went against my grain to buy these tickets, but I know that one of my big priorities is to have fun experiences with my kids, and we do have the money (now), so I don't want to miss out just because my habits ingrained from different circumstances make it feel really uncomfortable to spend this much money. Budgeting helps me to make decisions based on rational numbers rather than old patterns, if that makes sense.
People tend to be very against budgets, I've noticed, but budgeting has been awesome for me for almost twenty years. I used to use Mint and now I use Simplifi. I'd probably do Monarch Money if I weren't already entrenched in Simplifi.
I think if it's working for you, it's working.
We have had budgets in the past, but currently do not. We have our household spend listed out so I can tell you what we make and what we spend each month. But that's it. As commerce has shifted away from cash, I find it too overwhelming to keep track of all the spending. We check in a couple times a year to make sure we're on track.
That's good enough for me. I also hate numbers 🙂
After so many years of "spend as little as possible", with a larger income I actually need a better budget to know what to spend and what to save on. I have tried to avoid lifestyle creep, but if I make thoughtful, budgeted choices I can prioritize spending on things I value like travel to see family and friends. So, if you have a a fear that the ingrained saving habit will get in the way of never making choices to spend more, I would think of a budget that takes your goals, values and wants into account.
Another thing I try to think about is to avoid becoming just a worker bee that only thinks of productivity, so I try to nourish things that fill my cup like art, music as well as personal health and well-being. Some of this can be done free or low-cost, other times I choose to spend more money on an experience or equipment. A budget would help to make me feel less guilty on spending on some of these items.
We haven't had a budget since back when all bills had to be paid by either cash or check.* I feel like budgets are great tools for beginning earners and those with monetary constraints. It's important to learn how much you make versus how much you spend and to adjust accordingly. Once you figure this out, unless you're a spreadsheet nerd, a budget is not necessarily required.
*I find it slightly hilarious that checks actually seem to be making a comeback.
They are? What's the reason?
I find that I'm using checks to get away from the "credit card convenience fee." The places I'm using it don't consider me using my debit card as a non-credit-card transaction, so a check it is!
@WilliamB, checks making a comeback is a bit of a surprise to me, too! But I bought a house four years ago that has needed a fair amount of work, and the companies I've used often prefer checks. They can avoid the credit card fees that way (and they typically pass the savings on to me), so I'm here for it. Although, and I never thought I'd say this, I think I need to reorder checks soon....
My dentist office asks for check payment if possible!
I've had a budget since age 14 when I got a regular job. I didn't know who Dave Ramsey was, but I did have "envelopes" or specific bank accounts for car, college and fun. When I turned 15, bought my car, then had a budget for upkeep, insurance and fuel.
When I turned 17, after scholarships, I budgeted rent, utilities and a fun account for travel and concerts.
When I graduated, got a better job, rent budget went down (roommates), saved harder for house, bought one and then roomies were paying me rent.
Now that I'm retired, I have a tax account, farm operating account, house account, fun account. The fun account was for travel, but I can't really travel now that mom needs me, so it is invested to grow (last year it grew at 25.92%). Budget your goals is what Gramps always encouraged. I listened! He was a self made business man.
I've been frugal practically since birth, and have a hard time budgeting. My brain has a hard time predicting the future, and budgeting feels a lot like that to me. I prefer tracking my spending and then having a general sense of where I need to tighten the reins.
I think it totally depends on the individual situation! I think in your case, you're probably fine without one - however a budget can also be a nice tool to know WHERE your money is going and just have the data on what you're spending where over time.
For my family a budget is essential with costs being a lot higher than they used to be. Most of our dollars these days are accounted for in bills and other essential costs. I budget very strictly for groceries these days and plan every single one of our meals pretty much. We are just in a place economically where our bills have gone up but not our income, and to absolutely ensure that we are not over spending we have to budget. At the same time I am working to minimize unfixed expenses. We also don't pay for a lot of extras so we don't have much we can eliminate. My side business pays for a lot of our extras and even that may have to go to essentials soon if things get worse.
I would say a budget is a good idea - not to set boundaries for yourself but to set dreams for yourself.
