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Does budgeting change how you spend money?
01-24-2023, 09:26 AM
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#1
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Full time employment: Posting here.
Join Date: Nov 2020
Posts: 761
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Does budgeting change how you spend money?
I've tried several times over the years to create a budget, but never really kept it up. I guess I'm wondering what would change if I did. My wife and I generally have a frugal mindset - we look for deals, clip coupons, and don't eat out very often, but really just spend as things come up and don't follow a budget.
Would I really save any money by tracking expenses - I don't think so.
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01-24-2023, 09:44 AM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
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Interesting.
Back in our working days we saved a lot and we did budget more carefully and I believe it did change how we spent our money: motivated us to find better deals in recurring expenses for example. Also pointed out when we were spending more than expected in a given category, motivating a drill down to figure out what was going on. It influenced timing as well - waiting to purchase certain things. And I think it did help reduce spending in areas we considered wasteful/low priority.
The most important contribution of tracking expenses all those years and having the data readily available via Quicken was being able to plan for spending in retirement. It was super valuable then.
And since retiring we continue tracking but do really have a detailed budget anymore, but rather an idea of how much we’re likely to spend in very broad categories. Helps manage the cash flow.
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Retired since summer 1999.
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01-24-2023, 09:58 AM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2015
Posts: 5,867
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Budgeting has always been a part of our financial picture, knowing how much we had coming in and what we had to spend, after putting aside savings, for bills and lifestyle choices. We didn't have a lot for a big portion of our marriage and lived a pretty frugal lifestyle.
As audrey1 pointed out, it gives us good information.
I am one of those who has 12 column budget books still on paper, several years back! I always found it helpful to look back on how we spent our income to project for the future.
I finally shredded two old books (about 15 budget years).
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Give a Man a fish, he will eat for a day.
Teach a Man to fish, he will eat for a lifetime.
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01-24-2023, 10:09 AM
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#4
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Thinks s/he gets paid by the post
Join Date: Feb 2014
Location: NW Pennsylvania
Posts: 1,820
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I do not create a budget. But I do meticulously track my spending into categories. It's so easy to do with Quicken, which I have used for years. But I only started the categorization of my spending 2 years prior to my retirement to get a better feel for how much I actually spent while living life. I still do the tracking. It's interesting to me and something that I actually enjoy doing as one of my retirement activities.
But I don't really think it guides or changes how much I choose to spend. I spend on whatever I want/need.
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01-24-2023, 10:26 AM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2012
Posts: 6,181
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When we were younger, in saving mode, with kids at home, it certainly helped us save more, on anything from where we shopped for food, frequency of eating out and where, and where we vacationed and what we spent. Tracking also gave us overall information on our spending patterns that helped make better saving decisions.
Now that we are retired empty nesters in spending mode with about a 1% WR, we do not budget, just look at overall cash flow. But being a numbers person I still finding tracking our spending interesting and worth the little time I spend doing it.
It all depends on the perceived gap between ones income and expenses, and if one feels the need to do something about it.
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FIREd date: June 26, 2018 - "This Happy Feeling, Going Round and Round!" (GQ)
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01-24-2023, 10:28 AM
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#6
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2008
Posts: 13,150
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Yes it does for me as much more accurate than my mental note.
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Have you ever seen a headstone with these words
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01-24-2023, 10:30 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Feb 2019
Location: St Pete
Posts: 1,243
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I create a bogey "budget" (based off of prior spending) to plan cash needs for the year but don't budget in the sense of limiting or having to "find the funds" elsewhere. -There is a part of me that gets pleasure under-spending though! So "budgeting" does not work for me because I'll spend as I spend. However, I've been tracking my expenses since 1998 and I believe the feedback loop does inform and influence my decisions and keeps me honest with myself -I track my diet and exercise for the same reason.
