I think we spend more $ when we budget?

[Ann.without.an.e]

I know this is counter-cultural and counter-Dave Ramsey, but I was reading this article on Forbes. For years we didn't have enough money to make a budget work so we just didn't budget, instead we made it our goal to simply spend as little as possible.  It worked.  I was reading this article this morning about Mr And Mrs Frugalwoods and it just makes sense.

 

 

https://www.forbes.com/sites/laurengensler/2015/08/04/frugalwoods-early-retirement/#13aee221bbd4

 

Here is the quote that made me think...

 

"What is perhaps surprising about the Frugalwoods is that they don't have a budget ("spending is like a gas: it'll expand to fill whatever space you give it"). So, in other words, if having a budget means thinking about how much you can spend on things every month, the Frugalwoods are focused on how little they can spend.

They don't take a calculator to the grocery store or obsessively check spreadsheets, but they do spend with almost painstaking deliberation."

 

We have the money now to "fill" a budget.  We make so much more money and we spend it.  Would we better to not budget, but rather go back to just spending as little as possible, rather than feeling the freedom to spend a budget amount?

This is just me, rambling and pondering life and hoping that ya'll can stop me if this makes no sense at all   :lol:

 

 

ETA - more specifically what I had in mind is not to scratch a budget altogether.  Rather, limit the budget to the fixed expenses.  Then allow all things that aren't fixed to flex with need and just try to spend as little as possible out of the unfixed "pot".  Because if I budget X amount toward clothing then I feel free to spend X amount there.  Clear as mud?

 

 

 

 

 

Edited January 2, 2018 by Attolia

[SparklyUnicorn]

Makes sense to me.  If I had budget categories I'd spend what was in the budget because it's there.  I don't think like that overall. 

 

 

[teachermom2834]

I don't know but it sure makes me feel better about not budgeting:)

 

We get paid, pay our bills, put what we feel we can spare in savings and then make what we have left stretch to the next paycheck. We are not big spenders by nature. It works okay but I know we could do better. I've just never been able to make a budget work and this has worked okay for us.

 

I think our problem budgeting in the past was that there just wasn't enough money to go around and we had no emergency savings. Maybe now that we have more income and more savings it would be easier to get started. Not helpful to you, OP. Just musing.

 

But I can see the point of the article. If you have a budget set for entertainment you may be more likely to spend that rather than pass on entertainment all together. Same with eating out or gifts. If those are not things you are tempted to spend on you might do better not to have the money set aside at all.

[EmilyGF]

I think this depends on your personality. We saved enough money to take our whole family to Europe when we followed a budget for 6 months. 

 

I think it is like dieting - some people do well counting, some people do well just avoiding certain food groups. For me, without a budget, I feel deprived and end up splurging. 
 

Emily

[Mom22ns]

When our money was really tight, we didn't use a budget, but simply didn't spend. We bought only the absolute necessities. If I had budgeted, I would have spent what I said was available in each category and if a category had an emergency need for more, I wouldn't have had it. I will add that we tracked our spending and looked back on what we spent now and then, so we weren't completely unaware.

[TravelingChris]

We don't have budgets.  When we were facing a possible big drop of income, we just cut back and didn\t spend anywhere as much. Like I am doing right now due to full pay private college bill being paid and another installment of our vacation being needed to pay.  Now is not when I buy all sorts of things for myself.

[solascriptura]

I agree with that statement and quit budgeting years ago. I hate writing down every penny and fretting about a budget.

[Annie G]

Money management is like dieting....there's not one way that works for everyone.  So I can see where some people might see a line item as an 'I can spend this much' challenge.   

 

We don't budget so much as we track and analyze.  We do put money away for future expenses that we know we'll have, but dh and I don't have an allowance for fun spending or other discretionary spending. BUT...and here's the big BUT...we make more than it takes to pay our bills. Back when we were raising four kids and had kid expenses...gymnastics, music lessons, college, etc., we did have to budget because otherwise some months might have ended up with us having new clothes but no money to pay a doctor bill. 

 

So like I said, if setting budget categories causes you to see it as an 'I can spend this much' then definitely it's not for you.  But I'm interested in how you decide to spend your money, and how to save for upcoming expenses?  Maybe I can learn some things from you guys here. Always looking for ways to improve. 