When you are finished with school and have more experience in your job you will look around and say . . . What is possible? A budget can help clarify. You will want to buy a house but what kind of house? Rather than say, "What can I afford?" you can ask "What do I want in a perfect world?" Travel, experiences, future gifts for you children, grandchildren, these will all be possible over the long term.
I have a River House budget. I spent most of my stock market gains in the last two years on visiting all 7 continents.Still, I have enough to live on, an IRA and an emergency fund. The next big goal is all the 63 National Parks. I have about 40% currently completed.
I think that's a good way of looking at it; a budget to help me expand my horizons a little.
I was going to suggest the same thing, or even the Ramit Sethi concept; what is your rich life? You get to frame that up all on your own. When you think you know what you want your future to look like ( you’ve made a great start on that ) that will help you decide where your money needs to go to make the vision a reality. Good luck! The hardest part is behind you .
This is really awesome, Mary Ann. Good for you!
It is so interesting -- and affirming -- that most frugal people, in this group at least, do not have a budget. I myself track my spending religiously, so I know where my money went. Forecasting the future is trickier. You have a general idea, based on your past spending, but there are always surprises, so I go with the flow. Basically, like others, I try to spend as little as possible and sweep what's left into savings, and that covers surprises and adjustments.
I think you are doing AOK.
I do not have a budget. I am the same- no risk of impulse spending here!
I’ve found creating a fun money fund for me doesn’t work. It’s just not my thing. We are all different!
I am also single (divorced, no kids), and I no longer have a household budget. I do plan my paychecks so I know which fixed expenses get paid from which check, and know what the leftover wiggle is. If I think I'm doing too much, I will review my spending and sort it into some categories - and usually I realize I'm fine, or need to plan better for xyz. That said,... Inflation and wage stagnation have been SO challenging as the sole earner! This is a season where money doesn't stack. I'm just trying to keep my savings from leaving, too.
I think many people (& I used to think this also), think of the word “budget” as synonymous with restrictions and limitations. However, I agree with the commenter who describes a budget as a spending plan. It is simply listing out how much money is coming in, where it’s going (saving, spending, etc). I find it quite freeing and as a natural saver/frugal person, it is a way to give permission to spend guilt free in certain areas. I also like to look at things in percentages (what % of income is going toward housing, savings, etc). Regardless of anyone’s income amount, this can be a helpful tool!
I think having a good idea of expenditures is a good thing and you already have that.
After raising 4 kids, I think you’ve got this handled!!
I would say you might benefit from a once a month dinner out for yourself! AND you have that FUN MONEY category already,right? Maybe just socking away something for travel.I am 72, and I wish I had done MORE traveling in my 50’s!!It gets harder in a bunch of different ways.
Soo.. I’d love to see you enjoying your income just a tad more.. on splurges that fulfill you! You have earned it!!
I swear by having a budget. We would have had a hard time making big purchases without being able to look at a budget and know exactly where we stand. It's been crucial when deciding moves and job changes, vacations, home repairs, car purchases, etc. Looking at a bank balance, even if it seems large-ish, stresses out my brain because I know plenty of it is already earmarked for things and I find it mentally taxing to try to remember everything we already have planned with our money if it's not recorded in a clear way. We learned early on that we feel much better about decisions when we already have a record of our plan for every dollar. We've used YNAB for over 10 years and not only does it help with forward planning for our financial priorities, it's also been really great to have the history to look up when certain purchases were made in the past and how much they were, etc. For us, having a budget really helps us spend our money in line with our priorities and it GREATLY reduces the stress of making money decisions.
I really think everyone needs a budget frugal or not.
There's accountability to yourself seeing it clearly in black and white. It doesn't have to be complicated so a basic budget would do.
My circumstances are similar to yours on a lot of ways. I DO NOT have a budget. Like you I'm frugal to the core. I have sinking funds for things like car repair and vacation. I seldom use them. (I took a 10-day trip to visit some friends in the South (SC, NC, TN) in 2022. It seems like just yesterday. There is enough money in the fund for several vacations but I DO NOT have wanderlust. I'm a homebody.
I get along without a budget, and I think you can too.
