I Have a Love-Hate Relationship With My Budget

I have a love-hate relationship with my budget but not for the reasons you would think.

I finished up my 2017 budget yesterday–gasp, yes 11 days later than normal.  My careful readers know I typically spend New Year’s Day updating my prior year spending and net worth and finalizing my current year budget but not this year.  I started working on it in mid-November but sort of forgot that it wasn’t complete.  For me, budgeting is such a given that the lack of a budget has no impact.

I’ve been budgeting for 34 years now.  My early budgets had 4 categories–rent, car payments, gifts, spending (everything else).  I now have 21 categories–I have the various utilities dual home ownership requires and I’ve broken spending down a bit further (vehicle, boat, home improvement etc.).  Doing my budget each year takes about an hour and most of it stays the same from year to year.  My spending budget is the same as it was 10 years ago–I didn’t spend it all then and I don’t spend it all now.

What I love about my budget is it is a permission to spend plan.  If I want to do something, and the cost fits in my budget, I can do it without thinking much about it.  I don’t have to finagle, I don’t have to justify, I can just do it.  I don’t even care whether I have money in that particular line item–I can save money in one area and spend it in another.

So let’s say in June Mr. Ms. Liz and I decide to take an epic vacation.  Let’s say my $10,000 budget for vacations (yep, it’s that high–I’m retired after all!) isn’t adequate for my portion of this epic trip.  But in June, I am under budget on my spending category by $2,000. I can put that $2,000 towards the epic vacation without much thought.  It was budgeted and it wasn’t spent so it is available for whatever I want.

In a strange way, budgeting is freeing.  I don’t have to think or worry (I’m a worrier y’all!) about my money because I have a budget.  I know if I stay within my budget, I’ll meet my goals.

What I hate about my budget is it is a permission to spend plan.  Last night, I was updating my quicken with the spending I’ve done so far this month.  I looked at my income statement and noticed that I haven’t spent much money yet this month.  I then started thinking about what I “need” since I have the money to spend.

I try to time infrequent expenses so they don’t cause a budget overage so I’m thinking this might be a good month to buy a new biking helmet.  Or I could just spend less than I budgeted and finish the month with a surplus.  That’s a great way to start a new year–as long as I don’t crash on my bike . . .

A helmet is a bad example because head protection is super important but sometimes my budget encourages me to spend money on things I don’t value enough.

Each spending decision I make is an effort to balance how much I value this thing or this experience vs. how much I value having this money.  If I value what that money can create for me more, then I don’t spend it but if I value the thing or the experience more, then I spend it.

If I feel like I have extra money in my budget, it changes how I evaluate that balance.  I demand less value from spending than I should.

I signed up for the Frugalwoods Uber Frugal Month program this month.  Partially because I knew I would learn something from Mrs. Frugalwoods and partially because I find her writing and pictures so amusing I knew I would be entertained–and I have not been disappointed.

They don’t budget, because they find a budget to be a permission to spend plan and their goal is to spend $0.  I think they’re right–I think I would spend less without a budget.  But I think this only because I have budgeted for so long that balancing my spending with my other goals happens automatically.

Not long after I retired, I was chatting with my Mom’s financial planner.  He said the thing his retired clients struggle with the most is spending enough money.  Their thrifty habits served them well when working towards financial independence but work against them once they have achieved it.  They weren’t using their money to live their best life.

His advice to me was to spend more money and live my best life.  So I’ll continue to think about my budget as a permission to spend plan–and I’ll be shopping for that helmet this week.

Is your budget a permission to spend plan?

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Author: Ms. Liz

A CPA, I retired at 51 and I am helping people create their fantastic futures!

3 thoughts on “I Have a Love-Hate Relationship With My Budget”

  1. For me the budget is not permission to spend it’s a road map for where we want to be financially. Our mindset is that if we stay frugal (don’t miss out on things we love), thanks for the link to Mrs Frugalwoods, we can just live the life we dream. On the other side of the coin, we would not stay in 5 star hotels even if we were billionaires. We are happier in our camper living life simply.

    Of course the biggest unknown is future medical insurance and medical expenses prior to Medicare. Is there a post in your future on this topic.

  2. Today, I did my first budget for years. Like you, we are retired. We live well within our means, so don’t watch our spend too closely. We do live a pretty simple (not frugal) life, except that we do travel lots.
    However, I realised that we had money sitting in savings accounts that was earning virtually no interest, (e.g. Replacement Car Account), so I decided it was time to invest it better, which then led me to think if I worked out a budget, I would be able to identify what money I was likely to use this coming year, and what could safely be invested.
    Now, I just have to track the spend to see how good my budget is….
    Our Financial planner said the same as your Mom’s – spend some of the money. However, we feel like we are already living the best life we can, and our natural thrifty nature holds us back!

    1. Thank you for stopping by Erith. High five to you for doing your retirement budget! Watching those funds sit idle is tough–I keep too much in bank accounts too. Keep your tracking method simple (my husband uses a day timer book) and you’ll be able to stick with it. Here’s my post on how we do our tracking: https://www.mslizmoneymatters.com/?p=1227. I’m glad to hear you’re getting the same advice from your financial planner–sounds like we both need to live it up!

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