Does budgeting change how you spend money?

[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.

 

[audreyh1]

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.

 

[pacergal]

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).

 

[PaunchyPirate]

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.

 

[jollystomper]

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.

 

[easysurfer]

Yes it does for me as much more accurate than my mental note.

 

[FLSUnFIRE]

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.

 

[beachfire]

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.

 

[rodi]

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.)

 

[Gotadimple]

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

 

[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.

 

[Sojourner]

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.

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.

+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.

 

[gayl]

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.

 

[Jerry1]

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.

 

[W2R]

I do not create a budget. But I do meticulously track my spending into categories.

+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.

 

[Gumby]

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.

 

[Gary from Tampa]

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.

 

[scrabbler1]

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.

 

[FlaMariner]

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.

 

[foxfirev5]

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.

 

[REWahoo]

While I do not budget using the textbook definitions of the term, I have for more than 20 years tracked our spending. Looking at historical monthly/annual expenses by category, each December I create a spreadsheet outlining the monthly anticipated expenses in each category for the upcoming year.

This allows me to be sure I have the required funds on hand to pay not only the routine monthly bills, but for lump-sum annual payments for expenses like property taxes and long term care insurance. It also allows me to look at trends by expense category and, over the years, see how our spending has changed due to factors like technology (no more satellite TV or land line phone) and age/health (no more chainsaws, extension ladders or RVs).

It also creates an excellent record of major purchases, repairs and other large expenditures to answer the "when did we buy/do that"?

 

[marko]

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.

+1. Us as well. What we find interesting is that, with rare exceptions, we spend just about the same amount each year but just on different things.

 

[mrfeh]

I do not create a budget. But I do meticulously track my spending into categories.

+1

Spouse and I are frugal by nature, and always had more than enough income, so never really had a budget.

Heading into retirement, we started monitoring our spending via mint. At the end of the year, we total things up to see how/if they have changed from what we expected.

 

[GenXguy]

I have a budget, but I don't really adhere to it. It's more just to show me how much my required expenses are plus what I have left to save or for discretionary spending. I try to keep those required expenses in the budget very close to what those expenses actually are. I don't budget saving or discretionary - that's just the amount left over at the bottom, which I mostly save.

 

[Marita40]

No budget per se. I have a monthly generous "allowance" for myself from savings and live within it. I always know exactly how much is in my account. I'm single, and that helps. It is simple. If I spend too much in the beginning of the month, I stop spending until the next month rolls around. I also have a separate annual travel "allowance."