[fairfarmhand]

Not at my house. We spend more with no budget.

 

 

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[Ann.without.an.e]

 

 

We don't budget so much as we track and analyze.  We do put money away for future expenses that we know we'll have, but dh and I don't have an allowance for fun spending or other discretionary spending. BUT...and here's the big BUT...we make more than it takes to pay our bills. Back when we were raising four kids and had kid expenses...gymnastics, music lessons, college, etc., we did have to budget because otherwise some months might have ended up with us having new clothes but no money to pay a doctor bill. 

 

So like I said, if setting budget categories causes you to see it as an 'I can spend this much' then definitely it's not for you.  But I'm interested in how you decide to spend your money, and how to save for upcoming expenses?  Maybe I can learn some things from you guys here. Always looking for ways to improve. 

 

 

Ok, this is pretty much what I had in mind.  We have a budget where you fill in a category amount for each month for each category.  For example, designate $200/month toward clothing.  Just an example.  I was just rethinking it.  What if we only budget for our fixed expenses like insurance, phone bill, etc.  Then, we only track and analyze for all things non-fixed?  We don't set a predetermined amount that we are "allowed" to spend.

[ScoutTN]

I have struggled with this too.

 

I think it depends on How you budget. If you budget tightly with as much as possible going to savings (or wherever is not for spending now) and keeping the categories where you are likely to overspend low, it works like the just don't spend plan. Except you know that you are saving.

 

I like to have a plan! I am tense and unhappy without one. It makes me happy to see the numbers in categories for future expenses slowly go up.

 

If I fill most budget categories most of the time, we don't save well. So I don't. But it took me a while to figure that out. And to learn what works for us - where we can cut and not miss it much, which areas not to be too tight in. For example, my dh Needs some fun money to be happy. Not a lot, but some every month. I really don't.

 

Budgeting is a very individual thing and what works can change over time and circumstances even within a family. The word has a rather static, rigid connotation, but in our family it is a dynamic thing and a freeing one.

[ScoutTN]

I hate writing down every penny and fretting about a budget.

Ah, but the budget IS what enables me Not to worry! I use the old YNAB program, which is simple and quick.

[Ann.without.an.e]

Ah, but the budget IS what enables me Not to worry! I use the old YNAB program, which is simple and quick.

 

 

This is what we use so you will understand exactly where I am coming from.  I am thinking that we fill out the budget lines for fixed items.  Leave the non-fixed (flexible) things without a budgeted amount, but still track it.  At the end of the month we fill it in with what we spent.  I think that if I see the buffer growing, rather than the money "collecting" in a category, I will be more apt to save rather than spend.  Plus, it takes away the fear that this is my allocated amount and if I don't spend it each month then DH will cut it and I might need it.

Edited January 2, 2018 by Attolia

[Annie G]

 

I like to have a plan! I am tense and unhappy without one. It makes me happy to see the numbers in categories for future expenses slowly go up.

 

 

 

This is me.  My family struggled when I was a kid and I was somehow aware of that even though it was never openly discussed. As an adult, I find great comfort in financial security. Seeing my spreadsheet showing future expenses being funded brings me peace.  I can remember days when opening the mail was stressful. Was I going to have enough to pay everything?  Yeah, once we fixed that by allocating some of our money towards known future obligations my anxiety level went way down.  

[Pawz4me]

 

We don't budget so much as we track and analyze.  We do put money away for future expenses that we know we'll have, but dh and I don't have an allowance for fun spending or other discretionary spending. BUT...and here's the big BUT...we make more than it takes to pay our bills.

 

Ditto.

 

I had no idea the extent to which some families budget until I came to this board.

 

That said, neither DH nor I are big spenders. We're natural minimalists who don't enjoy shopping.

[Annie G]

Ditto.

 

I had no idea the extent to which some families budget until I came to this board.

 

That said, neither DH nor I are big spenders. We're natural minimalists who don't enjoy shopping.

