Budgeting apps

[Sunset]

When I retire I'll have time to track all the categories.

These days I don't have the time, working for MegaCorp and commuting .

I suggest to you , that precisely because you are working and thinking of retirement,. that now is the time to track spending.

It will be incredibly comforting for you to know precisely over the past X years how much you spend, so as to be able to know for sure when you can retire successfully.

I also found it a pain, until I used the phone app, as I always have the phone with me, and it literally takes 5 seconds to enter the number for a purchase.
Using a phone app is easy and quick.

 

[Cobra9777]

So if you are spending more than your budgeted, your only action is "stop spending so much".

If you used categories you would know why, and could make appropriate specific adjustments.

I get that you may not see the value in doing so. I am trying to explain why I and others perceive value.

I understand the value in certain situations. Before retirement, I tracked categories on a monthly basis. Back then I was trying to tightly control spending in order to maximize saving, with a goal toward ER. I also wanted a detailed understanding of our spending profile headed into ER.

Now in retirement, our non-discretionary is on auto-pilot. There would be very little value in monthly tracking of cell phone, insurance premiums, electric bill, etc. My once-a-year category breakdown is fine for understanding if there have been any changes that either need to be addressed or built into a new baseline.

As I said, we don't constrain our spending to a budget, with the exception of our large discretionary bucket for travel, home improvements, new car, etc. These are large discrete items with no specific timing. We decide on priorities at the beginning of the year and that's the end of it. At that time we're using estimates, so it's not unusual to come in over/under $5K or so, but that evens out over several years.

 

[brett]

Time was an issue for me in the four years leading to early retirement. I did not have the time nor did I see the need to look at anything other than total spend.

That is essentially why I decided simply to track spend at the macro level from a bank account tape. I was somewhat interested in the monthly number, more interested in the quarterly number, but focused on the annual number. The annual total was all that I really cared about. My spouse was of the same view.

The other factor was that we planned a complete change of lifestyle on retirement. The house was going, to be replaced by a condo or HMO of some sort so that we could lock and go. Our clothing requirements would be completely different. The second vehicle would go. Many changes. We saw no reason to estimate these numbers. We knew they would be close so we took our previous annual spent, increased it by 20 percent for inflation and error, and then did our retirement financial assessment.

As it turned out we had far more changes than we anticipated. The annual after tax budget was, to our surprise, just about spot on but the composition was very different. And it changed again after five years when we finally decided to buy again after renting for four years. I may not be able to tell you what we spend on food (nor do I care) but I can tell you what we spend in the year, what we spend on things like utilities, communication, insurance, etc because we shop these from time to time. But the rest...just an educated guess.

One reason that this may have worked for us is that I know numbers, ratios, margins etc.. I worked with them for years and I have a good memory. I know what I paid for a shirt five years or what we paid a household item eight years ago.

 

[Montecfo]

As I said, we don't constrain our spending to a budget, with the exception of our large discretionary bucket for travel, home improvements, new car, etc. These are large discrete items with no specific timing. We decide on priorities at the beginning of the year and that's the end of it. At that time we're using estimates, so it's not unusual to come in over/under $5K or so, but that evens out over several years.

I do get what you are saying. The most important items are the discretionary ones. In the short term I can't easily change my rent, mortgage, cable bill. In the long term virtually all bills have a discretionary element of course.

You do not "constrain " yourself to a budget EXCEPT for the large discretionary bucket.

So you are back to the same point it seems to me. When you have overspent your budget for the large discretionary bucket (which you do track somehow), then you have to say hey, we have overspent the large discretionary bucket. We need to stop spending on large discretionary items.

And at the top of the discretionary bucket is the most discretionary item, travel. Below travel are indeterminate expenditures for other stuff, for which the actual and budget are unknown. So that is your lever, you stop travelling.