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You are internalizing your budgeting by tracking spend vs income on a regular basis.
You might want a formal budget when you want to plan for something that can’t be paid in one period: a car, a house, a family. Setting a goal without forecasting how long it will take and how you could make choices to accelerate the execution of these plans is simplified by using a budget.
Budgeting is useful for people that waste money. Since most people are wasteful, most people benefit from budgeting.
I don’t really enjoy buying stuff I don’t need, so a budget would not be useful for me.
> [I] Max out tax advantaged stuff
> I don’t have a budget.
You clearly have more income than expenses. In that scenario no one needs a budget. Budgets are for people who have more expenses than income. Budgets are for people who have to prioritize expense A over expense B.
> I just make sure my net worth grows each week.
Also, this is a form of budgeting. Just a very loose and informal system.
i think many budgeters would disagree with you about 'who budgets are for'. i have a friend that budgets, he has more income than expense. but he also spends $1k/mo on restaurants sometimes and he finds that regretful, so he started budgeting.
I might be in a similar situation to your friend then. Your friend, assuming they’re putting an adequate amount of money into retirement savings, doesn’t **need** a budget, they **want** a budget.
In general the financial advice that has budgeting as a first step is not directed towards people who easily have more money coming in than going out.
>In general the financial advice that has budgeting as a first step is not directed towards people who easily have more money coming in than going out.
I don't agree with that, IME it is usually directed toward people who spend their money irresponsibly. though the people that talk about their budgeting the most are usually people that have necessary expenses very close to their income.
> IME it is usually directed toward people who spend their money irresponsibly
In the above case though, the person is maxing out their tax advantaged retirement accounts. Assuming the person is also has an emergency fund and is debt free, excluding a mortgage, it’s difficult to say they are spending their money irresponsibly.
> Budgets are for people who have to prioritize expense A over expense B.
Prioritizing expenses *is* the reason to budget, but you’re mistaken to think that the only people who benefit from that are those whose expenses exceed their incomes.
I think it's not so much about how frugal you are, it's about how close your income is to your spending habits. If you're more frugal, the required income to not worry about a budget is lower, but it's still there. If you made a third of what you do now, it's very likely that a budget would be useful to you in order to help you plan where to cut back, rather than doing it ad hoc.
If you’re so frugal that you’re only buying necessities, a budget is useless. Budgets are useful for helping you identify where you’re wasting money. Very frugal people aren’t wasting money.
If I made a third of what I do now, I wouldn’t change my spending at all. I just wouldn’t be saving as much.
If I made 10% of what I make now I’d have to sell my house and get roommates but that’s all that would change.
Do you believe that more expenses are coming in the near future?
How about a household of a young family. Let's say the parents are frugal and don't see a use for a budget.
How about when children are on the way (or already born)?
What if they have to save for their own home, children education and other big expenses?
Many have pointed out great reasons for a budget. But - there is one more I have not yet seen.
It does not matter if your income is much higher than expense or vice versa, if you want a complete financial picture, you develop a budget for your finances.
This budget can be prescriptive or descriptive in how you plan to use it, but ultimately it is information about how you allocate resources each month (or paycheck).
I am like you. Later in life, have resources, and don't have to watch my money carefully. It is not about frugality here, it is about knowing my normal lifestyle is easily paid by my income. I spend a lot of money - but I also make a lot too.
The reason this is the first piece of advice for people looking to get recommendations on finances is that it is baseline information for where you are at. The people these articles are targeted at typically don't have the situation you do. They instead are looking for financial information for help about saving, investing, getting out of debt, etc and baseline information of income/expenses is typically very important for that conversation.
So, for you personally. Here is the reason you should have a 'budget'. It will tell you how you are allocating your resources. You really actually have a budget now, whether you realize it or not. You are making allocation decisions based on generalized feels for your income and desired lifestyle. Doing the analysis will tell more detail.
If you don't want to bother - I hear you and I understand. I am like you. I don't have a formal budget either and for my unique specific circumstance, I don't think trying to get more detailed information into a monthly budget would add much value to my financial planning. But we are the exception here. Most people I know do need budgets and having one allows them to create the roadmap to achieve more of their longer term financial goals.
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Yeah, I'm the same way, I just don't spend money I don't have. But the easiest way to make sure you're doing that is to establish a budget. A budget is a crutch to help you keep track of your income vs expenditures and cut out the extraneous ones. Once you're accustomed to living that way (or if, like me, you've always lived that way) then there's no need for it, but that doesn't make it any less useful for people who are still learning how to live within their means.
Your point has nothing to do with frugal and everything to do with being financially comfortable.
You’re rich. Congrats. You make so much money that you don’t need a budget. But there are people who earn less in a year than you save in retirement funds alone.