I think a budget can be useful for reasons of encouraging you to spend money on certain things you might not think of, or might otherwise feel guilty about spending. For example: this month our electric bill was very low, which leaves me about $100 extra in that budget. Now, I could roll that into next month's budget, but instead I'm using that money to get our AC unit inspected before summer temperatures get insane. Because it will be much cheaper (and convenient) to get a tune-up now and head off any issues than waiting for something to go wrong when it's miserably hot outside. Surplus budget reminds me to do maintenance, or encourages me to make needed upgrades (like replacing torn through dishrags when I have an excess in my home supplies budget). Or I might treat the kids to snacks they like because I have more grocery budget than I thought left for the month. I like being able to see where the money goes each month.
I think that short-term, it's probably fine not to. You aren't paying for children's clothes or tuition or anything like that. It's just you! And you do great at staying within your means. But if you have any future financial goals, then I would think it's worth a strong consideration. And perhaps the process alone would help in thinking through what those goals would be.
My personal thoughts are that you don’t need a budget. You are doing fine just as is, and don’t need to complicate your life with more “categories”. Being debt free is indeed, very freeing, and if you need money, for say health care for your cat, or yourself, I’m sure you have enough savings to cover that comfortably. I assume you have the necessary three months expenses set aside in case you suddenly lose your employment or need a leave of absence. You have worked very hard to put yourself in this comfortable position, and I congratulate you for that! I’m like you in the way that it is harder for me to spend money on myself. I have no desire to accumulate more things, and when I want to do something fun, it is on experiences, not things!
I do not have a "budget." I grew up in budget world and have tried so many different systems. None work for my brain. What I do have is a monthly planner that I sit down with on a weekly basis and record my income on payday (I get paid weekly, it is weird), and write down all the expenses I have paid in the last week. I have all my fixed expenses mapped out on a page that moves through my planner so I can see what's coming up in relation to what's in my accounts. Some people say paying with cash makes you more aware of your spending. For me, it's simply writing things down.
I've recently been thinking deeply about "budget culture" and how desperately I've wanted budgets to work for me and they simply do not. And I think people just need the freedom to find the best way for themselves to track how much money they get, have, spend; and what their savings/retirement goals are. The "right" way to do this is the one that works for a person's brain, not the one that fits a particular millionaires (😬😬😬) model.
This is a timely topic for our family, as DH has decided to retire this fall and I am *definitely* going back to nursing school! (Got my invite for the Spring 2027 cohort last week!) We have a good sum saved up, but up till now I haven't really been on a budget, unless you count trying to only use my Amazon rewards points for buying books, ha. I am NOT naturally frugal, unless you count not liking to shop for clothes, so I actually need a budget to keep my spending in check. If we stick to our budget, then we should be able to make our savings last ten years, even with paying for tuition for the kids and myself.
I think there are times you need a budget and times you may not. I do wish I had grown up with parents who knew how to budget, or who wanted to budget. My mom would just go spend whatever she wanted using one of her many, many store credit cards. I remember once seeing my dad sig
Ugh, I meant to delete the last half of that! And then I forgot. But I might as well complete the thought. My mom would spend because if she could spend and buy things, it meant she wasn't poor anymore, and my dad would sigh about the bills but not "begrudge her anything" as she put it. He grew up pretty well off, and my mom did not. I never learned anything about budgeting growing up!
Ooooh, that is exciting! Yay for nursing school for you!
Congratulations on your acceptance!
Yes, congratulations on moving ahead with your nursing career! Between that and your husband's upcoming retirement, sounds like exciting changes ahead..
I am not sure if having an actual budget would encourage me (or you) to spend more money. I also have the challenge that I sometimes tend to rather save money than to use it for something fun (or helpful). For example eating out. What helps me is imaging that I not only spend money but I do invest it. I invest it in someone's business, in neighbourhood, our city (via the taxes which the restaurant hopefully pays). For example there is only one small restaurant in walking distance where I live. The food is nothing special (pizza which I could make on my own, order somewhere else, etc.). But the owners are really nice and I love to have a restaurant close to me. It makes the neighbourhood more attractive. I therefore make an effort we eat there every other month or so during season (they are closed from December to end of February). Of course I do it because I have the money in my imaginary budget. I would cut it down if I would save money for -lets say- a renovation of my kitchen. But I would still try to make it there once in a while.
Lina,
I like how you prioritize supporting nearby small businesses that make your neighborhood a better place. Kudos to you!
