I have a secret to tell. I’m One Frugal Girl who does not budget. At least not the strict sense of the word. I have a general idea of how much money I can spend on things, but I don’t sit down at the beginning of the year and define just how much I can spend right down to the penny.
I’ve tried to budget in the past, but I always find that I don’t keep track of my spending in a way that makes budgeting easy. My husband and I keep detailed records of our finances. I can generate cash flow, income and expense reports in a moment’s notice that depict how much we earn and spend down to the penny. This tracking is easy. We pay for everything with a credit card and meticulously document exactly where our money goes each month.
The problem with budgeting is that I can’t seem to keep track of exactly how much I’m spending as I’m spending it. For example, if I budget $100 for clothes. I need to keep that number in mind as I go shopping. When I buy shoes for $20 and clothes for my son for $30 I need to go update my budget so that I recognize I can only spend $50 more.
Every time I’ve tried to follow a strict budget I’ve failed to update the numbers as I spend. So when I go out shopping the next time I don’t know if I can spend $20 or $75. Then I get frustrated with myself for failing to update the documentation and ultimately give up on it entirely.
I no longer worry about exactly how much I spend in a particular area and while I look at the numbers on the credit card at the end of the month I don’t keep track as I go along each day. I do make notes as I review the credit card statement though. I track my overall expenses in very specific categories. If I find that I’ve already spent a lot on one specific area I stop myself from heading to any of my favorite stores for awhile. The same goes for any other category for which I seem overextended.
The truth is that these days I don’t spend much money. I try to live my life as a quasi-minimalist. I purge when I can and try to bring new things into the house unless they are absolutely necessary. My no-budget approach works because I don’t desire many new things these days and don’t find myself craving too many things that require a credit card.
I know a lot of people live by a budget and couldn’t imagine having it any other way. Others can’t stand budgeting and avoid it like the plague. How about you? What are your thoughts on budgeting? Do you find it helpful or hurtful? Do you use a specific system to help you stay on track and how often do you find yourself diverging?