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FIREd 7/2021 at age 47
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01-24-2023, 10:35 AM
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#8
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Recycles dryer sheets
Join Date: May 2017
Posts: 79
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When we were working we had a “savings budget”. Simply set a $ amount that we wanted to save for the year and then spent the rest. Now that we are retired, we have a spending budget. A set $ amount that we are comfortable spending for the year. We are disciplined people and usually spend about 10% less than our plan.
We do track our spending monthly in categories for 2 reasons. 1. We want to make sure we are not drifting and remain on track to hit our annual spending goal. 2. We like to travel and entertain people at our house, so we keep an eye on how we are allocating our spending to be sure it is focused on our priority areas. We find it to be a fun exercise. We are not keeping receipts and logging transactions, simply use a credit card for most all spending, download transactions and categorize stuff at month end.
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01-24-2023, 10:43 AM
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#9
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Moderator
Join Date: Apr 2012
Location: San Diego
Posts: 14,212
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Like several others here we track data... but don't have a defined budget. That said - I tend to compare current spending to previous years just to see if things can be tweaked. Just this morning DH and I were discussing our groceries expense. I was able to pull out last year's, vs previous years, make mental adjustments for when the kids moved out to go to college, etc. It was a useful discussion and the effect of food inflation was noticeable, but not as bad as we expected.
We do budget/plan for big purchases (travel, solar last year, cars... etc.)
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Retired June 2014. No longer an enginerd - now I'm just a nerd.
micro pensions 6%, rental income 20%
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01-24-2023, 10:49 AM
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#10
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Thinks s/he gets paid by the post
Join Date: Feb 2007
Posts: 2,613
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I do define a budget before year-end to determine cash needs for the next year. I also record spending to help with determining cash needs, including on-off spending, like a new laptop this year, or extra travel.
I also determine where the $ are coming from (defined income payments, savings, or investments). If I need to generate cash when I rebalance at the beginning of the year, at least I have a plan. That doesn't mean I can't generate extra cash if I decide to spend, but I don't budget too 'tightly.'
- Rita
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Only got A dimple, would have preferred 2!
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01-24-2023, 10:55 AM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2003
Location: Florida's First Coast
Posts: 7,723
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I do track our spending, but we do not budget, we buy what we want and what we need when we want or need it. Retirement if well planned is not about counting the dollars. It is about doing what one wants when one wants to do it.
Covid put the mockers on that somewhat, but it is what it is.
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"Never Argue With a Fool, Onlookers May Not Be Able To Tell the Difference." - Mark Twain
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01-24-2023, 11:12 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Jan 2012
Posts: 2,593
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Quote:
Originally Posted by qwerty3656
I've tried several times over the years to create a budget, but never really kept it up. I guess I'm wondering what would change if I did. My wife and I generally have a frugal mindset - we look for deals, clip coupons, and don't eat out very often, but really just spend as things come up and don't follow a budget.
Would I really save any money by tracking expenses - I don't think so.
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Quote:
Originally Posted by ShokWaveRider
I do track our spending, but we do not budget, we buy what we want and what we need when we want or need it. Retirement if well planned is not about counting the dollars. It is about doing what one wants when one wants to do it.
Covid put the mockers on that somewhat, but it is what it is.
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+1
I track yearly spending, and DW and I discuss those numbers in relation to our SWR per FIRECalc. If we are under our SWR, all good. If we ever go over (haven't so far!), then it's time for some belt tightening in areas where we were too spendy.
IMHO, meticulous budgeting is probably more well-suited to folks who have consistent trouble LBYM and need a mechanism to help them reign in their spending. This has never been the case for me, as I was always an "over saver" by nature.
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01-24-2023, 11:15 AM
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#13
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Thinks s/he gets paid by the post
Join Date: Jun 2004
Location: Diablo Valley (SF Bay Area)
Posts: 2,705
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I don't actually budget but I auto pay all utilities on 12 month balance pay, charities, gardener, insurances out of my pension. Then I can spend what's leftover .... save SSA for property taxes in December and April (1749×2 which is less than single SSA). That account keeps accruing and I'm trying really hard to spend it rather than gift it to kids.