Yes, but change from ‘budget’ to financial plan. Have one savings but keep a spreadsheet that tracks your ‘buckets’ such as for travel. Keep spreadsheet that tracks your retirement quarterly. You often talk about motivators and how being frugal can be fun. Having a financial plan that is visual and trackable is a great motivator, pat on the back and fun. I continue this even though I am beyond needing a budget. I LOVE looking at the progress.
I'm team no-budget. Even as a married household, we've just setup savings subaccounts that get $ transferred in each month for things like insurance, property tax, car, home maintenance, vacation, whatever. It's there when we need it and grows when we don't.
This is what we do!
No, you do not need a budget. A budget is a tool like any other; if your goal is to get dinner on the table daily and you're doing it without struggle but you don't have a multi-cooker, you do not need to go buy one just because most frugal people use multi-cookers.
I think budgets are super helpful if spending feels out of control or if the stakes are high--if someone has no finacial wiggle room, then a budget can be necessary to avoid debt. But a lot of people with higher incomes don't have budgets. Maybe this makes me sound horribly out-of-touch, but I've never really had one. I've tracked my spending and made adjustments to my buying habits, but I've never assigned myself "you have X amount to spend on Y category." I pay my fixed expenses, save money for short/mid/long-term goals, and the rest can be spent. Regular frugal habits go a long way.
You definitely need a travel fund. Money SET ASIDE for travel. If you use cash a lot, put the change in a jar for starters. The travel fund can be used for yourself or to bring someone to you.
I loved reading everyones comments! What worked for me: I tracked all my spending for the year without a budget and then used my monthly averages for each category to set my budget for the next year. I dont make a huge effort to stick closely within the budgets but it is helpful to me to have some guidelines so I can make decisions on purchases throughout the year. I like to log my income/expenses by hand as part of my weekly review process bc it keeps me more mindful of what I spend on.
I never could make a budget work, because I can't predict what exactly expenses will be. There's always something to be done for the house, vehicles, groceries going up, etc. But I like to track where all the money goes once it is spent! If I do want to cut back in an area, then I know exactly what was spent the last month, year, etc. I also like that it gives me the exact amount I have leftover for the values based spending: travel, staycations with family, date nights, hobbies, early retirement savings. The Frugalwoods had an interesting post many years ago about thinking of spending as little as possible on essentials so they could fund early retirement. It's the post "Why We Don’t Micromanage Our Money".
I have no advice for you, but I am interested to see what you land on and why.
I have also never budgeted. My husband and I are very frugal, and therefore do not need the limits of budget. I tried "real" budgeting once or twice, but didn't like the stress it created when an unexpected medical bill or extra gas stop came up.
Instead, what I have done for years is: each month, list out what is coming out of the checking account the next month. This list includes our mortgage, any checks coming out, automatic savings, and our credit card bill payment (which is basically groceries and gas from the previous month). Then I tabulate what is coming in and take a distribution from our business if I need to balance things out. During said month I tick off each expense as it hits our checking account. It gives me insight, predictability, and control without me having to fool with whether we will budget $200 or $220 for gas. It's all done on a piece of paper that sits on my desk too. I think keeping it low-tech makes it feel more simple as well.
I've been poor and I've been comfortable, and having a budget was a way to target future spending. I didn't want to have a pay for a car repair and sacrifice a weekend away I'd been planning. Did I have enough for both -- not always, so a budget helped. A financial advisor will suggest to put away the equivalent of a car payment every month to be ready for the next car; that's extreme, I know, if you do that for all your major spending areas, I think you could use a series of saving accounts, which might be as inconvenient and old-fashioned as putting cash in envelopes in a kitchen drawer. See what your current banks are offering as part of their customer-service-on-line accounts.
I don't have a budget either. I track expenses carefully, I know what we'll likely spend, and I make sure there's money in the account to pay the bills that come in. at this point in my (57) I don't worry that I'll splurge on something silly; I'm focused on retirement in the foreseeable future and have a good plan to get there that I follow.
Keep doing what you're doing, Sweetie. Budget or not, you are a total inspiration to all of us. Don't try and add any more organization to your plate that will give you grief for no reason.
Those special accounts have a way of giving you permission to spend money on those items. That's the possible benefit I see for you.