 

I will admit that even though dh and I are not big shoppers, we have our own kryptonite. Mine is quilt fabric and his is books. We have made a huge effort (successfully!) to cut down on our purchases over the past few years and I'm so proud of us.  We still buy things but more mindfully.  And even though we still love to go antiquing, we are getting much better about enjoying the find and not the purchase. g  We go with another couple and they always feel bad when we don't come home with something. Nope- the fun for us is being with them and looking at stuff. 

[historically accurate]

This is what we use so you will understand exactly where I am coming from.  I am thinking that we fill out the budget lines for fixed items.  Leave the non-fixed (flexible) things without a budgeted amount, but still track it.  At the end of the month we fill it in with what we spent.  I think that if I see the buffer growing, rather than the money "collecting" in a category, I will be more apt to save rather than spend.  Plus, it takes away the fear that this is my allocated amount and if I don't spend it each month then DH will cut it and I might need it.

 

You both need to do the budget together or at least have a meeting where input from both sides is presented. One person should not be able to cut an expense and say, "Deal with it." In our house, I make the budget, but DH pushes back if something is off to him. In our case, we don't have any extra (or really enough to pay everything) so I'll cut something to the bone in order to make up a different expense - DH is my check that yes, we really do need more than $25/week in groceries for 5 people...

 

That being said, because of our precarious financials, we do only budget the have-to's. The rest goes in a pot to be paid out to what is most needed that pay period.

[KrissiK]

I think, like other posters mentioned, it depends on the person. I track, as meticulously as I can, what we spend on Excel. To me, the idea of “just don’t spend money†or “spend as little as you can†doesn’t make sense. You have to buy things and having a budget determines when and how much you spend on those things and helps you keep track of what you spent. For me, it’s not a matter of, “I have $50 this month to spend on clothes, so I better go out and spend it.†For me it’s, “I can spend that if I need to because I have budgeted for it.â€

[Night Elf]

Back when I did a budget, I got a thrill of seeing how much money would be left in each category of spending so I did focus on spending as little as possible. At the end of the pay period, we took all that unused money and put some extra on our mortgage and some in savings not to be touched except in case of emergency.

[KungFuPanda]

I think some personalities need budgets. I hate to shop and spend, so not having a budget works pretty well in my house. However, if you are the personality type that always has an eye towards that next thing you need or want instead of the type that procrastinates any ttoe of shopping, a budget might be better for you.

[Bootsie]

I have been really surprised to hear how much time and effort some people put into their budget.  DH loves working with numbers and Excel and I find it very stressful not to have a plan for just about everything.  So, it seems as if we would be the type who would have an elaborate budget plan, but we don't.  Neither of us is a big spender; we have discussed long-term goals for savings and we have discussed what type of overall lifestyle we desire and can afford when it comes to housing expenses, automobiles, clothing, children's education, etc.  Whenever we have made decisions that would have a large impact, such as my working part-time for a while or sending a child to private high school, we have taken an overall look at how that will impact our spending habits.  

[Ann.without.an.e]

You both need to do the budget together or at least have a meeting where input from both sides is presented. One person should not be able to cut an expense and say, "Deal with it." In our house, I make the budget, but DH pushes back if something is off to him. In our case, we don't have any extra (or really enough to pay everything) so I'll cut something to the bone in order to make up a different expense - DH is my check that yes, we really do need more than $25/week in groceries for 5 people...

 

That being said, because of our precarious financials, we do only budget the have-to's. The rest goes in a pot to be paid out to what is most needed that pay period.

 

 

We do budget together.  We check each other.  I never said he would have a "deal with it" attitude.  It would just mean he would want to cut that area and for good reason, but I always think "what if I need it".  I think my mind works weird sometimes  :laugh:  It is a mentality that I need to change but I think that reworking our budget this way would help me with it.

[Arcadia]

The tightwads in my extended family need a budget or they will literally spend the bare minimum on anything. They hoard cash and assets.

 

The spendthrifts in my extended family need a budget to not overspend. One of my uncles is an undischarged bankrupt. All my spendthrift relatives are good at paying down mortgage thankfully so all have paid off their mortgages.

 

I am not as tightwad as my husband but I am so picky that something has to be near perfect for my needs for me to buy. So my shopping list has model numbers and color for clothing, brands and labels for food. I did logistics management and financial reports in my previous job when my boss couldn’t find someone to hire so I would say it is a personality thing.

