Budgets and Why We Don’t Have One

Vegas Skyline Night

We have a confession to make which goes against most conventional personal finance advice… we do not keep a budget and have never followed one.  The entire time we’ve been together (10+ years), we have never once said, “This month we have $X, $Y, and $Z to spend on A, B, and C.”  It’s just not something we’ve ever done.  This doesn’t mean we spend money thoughtlessly.  We’re actually extremely intentional about what we buy and have very few, if any, impulse purchases.

Now, we don’t think budgets are a bad thing.  For many, they are extremely helpful tools to help rein in and control spending.  They’re also great for those working their way out of debt.  We’ve known people who plan out their monthly spending and track each purchase real time.  Others set up virtual envelopes where a certain amount of money is allocated across multiple categories such as $1,000 for rent, $500 for groceries, $200 for entertainment, etc.  Once all the funds in that bucket are spent, they’re done for the month.  If these or similar systems work for you, great.

In our case, we tackle spending a little differently and only go shopping with a specific purpose in mind.  Instead of allocating money to various buckets, we scrutinize each and every purchase real time.  Nothing is bought unless it is something we really need and we’ve compared prices to ensure we’re getting a good deal.  A couple weeks ago we went to Costco and several times Mrs. DTG made quick Amazon and other internet searches to see how their prices measured up.  Oftentimes Costco won, sometimes by a large margin, and we scored a great deal on a few food and household items.

While there, a pair of sweatpants caught my eye and I debated with myself whether or not they were worth their $9.99 price tag.  In the end, I decided that since I had been wanting some sweatpants to wear around the house in the winter for a couple years, they were worth the money.  This is something we could easily afford, but I genuinely questioned myself before spending the money.

Like with the sweatpants, we occasionally buy something we didn’t intend to when we went to the store and that’s okay.  It happens and we try to limit these types of purchases.  The best way we’ve found to do this is to never go shopping for fun.  Shopping is not entertainment so we don’t give ourselves extra chances for needless spending!

Although we do not budget, we do track expenses.  This allows us to see if there are any areas we need to cut down.  One recurring expense we’re looking to drastically reduce, if not eliminate, is television programming.  We currently have DirecTV and it is getting harder and harder to justify paying $100+ a month for a service we hardly use.  The main thing keeping us from cutting the cord has been live sports, particularly college football and basketball.  This is all on me.  We know that sports and the few shows we do watch can mostly be replaced by a combination of Sling TV ($20-25/mo), an over-the-air antenna, and online streaming.  Once the current football season is over, we plan on finally ditching DirecTV for good.  At the end of the day, we’d rather have an extra $1,000 each year than pay for a bunch of channels we rarely watch.

Since we enjoy traveling, one last example relates to vacations.  Before we went on our road trip this past summer, we made a best guess of how much we thought the trip was going to cost.  This was mostly done for fun and also as additional blog material.  We knew most of the lodging and some of the entertainment costs ahead of time and estimated food and other costs.  In the end, we ended up spending very close to the estimates; however, during our trip we were never constrained by the thought of going over budget.

In each case, our mindset is not necessarily to restrict spending like you would with a budget, but to instead be mindful and deliberate about our spending.  We still have some expenses that could be optimized a bit more and we’re getting there.  For some who have struggled with keeping a budget, maybe a change in outlook will be helpful.  Instead of feeling like we’re missing out by limiting spending, tracking our expenses allows us to find areas we could easily cut out without sacrificing our quality of life.

How do you keep tabs on your spending?  Do you have a budget or go freestyle?

11 thoughts on “Budgets and Why We Don’t Have One

  1. mrsssc says:

    I get where you are coming from – we don’t budget either, but track expenses. Mr SSC grew up in a situation where they never had money and the work ‘budget’ just reacts negatively with him. At the most – I will say something along the lines of “we spent $XX on groceries last month, so lets try to trim it down this month” but we definitely do not have a rigid budget! Lately, we try to focus on “wants” vs “needs” and that helps us be more mindful.

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    • Ditching the Grind says:

      Sometimes we’ll say things like, “looks like we’re eating out way less than last year” or “Why’s the water bill so high? That’s right, so and so visited last month.” Seems like keeping a budget would be a lot of work. I guess we have the luxury of ample cash flow right now. Maybe it view on this will change in a few years.

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  2. our next life says:

    We’re in the anti-budget camp, too! It’s just not our thing. Like you, we focus on conscious spending, questioning and optimizing everything possible, but are also HUGE fans of paying ourselves first. So we slice a lot off the top of each paycheck for savings and investments, and give ourselves relatively little to “live on.” We plan to keep doing that in retirement, too, hiding most of our money in funds for the property tax, insurance, predictable utilities, so we don’t accidentally overspend and put ourselves in a bad position.

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    • Ditching the Grind says:

      I think I’m going to increase our automatic investments because we still have a solid surplus every month. If Mrs. DTG gets reassigned to the same base after graduation, which appears to be a decent possibility, we’re going to really start attacking the mortgage. That is our biggest expense and it has always been a tough balance between paying extra and paying the minimum since we could be moving as early as next August. I can’t wait for the day when we have no mortgage though!

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  3. MrFireStation says:

    I think weekly & monthly budgets were more important when we were first starting out after college and living check-to-check. Once our incomes grew (and we began living well below our means), budgeting became less of a necessity. I’ve hooked our accounts up to Mint.com in the last 18 months and it has been useful to see the trends of where we are spending.

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    • Ditching the Grind says:

      That’s definitely true and I thought about that as I was writing. Even when we first started out we never budgeted, but we were never big spenders. Now it’s all about investing more and creating new and sustainable income streams.

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  4. Andrew@livingrichcheaply says:

    Glad there are others who don’t budget either. I think when you’re naturally frugal and pay yourself first, you don’t really need to go through the hassles having a strict budget. So funny that you debated the purchase of sweatpants for $9.99 but decided for it since you had wanted it for a couple of YEARS!! Man, that is exactly what goes through my head when I make purchases. I think most people with the consumer mindset don’t think twice when spending that amount…actually they probably don’t think twice spending much more than that.

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  5. Naomi @ Rising Net Worth says:

    I like your idea of not having a budget. It’s the same trend that my husband and I have been gravitating towards lately. We’ve realized that when our income began to exceed covering the basics and fun money we didn’t necessarily have to live by a budget. We still have end-of-month savings, loan payment & investment money allocations but its not the end all be all. If one month the numbers are lower than we like we look back and see what caused the decline in allocations. So far this system has been working for us.

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