Yup; sometimes we frugal people have a hard time giving ourselves permission!
I think you do pretty much have a budget that you carry in your head. Like, for example, how you have been allocating fun money to yourself every month and keeping track of the amount you have left. Or how you track your food spending and are aware of when you expect to have to stock up based on how much you've been spending. I agree that you don't need a budget to reign in any spending above your means, but I also think it can be helpful to be sure that your spending is matching up with your priorities.
'Chiquita only contributes cuteness'
she certainly does!
Keep track of where it goes, then you will know what you need, and when you will need it.
car registration, insurance, taxes,
I do not budget per se, but I generally know what is in my various checking/savings accounts, keep track of when bills are due (I do not like late fees!!), and do make regular automatic deposits into accounts like oportun, plynk, and the like. I like painless ways to save for things that are important to me.
You do not need a budget... Your financial situation is steady and building. Do you have a vacation account?
We have a loose budget: the household bills are consistent, they get paid first. I save 10% of my monthly income, plus I pay into a pension.
My partner and I have separate finances. He makes double what I do. He buys the groceries and sends me money towards the bills each month. We also share the costs of the house renovations.
The only debt I have is a car payment ( 19 months left to go). He has no debt, and his car payment is done, so he switched the money to an RRSP. He has other savings as well.
I have saving categories:
Emergency
Pet ( when we are ready for a new dog, I want to have the money saved for the vet, grooming, etc)
Christmas/birthday
Vacation
( I'll open another one for car when it's paid off).
My biggest realization this past month was if I use my debit card/credit card to make a purchase is that I need to transfer the money immediately.
I am frugal but I also like nice / good quality items. Somethings I buy new, others used.
I think having a budget will help you use your money better.
It's almost like a game..see how much I can do with a smaller amount so I have more to do the big things. It doesn't need to be super detailed if you don't want it to be. But I think it's a good idea to occasionally add up different categories in your spending to see how well you're using what you have.
We don’t have a “budget”. We do care a lot about saving for retirement and big expenditures. Instead of a budget we have a savings goal each year (I track this in a very simple spreadsheet). For big expenditures we have automatic transfers from our checking account to a few specific savings account (travel, home repair, car repair, personal allowances). As we spend in these categories we reimburse the checking account periodically (maybe once or twice a year). To me the purpose of a budget is to 1) make sure you aren’t spending more than you earn which we don’t have a problem with and 2) making progress to financial goals, which we take care of by tracking savings. As long as we’re meeting our savings goals we’ve decided we don’t care so much about how we’re spending the rest. And tracking all of our spending took a lot of time for me and I really hated it so I haven’t done it in a long time. I do occasionally look through our transactions and my husband has alerts for purchases so he can catch anything fraudulent.
Edited to say: everyone is different and for me I built this process because tracking was doing more harm than good for me. I tend to over optimize and I have tangled a lot of worth and emotion into how I spend money. I’m working on that (and I’ve had to actively coach myself to spend money instead of just squirrel it away!) I grew up in a financially strapped household and the first 10 years of our marriage we were in medical training so I think that has contributed to too much focus on saving. I probably could spend less money if I tracked my spending but I’d think about everything too much and it just isn’t good for me.
This is a great topic. I myself don't have a budget, however every month I go through my entire debits and credits and total everything up. This gives me a reasonable idea of how much I'm worth. This includes all of my retirement funds too. It's interesting, since you're so frugal, it doesn't seem necessary to have an actual budget, but it is a good idea to have an overview.
No, you don't. You already "budget"!
I have alway thought you were more of a Spending Plan kind of person. You have your fixed expenses all locked in and you have an idea of how much you want to spend for the adjustables like groceries and gas. But if a deal comes oyur way you will determine if it is good enough to go ahead and buy. This is why some weeks you plan and stock up but it just doesn't happen.
I have a budget (spending down debt and extra life insurance) a spending plan and special accts (Christmas, Car, and General Savings. I break everything down and account for everything. I have goals I need to fulfill: retirement, living arrangements for a special needs family member, pay off my home.
Not a contribution to the questions at hand...but "Chiquita only contributes cuteness" LOL LOL LOL and so true of our pets.