 

My kids are tightwads. We can go shopping everyday and buy nothing. It took DS13 more than two years to find his near perfect laptop backpack which is TSA compliant. It cost $89 which my husband would normally complain about the high cost but since we have hunted for two years, my husband just paid up. DS13 only bought one top the whole of last year because he is that picky about what kind of top he wants (cream color and small logo).

 

Could you open a petty cash account and just transfer a fixed amount of petty cash there? So if you underspend in a particular month, you have a buffer in the petty cash account for temporary price hikes in essentials. Then you don’t need to worry about underspending and the money being gone from your future budget. If you are unlikely to overspend than do an annual budget instead, then you won’t need to worry about spending the allocated amount per month.

[Clear Creek]

We use YNAB. Some expenses like vehicle registration that need to be paid annually we put in a little at a time and save up for. We don't save ahead for things like clothing; I can see how having all that extra money in that category would be tempting to spend! At the beginning of the budgeting period (the 1st or the 15th for us since that is when my husband gets paid) I decide if there are clothing items that need to be purchased with that money. If no one needs anything, then that category does not get any money out of that paycheck. If someone needs something, then I decide what the maximum is that I am willing to spend on the item(s) and that is what I allocate, nothing extra. I try to get below that amount, and the extra money left over goes into another category. There is no way I could look at a rising balance of money available for clothes shopping and not spend it, lol.

 

Spreading out clothing purchases like this works for us. In all the years that we have been using YNAB we have not had occasion to purchase more clothing during a pay period than I could reasonably allocate from one paycheck. But then again, we are very frugal with our clothing spending - according to YNAB we only spent $438.10 last year on clothing for our family of 5. Shoes and underclothing are purchased brand new (though never full price for shoes); the order that I shop when we need anything else is Goodwill, Ebay, then clearance racks. I don't remember the last time I paid full price for a piece of clothing. We also participate twice a year in a local clothing swap and families in my church all pass on unneeded clothing to other families.

 

If I knew that I had to save up for a large expenditure in the future (lots of clothing at once, a vacation, next year's school stuff) it would not stay in that category in YNAB. It would be transferred to savings and reappear when it was actually time to spend it. That way the money is not staring us in the face, lol.

[ondreeuh]

We have literally never had a budget, and we have A+ credit. And we've had years when we made so little! We just have the habits of being total tightwads and keeping our standards low. I had friends who were making so much more than us but actually "broke" because they had car payments, took lots of classes, ate at restaurants a lot, took frequent trips, bought new clothes, etc. We have always had used cars, old furniture, casual wardrobes, and low-maintenance lifestyles. When our income increased, I thought it was kind of funny when people would assume we were broke, either because they assumed everyone was broke or because they didn't see any obvious signs of wealth.

 

Both my dh and I grew up in families that lived frugally and made enough money to save for retirement and occasional travel, so neither of us had a habit of reckless spending or keeping up an image. We just have usually spent as little as possible, with occasional thought-out splurges. We keep a high balance in our checking account so that we can pay any bills that come through. I tried once shifting more money to savings, but then I had to keep track of my balance and I don't want to deal with that.

[KrissiK]

We use YNAB. Some expenses like vehicle registration that need to be paid annually we put in a little at a time and save up forl.

For yearly expenses such as registration, car insurance, property taxes, I divide up the bill over 12 months and out that much away in our savings account every month and itemize it on a spread sheet. Then I know we will have enough to pay it when the bill comes due we know we have budgeted for it.

[xixstar]

I think everyone find what works for them. One thing I like about the zero-based budgeting, which is what Dave Ramsey recommends, is that it does allow for both saving and spending depending on your personality. So if I put money in a category it may or may not get spent, but it is okay if we do spend it -- for my spouse, he hates to spend anything a lot of times and for him it lets go of the "guilt" around spending and allows him to have positive feelings about spending (even on mundane things like new wiper blades).

And for me, it's more a good limit that I can work within - when I see a category is out of funds, no more spending. If only I was good at following that - instead I juggle other categories a bit but there is a point where nothing can be juggled anymore and I find a hard limit. I'm not a DR poster child, btw. lol.