Many people who shop at Aldi and never go out to eat don’t have “plenty of money left over” because they’re earning far less than you. So they can benefit from a budget to help see IF there is anything they can reduce spending on in order to start having more left over money.
If your revenue income is greater than your living expenses you really don't need a budget, you already have a net income surplus. It's honestly alarming you don't know that since you're "very financially literate".
Budgets aren't really about income vs outlay, in my opinion. They are about income vs spending.
If you make 6 million a year and have only 50K a year in fixed expenses but, you're broke at the end of every week. You could probably use a budget.
If your income and outlay are precisely the same but, you're saving for big expenditures, have a healthy social life, are able to have some entertainment and fun money, have a stash for emergencies and your retirement, a budget isn't going to do you much good at all.
> I just make sure my net worth grows each week
Just for the record, this is a completely separate thing than having control of your cash flow. The S&P500 is up 25% in the last year—you could be overspending and missing it if you’re only tracking your net worth.
>What is a good reason I should have a budget
Well, it doesn’t sound like you need a budget in order to not *over* spend, which is great—I lived the same way for a long time, just sort of loosely knowing I was below my means. But without a budget, you’ll simply never know what’s possible beyond that. It’s literally impossible, because you don’t know where your money is going or how to make a change.
Budgeting took me from a sort of hazy knowledge that I wasn’t overspending to being able to set and meet specific financial goals that seemed audacious—moving to a single income, planning for an early retirement, and so on. It also allowed me to seamlessly transition from single life, to married life, to life with kids.
>What is a good reason I should have a budget? Never have and have no desire to. If bills ever get super tight I’ll consider it, but I already just live by motto of spend less.
It's not just about spending less -- it's also about knowing where your money is going on a detailed level, especially for someone frugal. Some people feel they're frugal and are saving but if you lay out, like, 'and you're spending $140/mo on streaming services, from Netflix to spotify to apple music, they might be like whoa, and cut the ones they use less, even if that money isn't breaking their bank. Or gee, I felt like I only ate out a couple times a month but if I add in sbux and stopping at this and that it's actually $250 so maybe I'll cut sbux to once a week.
I think my mom told me once " there are as many types of budgets as there are people in the world."
Frankly, I think the criteria of 1. Knowing how much you take in each month, 2. Knowing how much you spend each month, and 3. Having a reasonable idea of when is too much/ how much you can still spend is enough to make what you do have a budget. Plus, you save which requires at least some intentionality with your money, which I think is the point of a budget.
You don't have to have an itemized list, or, like I personally do, have 20 bank sub accounts to divide up the categories of my spending /savings, in order to have a budget.
This is slightly just definitional over what it means to have a budget, but these are my thoughts.
I'm very frugal. Each month I spend less than 1/3 of my net income on expenses and fun, 1/3 goes to investments, and the remaining 1/3+ goes to savings for a house down payment.
Without a budget, I wouldn't be able to track that I'm hitting my goals. Now I know exactly where my money is going. It means I don't spend money I shouldn't, but also gives me permission to spend on some personal luxuries when I can see I'm within my budget, which let's me enjoy guilt free.
And if I check at the end of the year and see that I didn't invest enough, how exactly am I supposed to unspend the money that should have been going towards investments?
So you do budget, just not as strictly and thoroughly as most people. Just because you don't go writing down specific budgets for everything each month, doesn't mean you still don't allocate money to specific things. Because you make sure your net worth grows each week, you make sure that your expenses stay within a certain range. Within a certain budget, if you will.
You obviously don't know how it feels if you don't have enough money or close to it.
It's not time to think about budgets but to look outside your fortunate privileged box and see how other people have to live. This will hopefully broaden your worldview and understanding of people.
Most people who just got a job and trying to find a home and buying a car will probably need budgeting, and I'd say budgeting isn't overrated, and sometimes even underrated, like when some people never save and never budget can't get the things they need due to overspending
>just make sure my net worth grows each week. I track all accounts with quicken simplify. I shop at Aldi’s. Go out to eat with friends few times a month.
Congrats! You have a budget! You are planning how to use you use your money.
What if your spending should *increase*? A budget can help most people avoid spending too much in things they shouldn't, and can help frugal people avoid spending too little when higher spending is warranted.
You are budgeting. It just comes so naturally to you that you do it all in your head instinctively. For some, having it written down is the only way they understand it.
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You are internalizing your budgeting by tracking spend vs income on a regular basis. You might want a formal budget when you want to plan for something that can’t be paid in one period: a car, a house, a family. Setting a goal without forecasting how long it will take and how you could make choices to accelerate the execution of these plans is simplified by using a budget.