We have not had a line-item budget for a long time. I do track spending in certain categories and there's a maximum amount I mentally allot for each, based on a lot of experience as to our needs. Most of the time it works out, although there are things like the month the cat was seriously ill and I way overspent on various cat foods to get her to eat.
We don't have a budget per se either. I will be doing one when I actually retire (I plan to ease into retirement). We've both always known when we need to tighten our belts (which became less and less over time).
I already had funds earmarked for a new roof as it would need to be replaced after I retired. A storm took care of that budget line item so odds are those funds will be repurposed.
I also know vehicle maintenance, tree service, driveway sealing, appliances, HVAC/water heater/possibly softener will be costs during retirement. The shelf life of appliances is not that great. Plus being on a well I buy water thrifty washer/dishwasher.
So if you plan on buying a house, I'd earmark monies for down payment/being a homeowner again.
But I'd also budget for retirement proper. And if you are offered disability thru your job, please take advantage of that benefit.
Perhaps a budget isn't necessarily needed, but I do recommend an annual deep dive into your financial picture ~ looking at recurring charges/subscriptions, insurance premiums (auto/renters/health/life), retirement contributions, etc. to see areas you can tweak in order to take full advantage of stretching your dollar. Are you missing any discounts you qualify for? Are all of your insurance coverages adequate for your needs? Do you have a recurring charge for a subscription you don't want any longer? So, while a monthly budget may not be needed, an annual deep drive review could be quite beneficial.
Hello,
I’m also a frugal person; however, I’ve learned to read all the food packages at Aldi. Quite a bit of the items there are bioengineered. Being frugal allows me to have a membership at a cooperative market. When things go on sale I’ll buy a couple. It’s surprisingly almost the same cost and much healthier. Plus, it just feels like a nice thing to do for myself. I also pay myself first. Working is harder if you can’t have a small treat sometimes. You have all the tools, so I doubt you need a budget. You won’t overspend.
What a nice "problem" to have! When it's time to budget for something big (a house? a big trip?) I know you will do it. But if you're good with it now, it's wonderful to see you . . . relaxed. Enjoy.
Life is short. I am a firm believer in eating dessert first, so long as outgoings are covered, what is the point in counting every cent? Enjoy today, tomorrow is not promised! You seem to be managing very well, so I would not bother about keeping to a budget. Just enjoy each day as it comes!
My approach isn't really having a budget per se. However, as others have noted, I do track expenses. More importantly, I have a separate money market account that I've subdivided into a bunch of escrow accounts. Those are things like `cat medical', `car insurance', `bulk food', `property tax', and so on (there are thirteen overall). Essentially, each one is a recurring but non-monthly expense, with at least roughly predictable amounts. I take the annual amount for each category, divide by twelve, and put that much into that escrow account each month. The effect is that I'm making everything a monthly expense (property tax is the equivalent of rent, for example), and therefore predictable instead of a huge amount every N months. The trick is identifying every such expense and divvying them up into the relevant categories (subscriptions, memberships, and filters for the cat fountains all go under `periodics', for example). I keep finding more over time....
Hehe, I love how several of your categories are cat related. 😉
I don't think a budget is always necessary. If you're doing fine without one, aren't in debt, no looming bug expenses and your net worth is increasing, a budget isn't necessary.
I've had times where I budget to the penny and times where I am very loose with it. I find a budget extremely useful if I have a specific goal (I first budgeted to get out of debt, then stay out of debt, then to replace a roof). I currently live on a small monthly income, so I track closely. I think with your brand new amazing car paid and since you don't have to worry about looming house repairs and without debt, a loose budget is fine. I will say that having a pulse on a budget and checking my accounts against expenses has allowed me to realize my account was compromised, so there is one benefit of close tracking. I find budgets freeing and I feel less stressed knowing where my money is going.
In my previous life, I talked with people a lot about budgets. I can't tell you how many people consider new tires or oil changes or kid's school supplies 'unexpected'. I have a relative with a paid off house and they scramble yearly to pay their property taxes instead of setting aside money monthly for it. You have a great pulse on your expenses, so you're ahead of most.
All I can say is retirement. yes you have your work account but I feel a Roth IRA or an account with Vanguard et al would be of help to you in the long run. You can still travel frugally but build up retirement savings.
That's all I got to say about that.