And when we were really broke, it often felt like we were able to do more when we didn't budget, but in reality, it's because we were always short changing something here or there (or putting stuff on credit when we shouldn't have). It was a perception that budgeting made me feel like we had even less money but after several months of sticking to it, it was much better for our household and family goals than just making do the best we can each month.

[ondreeuh]

I think, like other posters mentioned, it depends on the person. I track, as meticulously as I can, what we spend on Excel. To me, the idea of “just don’t spend money†or “spend as little as you can†doesn’t make sense. You have to buy things and having a budget determines when and how much you spend on those things and helps you keep track of what you spent. For me, it’s not a matter of, “I have $50 this month to spend on clothes, so I better go out and spend it.†For me it’s, “I can spend that if I need to because I have budgeted for it.â€

 

I see your point. But my version of "spend as little as possible" is to buy what I need, but only after deciding that it's really a need and not a want. Like instead of making a restaurant budget, we just only go out to a restaurant when we REALLY want to, which is like once a month, more or less. And then it's usually a cheap place, because why pay more? We need very little. We turn the thermostat down. We do laundry on weekends - but we do use a dryer instead of hanging to dry because I strongly prefer it). And instead of ear-marking $50/month for clothes, we replace what needs to be replaced when we need to. Which is certainly less than $50/month.

 

I get it if someone's expenses are eating up their whole paycheck. Then you have to know that you can pay your bills. But actually even when we were in that situation, we still didn't budget - we bought what we absolutely needed on a credit card, paid as much as we could each month, and paid it off when things improved. And it worked out fine for us.

[Runningmom80]

We track spending more than budget. We do have money goals and it's nice seeing the YNAB line fill up. 

[bethben]

We have a similar situation. Before, we were trying to spend as little as possible. Now, we have a healthy budget and spend it each month usually. But, we were also skimping on things that make life a little easier-like take out food when I’m exhausted or needing a break—classes for ds that he always wanted to take but we couldn’t afford—actually buying new shoes when they wear out, not when the child actually grows out of them. So, yes we spend more and usually spend what’s in the budget, but it’s probably what we should have been spending before but just couldn’t.

 

 

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[Ann.without.an.e]

We have a similar situation. Before, we were trying to spend as little as possible. Now, we have a healthy budget and spend it each month usually. But, we were also skimping on things that make life a little easier-like take out food when I’m exhausted or needing a break—classes for ds that he always wanted to take but we couldn’t afford—actually buying new shoes when they wear out, not when the child actually grows out of them. So, yes we spend more and usually spend what’s in the budget, but it’s probably what we should have been spending before but just couldn’t.

 

 

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This is a factor for us as well.  When you lived on a super tight budget, it isn't always that we spend it now because we have it, sometimes it is just nice to not have to sacrifice, sacrifice, sacrifice.

Edited January 2, 2018 by Attolia

[EmilyGF]

This is a factor for us as well.  When you lived on a super tight budget, it isn't always that we spend it now because we have it, sometimes it is just nice to not have to sacrifice, sacrifice, sacrifice.

I think this is like crash dieting - you can do it for a purpose and for a season. But most people can't do it for their whole life. So if you are trying to save money short term (job loss, paying off a certain debt, etc), great, spend as little as you can in every area. But if it seems like things'll never change, many people (including me) will start resenting it and splurging in a way that causes lots of problems. 

 

Emily

[Laura Corin]

We didn't budget when things were tighter and we don't now. We both just did our best to spend less, and trusted that we would each do our best. Even at our tightest, however, we had a bit of a cushion, so we weren't going into bad debt if we overspent. That might make a difference. We are also not big retail therapy people.

[kbutton]

We don't budget, but we do have several sinking funds (there is a recent thread on this--didn't know what it was called until I read it--I just did it because it made sense to me). Basically, we divvy up money, but not into categories as tight as a budget would. The categories are groups of compatible expenses, and we direct deposit to them as various savings accounts (or checking if the bank requires that for the mortgage to be deducted, for instance). It took time to get those categories how we wanted them, but they work extraordinarily well. I like them because it takes care of all the bills, the mortgage and upkeep on the house, and the big time bomb spending categories that are not well-distributed throughout the year (life, auto, disability insurance policies, half a steer, vacation or Christmas, etc.). As long as those funds remain self-perpetuating through direct deposit, then I know exactly what our surplus is without saving receipts and going nuts tracking it (especially those categories that we use so rarely). The house fund is padded enough that most of the time we can use it to pay for things like a new roof. It's super, super reassuring. Basically the "last" savings account to be funded through direct deposit is our surplus (at least 90% of it). I feel no need to spend like crazy from it because it's awesome to watch it grow.