Budgeting is useful for people that waste money. Since most people are wasteful, most people benefit from budgeting. I don’t really enjoy buying stuff I don’t need, so a budget would not be useful for me.
> [I] Max out tax advantaged stuff > I don’t have a budget. You clearly have more income than expenses. In that scenario no one needs a budget. Budgets are for people who have more expenses than income. Budgets are for people who have to prioritize expense A over expense B. > I just make sure my net worth grows each week. Also, this is a form of budgeting. Just a very loose and informal system.
i think many budgeters would disagree with you about 'who budgets are for'. i have a friend that budgets, he has more income than expense. but he also spends $1k/mo on restaurants sometimes and he finds that regretful, so he started budgeting.
I might be in a similar situation to your friend then. Your friend, assuming they’re putting an adequate amount of money into retirement savings, doesn’t **need** a budget, they **want** a budget. In general the financial advice that has budgeting as a first step is not directed towards people who easily have more money coming in than going out.
>In general the financial advice that has budgeting as a first step is not directed towards people who easily have more money coming in than going out. I don't agree with that, IME it is usually directed toward people who spend their money irresponsibly. though the people that talk about their budgeting the most are usually people that have necessary expenses very close to their income.
> IME it is usually directed toward people who spend their money irresponsibly In the above case though, the person is maxing out their tax advantaged retirement accounts. Assuming the person is also has an emergency fund and is debt free, excluding a mortgage, it’s difficult to say they are spending their money irresponsibly.
> Budgets are for people who have to prioritize expense A over expense B. Prioritizing expenses *is* the reason to budget, but you’re mistaken to think that the only people who benefit from that are those whose expenses exceed their incomes.
I think it's not so much about how frugal you are, it's about how close your income is to your spending habits. If you're more frugal, the required income to not worry about a budget is lower, but it's still there. If you made a third of what you do now, it's very likely that a budget would be useful to you in order to help you plan where to cut back, rather than doing it ad hoc.
If you’re so frugal that you’re only buying necessities, a budget is useless. Budgets are useful for helping you identify where you’re wasting money. Very frugal people aren’t wasting money. If I made a third of what I do now, I wouldn’t change my spending at all. I just wouldn’t be saving as much. If I made 10% of what I make now I’d have to sell my house and get roommates but that’s all that would change.
Do you believe that more expenses are coming in the near future? How about a household of a young family. Let's say the parents are frugal and don't see a use for a budget. How about when children are on the way (or already born)? What if they have to save for their own home, children education and other big expenses?
Many have pointed out great reasons for a budget. But - there is one more I have not yet seen. It does not matter if your income is much higher than expense or vice versa, if you want a complete financial picture, you develop a budget for your finances. This budget can be prescriptive or descriptive in how you plan to use it, but ultimately it is information about how you allocate resources each month (or paycheck). I am like you. Later in life, have resources, and don't have to watch my money carefully. It is not about frugality here, it is about knowing my normal lifestyle is easily paid by my income. I spend a lot of money - but I also make a lot too. The reason this is the first piece of advice for people looking to get recommendations on finances is that it is baseline information for where you are at. The people these articles are targeted at typically don't have the situation you do. They instead are looking for financial information for help about saving, investing, getting out of debt, etc and baseline information of income/expenses is typically very important for that conversation. So, for you personally. Here is the reason you should have a 'budget'. It will tell you how you are allocating your resources. You really actually have a budget now, whether you realize it or not. You are making allocation decisions based on generalized feels for your income and desired lifestyle. Doing the analysis will tell more detail. If you don't want to bother - I hear you and I understand. I am like you. I don't have a formal budget either and for my unique specific circumstance, I don't think trying to get more detailed information into a monthly budget would add much value to my financial planning. But we are the exception here. Most people I know do need budgets and having one allows them to create the roadmap to achieve more of their longer term financial goals.
[удалено]
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Yeah, I'm the same way, I just don't spend money I don't have. But the easiest way to make sure you're doing that is to establish a budget. A budget is a crutch to help you keep track of your income vs expenditures and cut out the extraneous ones. Once you're accustomed to living that way (or if, like me, you've always lived that way) then there's no need for it, but that doesn't make it any less useful for people who are still learning how to live within their means.
Your point has nothing to do with frugal and everything to do with being financially comfortable. You’re rich. Congrats. You make so much money that you don’t need a budget. But there are people who earn less in a year than you save in retirement funds alone. Many people who shop at Aldi and never go out to eat don’t have “plenty of money left over” because they’re earning far less than you. So they can benefit from a budget to help see IF there is anything they can reduce spending on in order to start having more left over money.