When I was alone my friend who taught me about stocks created a budget for me. But the hubby didn't want one. So, we don't have one. I can't decide if they are necessary or not. Am on the fence.
My Zozo graduated High School today. What a milestone. There were so many grads. They were called by majors and of course her cartooning class was dead last. So proud of her. We had lunch at Margaritaville in Times Square. It was very nice.
There were two politicians there who spoke and two alumns who spoke. One alumn from 2010 is a very popular teacher there. The High School of Art and Design is a very impressive place. This post did not show up in my email at all today. I googled it.
I’m in the very aware of my financial picture camp … not so much the budget camp. In my leanest years, including divorced with 2 children, I was very concerned about what my income was and the needs that had to be met. There were months when I knew I could only afford one tank of gas, for example. That meant no extra rides here and there and me riding my bike if the weather allowed. If I earned some extra money, I would set it aside for a special project. I also set aside money on a monthly basis to cover known expenses. I was responsible for half the travel expenses for the kids to see their dad. If I didn’t need everything, then we had extra for something else. In an effort to avoid surprises, I put my utility bills on the pay a certain amount each month based on the yearly total plan.
Nowadays, things are not lean; but, I am still frugal in many ways. And, in all honesty, not so frugal in others. Even that, though, is really being generous with others. Those deeply ingrained frugal ways simply won’t go away. I no longer worry about money and sometimes pinch myself because it’s not an issue. I know it’s not that way for everyone.
Meal planning, though is a non-debatable must do! Even when it’s just me, I meal plan. That’s where I expend my “budgeting” energy.
A record of all expenses would be useful. We can get into expensive habits, the odd coffee out to meet with friends can become a large annual expense. Are you saving for replacing household appliances, a house repair, an unexpected bill, and as a buffer against price rises?
Saving for a rainy day. For a farm labourer, a rainy day meant a day with no work, no money for food for the family, for rent, and a few wet weeks would make them destitute.
I'm not sure you need a budget but I do think you need to make sure you're clear about and doing the things that make you happy. Make absolute sure you have travel and hobbies going on as much as humanly possible. None of us will be here forever so carpe diem! Work and school and saving money does not a life make. Take time and money to feed your soul. Lots. I'm finding in retirement that many of my women friends are lost because they never figured this out. It's very important to know who you are in this way.
I have been living a frugal life since the mid-1990s, getting married, having and raising two kids to adulthood, working and running a household. I did it not by having a budget. I did it by living below our means, watching every purchase, buying preowned whenever possible, saving to pay off our mortgage early. We am now retired and living debt-free. I see the value of a budget for some people but I didn’t need one. I was laser-focused on saving money.
I don't do a budget, either. Someday, that will be more important for me than it is now, but my general groove is thrift, so I'm not worried about it. I also save a lot of my paycheck each month, pay attention to sales, do without and use what I have, and contribute to a 403B. I have wiggle room which = living my life in a way that makes me happy and content. I say, if you have a method that works for you, use it.
I do not have a formal budget and have not thought one was necessary because my savings rate from my salary (including for retirement)is reasonable. I am more in the category of needing to tell myself it is fine to indulge occasionally for my comfort or enjoyment. I do monitor my expenses regularly, especially those that are put on credit cards in order to earn points. Sometimes there is a recurring charge that I realize I no longer need or want. Having said this, I recently had to take on significant expenses for a family member and to make sure I had enough money, I cut back on some other spending categories. After a year, I realized that I could handle both the family obligations and other expenditures, including for charity. Maybe I would have known that immediately with a budget? Still, overall, in the situation where you are working hard and not having a lot of time to spend money, in addition to having frugal instincts, it seems that you could safely continue with the oversight of broad spending categories you have now, without having to create a detailed budget.
Your life is a budget so I don’t think you need to set up one.
Have never had a budget. I jsut spend what I have to on housing etc and an minimal with everything else. When I was in my 20's my best friend, who had 10K in credit card debt, had a budget that allowed her $40/week for entertainment spending. When we would be out in the city center and visiting record stores (this was the 90's) she would often buy a couple of random CD's becasue "she had not spent all of her entertainment budget". I was dumfounded and tried to tell her she would be better off putting that money to her credit card instead, to no avail!