 

We don't have a lot of kryptonite, or if we do, it must be pretty inexpensive kryptonite. When we were first married and super frugal, we each got personal money in the budget. At that point, it was literally $5 per pay period (twice a month) that we each got to save or spend, lol! You could make a kryptonite category, corral a couple of specific spending categories with a sinking fund, and then just let the rest build up.

 

I think the big concern is to not let yourself get off the rails, and otherwise use whatever method works for you. But I know exactly what you are saying in your OP--that's us. We save tremendously well, and we started doing it with not enough money to have a budget work on paper. We've always had an emergency fund (even when DH was in school), etc. Do we have frugal friends that put us to shame? Yes. Do we have friends who are more purposeful? Yes. But it works for us. (And we have excellent credit too. The bank always wants to know what we're doing with our money...we do have an advisor.)

[Garga]

Didn't have a chance to read other replies, but not-budging is how DH and I have done it over the years.  However, we're naturally rather stingy about spending.  It's pretty easy for me to see something I want and walk away from it.  I feel a sense of accomplishment walking away from purchases, whereas other people enjoy the high of buying the item.

 

I indulge myself at Christmastime by budgeting for that and gleefully spending the money on presents.  But all the rest of the year, I get a thrill by passing things up rather than buying them.  DH is the same way.  Our one weakness is going out to eat. We have a hard time not going out to eat once we get the idea in our heads to go.

 

It's like this: when my mother visited me a few years ago, she saw that one of our towels had a little hole in the corner.  She was aghast.  "Why do you have towels with holes?  Do you need me to buy you some new towels?"  But my mindset was that as long as the towel could get the job done--drying us after a shower--who cared about a little hole in it?  I mean, really?  What's the point of throwing away something that was perfectly serviceable and buying an exact replacement because of a little hole?  But some people would be bothered by that hole and feel bad about their old, holey towels.  They might feel that their lives are shabby or that they can't provide for their family.

 

If you are naturally stingy with spending and enjoy the thrill of seeing how many items you can pass by when you are shopping (for groceries), if you like to see just how long you can keep something useful (like the holey towel) and enjoy seeking out the lowest prices on things, then I don't think you necessarily need a budget.  We've always paid all our bills, have extra in the bank, and the only outstanding debt it the mortgage.  

 

But we also have a lot of yard sale items and hand me down household items and don't wear the latest fashions (except for the 12 yo.  He loves fashion). After 25 years, everything has come together in a charming way, but in the first 15 years of marriage our house was a bit of an ugly hodgepodge.  Now it's a charming hodgepodge, but it took a long time to slowly, and cheaply, acquire all the things we currently have.

Edited January 2, 2018 by Garga

[Garga]

We don't have a budget in the true sense of the word.  But going through a budgeting exercise once every couple of years exposes weaknesses in our spending habits.  

 

I think the article in the OP is on to something.  I can see the tendency in myself, to a certain degree...  Doing the budget analysis a couple of months ago was eye-opening...we thought we were doing all we could but really we were doing all we could without having to do some work.  :0)  Now that the work is done, and a few thousand dollars "found" for next year by changing health clubs, phone providers and so on, I think we will have a bit more focus on just not spending.

 

The main thing for me is just to stay off Amazon and away from the malls.  And the camera stores.

 

 

I like this.  DH and I do sometimes realize that we're starting to get lax in our savings and are starting to indulge in buying things we don't need.  Sometimes we need a reset.  (Especially with going out to eat!)

[scholastica]

I’m the opposite. When I have a set budget amount, I get a kick out of spending less than is allotted. It’s kind of a game to see how I can meet our needs with less money.

[Joyofsixreboot]

We've always operated on the principle of spending the least we can. It's worked for 31 years. If it ain't broke...YMMV

 

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