We have this kind of ‘budget’ where the only category is ‘savings’ and that gets automated (retirement, brokerage, 529s). And then everything else comes from what’s left over and I don’t track it. We have our emergency fund set and I make sure we never go below a pretty generous cushion in our checking account.

I consider myself very lucky that I did not have a budget for the last 15 years. We save more now that we have children. Money gets automatically transferred to a brokerage account every week. Plus, we max out on 401k. And although our HHI went up by a lot over the course of the last 10 years, our savings are still relatively low for DCUM standards. Why? Because our children cost us a fortune. It all goes to private school tuition, camps, after school activities, vacations, etc. Could we save more if we had a budget? Probably. But it’s a luxury not to have one and we are willing to pay for it.

We try to keep monthly expenses as low as possible and have several savings pots. One for short term savings (vacations, appliances, etc.), one for long term savings (new furnace, new windows, new car).

We max retirement. Kids' 529s are funded. That's it.

If we hit a snag (lowered income, etc.) we can lower monthly expenses to a level that's needed and make sure we don't spend up a storm.

The main important thing is not having a mortgage payment that's overly high.

Anonymous wrote:David Bach, author of "The Automatic Millionaire" and "Smart Women Finish Rich," has a podcast I was listening to where he says budgets don't work. His contention is that you should automate your savings and then the rest is yours to do with as you please.

That's what we do, but I feel out of control with money. We save a little over 20% of our income each year (8% to retirement, 12% to after-tax savings) in an automated way, and then we blow the rest, and I really don't know where it all goes.

If you don't budget, why not? If you do, how has it helped you and what is your process?

That's a budget.

Anonymous wrote:

Anonymous wrote:David Bach, author of "The Automatic Millionaire" and "Smart Women Finish Rich," has a podcast I was listening to where he says budgets don't work. His contention is that you should automate your savings and then the rest is yours to do with as you please.

That's what we do, but I feel out of control with money. We save a little over 20% of our income each year (8% to retirement, 12% to after-tax savings) in an automated way, and then we blow the rest, and I really don't know where it all goes.

If you don't budget, why not? If you do, how has it helped you and what is your process?

I mean that's basically a budget IMO

Yep, that's our approach to budgeting. Diligently move a set amount of money each paycheck into various investment vehicles and make do with the rest. Trying to be overly mechanical about budgeting is like counting calories. A lot of people will start the exercise, but only a few will be able to keep it going.

Anonymous wrote:I don’t budget. I max out retirement. The rest is for me to spend how I want.

Same here. We know what we will inherit, we save a predetermined amount, and then we spend the rest on what we want. To me, money is just a tool for life enjoyment and experiences, but I've never had money anxiety.

Anonymous wrote:David Bach, author of "The Automatic Millionaire" and "Smart Women Finish Rich," has a podcast I was listening to where he says budgets don't work. His contention is that you should automate your savings and then the rest is yours to do with as you please.

That's what we do, but I feel out of control with money. We save a little over 20% of our income each year (8% to retirement, 12% to after-tax savings) in an automated way, and then we blow the rest, and I really don't know where it all goes.

If you don't budget, why not? If you do, how has it helped you and what is your process?

That’s still budgeting, though. You’re just budgeting into two broad categories: saving and spending.

Budgeting was very important when we had less wiggle room in our finances and we had expensive financial goals (like buying a house, buying a car, paying off student loans, etc) we were trying to achieve. I wrote this post back in 2017: https://www.dcurbanmom.com/jforum/posts/list/135/305571.page#10945366

Now that we make far more than we want/need to spend, budgeting isn’t as necessary. I keep an eye on my credit card balance, because I know if I owe more than x amount per month, I have to dig into my non-emergency fund savings. It’s fine from time to time, but if it happens too often, it eats into other things and creates the possibility that we’d have to do something drastic like dip into our emergency fund to pay the credit card bill in full. We do still track our spending closely, but that’s not the same as budgeting. To me, budgeting means looking at my money before spending to confirm that I have the funds allocated for the purchase, and if I don’t I either delay the purchase or I decide to spend less in another area, while tracking means categorizing after spending to know how much money I spent in what categories (and from there evaluating whether we’re spending in accordance with our values and goals/priorities, and if not, shift spending accordingly).

We’re working towards a home renovation now and it’s expensive enough that we need to shift back towards budgeting and that feels surprisingly tough.

The way that our advisor has us budget is to have us only track three things: annual expenses (things like travel, holiday gifts), groceries, and flex dollars. Flex dollars are all the misc things like clothes and eating out. The rest of our spending is accounted for bc the amounts are about the same every month.

We automate savings, but we still have to budget the rest of our discretionary expenses. We have a travel budget, a food budget, a home maintenance budget. But I can see his point…we routinely go over budget…

Anonymous wrote:

Anonymous wrote:David Bach, author of "The Automatic Millionaire" and "Smart Women Finish Rich," has a podcast I was listening to where he says budgets don't work. His contention is that you should automate your savings and then the rest is yours to do with as you please.

That's what we do, but I feel out of control with money. We save a little over 20% of our income each year (8% to retirement, 12% to after-tax savings) in an automated way, and then we blow the rest, and I really don't know where it all goes.

If you don't budget, why not? If you do, how has it helped you and what is your process?

I actually generally agree with this. Too many categories just makes things difficult to track. So after we pull out money for saving, here are our other budget categories:

Nanny (autopay)
Mortgage and Insurance (autopay)
Charitable contributions (autopay)
Groceries
Travel
Everything else

Since the first three are on autopay, it really just is that we make sure to have money for travel and groceries. The rest just gets spent.

+1 There are too many one-off expenses to easily track it all. New fridge one month. New A/C unit another. Need a new car. Repairs on the other car. We save a bit and don't mindlessly spend, but we spend a lot in other areas like home renovations and a second home.

I don’t budget. I max out retirement. The rest is for me to spend how I want.

Anonymous wrote:

Anonymous wrote:David Bach, author of "The Automatic Millionaire" and "Smart Women Finish Rich," has a podcast I was listening to where he says budgets don't work. His contention is that you should automate your savings and then the rest is yours to do with as you please.

That's what we do, but I feel out of control with money. We save a little over 20% of our income each year (8% to retirement, 12% to after-tax savings) in an automated way, and then we blow the rest, and I really don't know where it all goes.

If you don't budget, why not? If you do, how has it helped you and what is your process?

I mean that's basically a budget IMO

Seriously. I think “budgets don’t work” is something podcasters and salesmen say to pique the interest of the financially illiterate.

I usually look at the credit card expenses and see if anything looks unusual. We typically the same amounts of money on the same things, so splurges, big one-off purchases, etc, will stand out. If bills look out of whack for too many months in a row, I will starts talks re: reigning it in.

Anonymous wrote:David Bach, author of "The Automatic Millionaire" and "Smart Women Finish Rich," has a podcast I was listening to where he says budgets don't work. His contention is that you should automate your savings and then the rest is yours to do with as you please.

That's what we do, but I feel out of control with money. We save a little over 20% of our income each year (8% to retirement, 12% to after-tax savings) in an automated way, and then we blow the rest, and I really don't know where it all goes.

If you don't budget, why not? If you do, how has it helped you and what is your process?

I mean that's basically a budget IMO