If your revenue income is greater than your living expenses you really don't need a budget, you already have a net income surplus. It's honestly alarming you don't know that since you're "very financially literate".
Budgets aren't really about income vs outlay, in my opinion. They are about income vs spending. If you make 6 million a year and have only 50K a year in fixed expenses but, you're broke at the end of every week. You could probably use a budget. If your income and outlay are precisely the same but, you're saving for big expenditures, have a healthy social life, are able to have some entertainment and fun money, have a stash for emergencies and your retirement, a budget isn't going to do you much good at all.
> I just make sure my net worth grows each week Just for the record, this is a completely separate thing than having control of your cash flow. The S&P500 is up 25% in the last year—you could be overspending and missing it if you’re only tracking your net worth. >What is a good reason I should have a budget Well, it doesn’t sound like you need a budget in order to not *over* spend, which is great—I lived the same way for a long time, just sort of loosely knowing I was below my means. But without a budget, you’ll simply never know what’s possible beyond that. It’s literally impossible, because you don’t know where your money is going or how to make a change. Budgeting took me from a sort of hazy knowledge that I wasn’t overspending to being able to set and meet specific financial goals that seemed audacious—moving to a single income, planning for an early retirement, and so on. It also allowed me to seamlessly transition from single life, to married life, to life with kids.
>What is a good reason I should have a budget? Never have and have no desire to. If bills ever get super tight I’ll consider it, but I already just live by motto of spend less. It's not just about spending less -- it's also about knowing where your money is going on a detailed level, especially for someone frugal. Some people feel they're frugal and are saving but if you lay out, like, 'and you're spending $140/mo on streaming services, from Netflix to spotify to apple music, they might be like whoa, and cut the ones they use less, even if that money isn't breaking their bank. Or gee, I felt like I only ate out a couple times a month but if I add in sbux and stopping at this and that it's actually $250 so maybe I'll cut sbux to once a week.
I think my mom told me once " there are as many types of budgets as there are people in the world." Frankly, I think the criteria of 1. Knowing how much you take in each month, 2. Knowing how much you spend each month, and 3. Having a reasonable idea of when is too much/ how much you can still spend is enough to make what you do have a budget. Plus, you save which requires at least some intentionality with your money, which I think is the point of a budget. You don't have to have an itemized list, or, like I personally do, have 20 bank sub accounts to divide up the categories of my spending /savings, in order to have a budget. This is slightly just definitional over what it means to have a budget, but these are my thoughts.
I'm very frugal. Each month I spend less than 1/3 of my net income on expenses and fun, 1/3 goes to investments, and the remaining 1/3+ goes to savings for a house down payment. Without a budget, I wouldn't be able to track that I'm hitting my goals. Now I know exactly where my money is going. It means I don't spend money I shouldn't, but also gives me permission to spend on some personal luxuries when I can see I'm within my budget, which let's me enjoy guilt free.
Why exactly do you need a budget to track your goals? You can look at your investment account every year and see whether you hit your goals or not
And if I check at the end of the year and see that I didn't invest enough, how exactly am I supposed to unspend the money that should have been going towards investments?
You don’t. Adjust going forward. You can do it at any frequency you want.
And how do I track those adjustments going forward? Maybe with something like... A budget?
I generally use it as a way to figure out how much I need to ramp up income the next year, or look at big ticket expenses to cut.
So you do budget, just not as strictly and thoroughly as most people. Just because you don't go writing down specific budgets for everything each month, doesn't mean you still don't allocate money to specific things. Because you make sure your net worth grows each week, you make sure that your expenses stay within a certain range. Within a certain budget, if you will.
You obviously don't know how it feels if you don't have enough money or close to it. It's not time to think about budgets but to look outside your fortunate privileged box and see how other people have to live. This will hopefully broaden your worldview and understanding of people.
Most people who just got a job and trying to find a home and buying a car will probably need budgeting, and I'd say budgeting isn't overrated, and sometimes even underrated, like when some people never save and never budget can't get the things they need due to overspending
>just make sure my net worth grows each week. I track all accounts with quicken simplify. I shop at Aldi’s. Go out to eat with friends few times a month. Congrats! You have a budget! You are planning how to use you use your money.
What if your spending should *increase*? A budget can help most people avoid spending too much in things they shouldn't, and can help frugal people avoid spending too little when higher spending is warranted.
Is this a CMV or a brag?
You are budgeting. It just comes so naturally to you that you do it all in your head instinctively. For some, having it written down is the only way they understand it.
It’s about financial goals. If you want to maximize your money, you’ll make a budget to track your spending and see if you can reduce it
Working out is over rated for people that enjoy working out and use a different name for it.
Diets are over rated for people that already eat healthy and don't realize that that too is a diet.