DO you need a budget?

[Gardenarian]

I've been fussing around with receipts and trying to figure out what we spend our money on, and I'm wondering if this is necessary. Our practice has been to be pretty cheap, spend as little as possible, and make sound investments - and our money situation is fine. So do we need to make a budget?
It kind of feels like going on a diet when you're already healthy and fit.
??

[catherine]

Sounds like you don't--unless you're curious about where your money goes, or if you have a specific money goal, like saving up for something and needing to figure out where the money will come from.

Do I need a budget? Oh, yeah. In fact, I use YouNeedABudget. And Mint.com. And Dave Ramsey. And my own Excel spreadsheet. And wall charts showing my declining trend line of debt. And my income goal figure on a dry erase board right in my kitchen.

[ToomuchStuff]

Messing with receipts sounds to me more like tracking all expenditures. Before I ever started my extremely simple budget, I kept a notepad and recorded every purchase for a couple of months. (after the first month it was easy) When I finally started recording things on a computer, I kept track of all spending and started a very limited budget. (x goes to the vehicle fuel and maintenance, y goes toward retirement, z goes towards eatting/groceries/fun money)
As you can see, the categories are not broken down too completely for a DR style budget, but it has worked for me. I think once you have a track record, a budget it simpler to set up.

[ctg492]

Gardenarian, we are similar. That is where we are at and is it a nice place to be.

[Blackdog Lin]

I agree - having a budget helps many people, but if you are doing well without it.....why hassle with one? We are also at that stage of life where we just.....try not to spend money, if we don't have to.

[fidgiegirl]

We have pretty much been operating without a budget, doing the YMOYL tracking and occasionally the 3 questions, but it isn't helping us keep our spending down. We're trying out You Need a Budget and I am hoping it helps us be more forward-looking. However, we are expecting a baby and figuring out how we will pay for daycare and also trying to finish our basement in order to turn it into an AirBNB rental space/guest room (hence why I loved your update and just re-read your whole thread about your cabin). So we're trying to come up with some buck that is already there, but we have to be a bit more disciplined in other areas in order to squeeze it out. Anyway, I think we're probably in two very different stages of life in that regard and in past times when we haven't had an immediate goal, we've just let things be as well.

Is there something you're trying to aim for? College for DD, or something else? What prompted you to want to know where your money is going, any specific reason other than curiosity/maintenance?

[iris lilies]

I have NEVER had a budget, even back in the day when I was a poor student. I don't spend money unless I really want to. DH spend money even less often that I do. That works for us.

Tracking spending is kind of a different thing. I think it's valuable to know where your money is going. Here'a for instance, and it's scary: last month I was thinking to
myself that my charge card bill would be one of the smallest of the year. NOPE! It was, in fact, the largest of the year. Wow, out of touch with reality much?

Tracking brings you into reality.

[pinkytoe]

I tracked all expenditures for one year and it was very insightful and led to changes. Now I just do a monthly tabulation of several categories - mostly out of curiosity at this point. If you are already saving as much as you want to, then no need to budget.

[sweetana3]

We do it every year because it is habit. Been doing the tracking/budgeting since early 80s. But, when it comes to spending we are know so knowledgeable about our finances it is not an issue. We know where we stand and what we can do within our finances.

[SteveinMN]

Never had a budget. There were times we tracked expenses to the penny and times we didn't have to. And times we knew we couldn't spend money on more than essentials. I did track expenses for the several months before I left work to make sure I wasn't living in dreamland. I continue to track expenses because I think it's instructive to know that we spent $8,235.61 on eating out last year (we didn't, but, if we did, it would bear some examination). It's also interesting to know if our electric bill is in line with others like us, and, if it isn't, at least to figure out why not.

Besides, I've never found budgets all that helpful. I think it's better to spend money smartly rather than just some rigid schedule. If one of the cars needs tires, and a good set of tires is $100 a set more expensive than "rim protectors", we find the money somewhere. Sometimes it takes spending money to save it later. We have to live within our means regardless of whether it's divvied out in neat monthly amounts.

If your values and process are such that you don't need to portion money into envelopes or run actuals versus budget in a spreadsheet, you're doing fine. There's no need to complicate things with a written budget.

[Alan]

If your values and process are such that you don't need to portion money into envelopes or run actuals versus budget in a spreadsheet, you're doing fine. There's no need to complicate things with a written budget.

I agree with this. We live below our means and maintain a separate 'rainy day fund' to cover those rare large purchases or unexpected repairs that may come up. Sometimes I consider tracking expenses to better identify any particular expense category that has crept up for some reason, but so far haven't felt the need to do so.

[Spartana]

I've been fussing around with receipts and trying to figure out what we spend our money on, and I'm wondering if this is necessary. Our practice has been to be pretty cheap, spend as little as possible, and make sound investments - and our money situation is fine. So do we need to make a budget?
It kind of feels like going on a diet when you're already healthy and fit.
?? I don't do a budget and I don't track. I just allot myself a certain amount of money each month and live within that amount for my basic expenses. For extras that rarely come up (like getting new brakes on my truck today) I'll use any extra I have left in my allotted amount and then take the rest out of savings if needed. I usually find I have a surplus of money left at the end of each month that gets saved and added into next months allotment to be used as needed (or for fun!), so often have enough there to cover most unexpected or extra things that crop up. So if you can live within a certain amount of money without the fear of overspending, then you probably don't need to budget or even track unless you are interested in knowing what you spend for each thing.