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01-24-2023, 11:29 AM
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#14
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Moderator
Join Date: Nov 2014
Posts: 9,181
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I only budget to see if my assumed spending is realistic. We track expenses meticulously but I don’t live to the budget. I’d be concerned if I went over budget and would give thought to changing some things so that doesn’t happen two years in a row. However, since retirement, I’ve been spending under my target expenditures. The most likely reason I’d end up going over budget would be a “lumpy” expense. Not much you can do about that as, to me, a lumpy expense, by definition, is unplanned as to timing. Example - I’ve planned for a new roof, but what year I’ll get one is still up in the air.
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01-24-2023, 11:44 AM
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#15
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2007
Location: New Orleans
Posts: 47,500
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Quote:
Originally Posted by PaunchyPirate
I do not create a budget. But I do meticulously track my spending into categories.
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+1 Same here. Tracking my spending keeps me mindful of what I spend and on what. So, just doing that makes me cut back on spending without feeling like I'm missing out on anything.
Another thing that I do when I want to cut back, is to focus on free things to do that are fun for me. Like, playing video games that I already own. That sort of thing.
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Happily retired since 2009, at age 61. Best years of my life by far!
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01-24-2023, 11:50 AM
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#16
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Administrator
Join Date: Apr 2006
Posts: 23,041
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I'm another who meticulously tracks spending but does not budget. We spend what we want. However, the very act of recording all the numbers forces me to think every month about what we are spending on and whether we could do better.
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Living an analog life in the Digital Age.
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01-24-2023, 11:51 AM
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#17
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Dryer sheet wannabe
Join Date: Dec 2022
Posts: 23
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When we retired 14 years ago we attempted a budget. On the first of each month we would check how much we spent the previous month. It only took us about 30 minutes to do, since ALL money coming in and going out was through our checking account. We found that we were consistently about 40% over our budget, but well within our spending guide. After 3 years we stopped checking monthly expenditures and just focus on staying within our annual spending guide.
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01-24-2023, 12:01 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2009
Posts: 6,697
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If by "budget" we mean to limit spending or place a quota on spending, then the answer is "no." If by "budget" we mean to track spending and income flows in advance or throughout or at the end of the year, then the answer is "yes."
Because my cash inflows always exceed my spending, at least on an annual basis but not necessarily on a monthly basis, I do have to make sure I carry forward surpluses from a low-expenses month into a high-expenses month and not mistakenly invest them somewhere and catch myself short.
For example, my current January spending spree will use my my February surplus and some of the March one, so I have to make sure I don't invest my February surplus somewhere, or too much of my March surplus when the time comes.
I have other sources of fat and second-tier emergency funds within my budget and portfolio which act as a further reserve.
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Retired in late 2008 at age 45. Cashed in company stock, bought a lot of shares in a big bond fund and am living nicely off its dividends. IRA, SS, and a pension await me at age 60 and later. No kids, no debts.
"I want my money working for me instead of me working for my money!"
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01-24-2023, 01:38 PM
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#19
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Recycles dryer sheets
Join Date: Dec 2021
Posts: 156
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I track expenses and have budget categories and it's all automated via BofA online banking budgeting tool.
I would not be able to just spend and guess and wonder how things are going and where it is going.
For me, it keeps me swimming "between the buoys" and knowledge is king.
I find that Her Majesty gets into it also and will ask "how are we doing with x this month".....Healthy discussions and mutual goals for us.
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01-24-2023, 01:57 PM
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#20
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Thinks s/he gets paid by the post
Join Date: Mar 2009
Posts: 2,985
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No budget. If the year end checking account balance is close to last years year end balance we won. If our net worth increases it's a bonus.
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Took SS at 62 and hope I live long enough to regret the decision.
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