[Gardenarian]

Thanks for your feedback.
After reading your replies, I realize I'm talking about tracking expenses rather than budgeting. For my purposes, a very general list of what we spend per month, and on what, will probably be sufficient.
Does anyone do this for the year, rather than the month? I think it might be simpler for me, as I pay our taxes and insurance (our largest expenses) all at once.

I've been tracking expenses for my vacation rental, which is pretty easy, so it made me think I should try to track all our expenses (which is really a pain in the neck!)

[Birdie]

I have an annual budget that is split into monthly expenses and the irregular expenses. Over the years I made a list of all the irregular expenses I had. The largest being property taxes and insurance (home owners, auto). But I had a lot of smaller amounts that I did not want to include in my monthly budget. So, I eventually ended up with an annual total for the irregular expenses and a separate monthly amount for those expenses.

I am retired and save my income over the year for the next years expenses. I fund each next year in December, separated into 2 buckets. One is for the regular monthly expenses and the rest for the irregular. I've been doing this for enough years to know it works for me. I do have separate savings that would pay for the larger expenses like a new car or a new roof so I do not include them in my annual budget.

[jp1]

I use mint but don't follow it terribly closely. Every few months I go through and categorize the transactions and then look at overall spending patterns. In general I'm not much into shopping, and since we don't own a home or car there are relatively few surprise spends. The one area that can go out of control from time to time is dining and drinking out, which is our main entertainment spending. SO works for a large hotel company so we can stay cheaply and tend to take lots of long weekend trips on a whim. While the hotel is always dirt cheap ($29-$49/night depending on whether it's a Hilton Garden Inn versus a higher end place like a Hilton or Embassy Suites) if I don't keep an eye on expense tracking I tend to forget that going away for the weekend also means eating a lot of meals out and a rental car.

Overall, though, I'm not excessively worried about spending. I save roughly 25-30% of my paycheck on top of putting money into 401k and Roth IRA and SO also saves money on top of 401k so I figure we're doing fine.

[ljevtich]

I have NEVER had a budget, even back in the day when I was a poor student. I don't spend money unless I really want to. DH spend money even less often that I do. That works for us.

Tracking spending is kind of a different thing. I think it's valuable to know where your money is going. Here'a for instance, and it's scary: last month I was thinking to
myself that my charge card bill would be one of the smallest of the year. NOPE! It was, in fact, the largest of the year. Wow, out of touch with reality much?

Tracking brings you into reality.

Totally true for us as well. We track but do not budget.


Thanks for your feedback.
After reading your replies, I realize I'm talking about tracking expenses rather than budgeting. For my purposes, a very general list of what we spend per month, and on what, will probably be sufficient.
Does anyone do this for the year, rather than the month? I think it might be simpler for me, as I pay our taxes and insurance (our largest expenses) all at once.

I've been tracking expenses for my vacation rental, which is pretty easy, so it made me think I should try to track all our expenses (which is really a pain in the neck!)

Once you start doing the tracking, it becomes very simple to do. I usually input grocery receipts, diesel, shopping done, etc. on the days we get the receipt. Then once a week, I go to my online credit cards and check there to make sure what is posted is the same as the receipts. More than likely there are more charges online than receipts because we are online. So I check and make sure of all the expenses.

Within the sheet for the month, I have an expenses section and an income section. These two sections are transferred over to the monthly categories and tallied. I can see how we are doing for the month on this second sheet. And lastly, I have the spreadsheet set up to tally the monthly categories into yearly ones. So I can tell where the money has gone each month.

I have all of this on my website, to keep us honest. However, I do not put the income only the expenses. I might start putting some of the income on - only what we make online each month. I think I might be able to do that starting in 2014.

I think it is a great idea to do it, just because you can see how the numbers are working for you. It gives you a real goal when you have debt and when you are trying to reach financial independence. I'll try to make up a dummy one so that you can see it, but here is a small sample of what we did in 2013: http://www.laura-n-sasha.com/Expenses2013.html

[Teacher Terry]

I have a monthly budget and I check off the items as I pay them. I include regular expenses as well as irregular ones. Instead of paying our property taxes yearly I pay them quarterly. Like many of you we don't have a mortgage. I am sure different things work for different people but this works well for us. I also have a list of long term goals & where the money will come to fund them.

[Gardenarian]

Thanks ljevtich, that's really neat!

I'm finding I really dislike tracking the money. I want it to happen all automatically. I'm looking into some apps like Mint.com to see if they will be helpful.

[ljevtich]

Hey Gardenarian, how far would you need the tracker to work? What I mean is: Say you took a picture of each receipt, picture of the credit card or checks, and put in a few numbers; would that help you track the money?

IF you went to a place like Mint or other for automatic tracking, wouldn't they have to know all of your accounts? And would you feel comfortable with that?