Do you think it’s worth doing personal budgeting? For me, person budgeting means saving every receipt and tracking how much you spent on clothes, groceries, Auto, Pets, etc., etc. and printing quicken reports every few months. Then, looking at the reports with my wife every few months and say things like: “we’re spending too much at Costco, do we really need to get organic milk?”

I'm thinking budgeting, for my stage of life (no debt, other than my properties), is not worth doing, and it’s better (and more fun), just to track net worth monthly, but I wanted to see what you thought.

I’m talking about budgeting personal finances here, with tracking rental property income and expenses a separate (and necessary) task.

I've just started taking over the finances from my wife, and I wanted to get your thoughts: Is personal budgeting worth it? Thanks - Bill

I don't bother with personal budgeting, but I am debt free and my monthly bills (fixed costs) are fairly minimal.

My husband and I came up with a system that has served us well for the past 45 years. This comes from the time we were "living in sin" and were dirt poor. We were in love, but college roommates and needed a way of breaking out expenses.

We got a little memo book. When the bills come in, they go in the book. When we sit down to pay the bills, we would alternate -- one month I would pay the rent or mortgage, and my husband would pay the utilities, the next month we would switch. Every payment got written down in the book, so there was no confusion whose turn it was to pay which bill. That kept one of us from wasting electricity or other utilities, and what we were paying was always top of mind. We each had our own checking accounts. We paid our own credit card bills and paid for our own clothes. We each made our own car payments back in the days we had to finance cars.

Of course, now we pay our bills on line, but we still write down who has paid what in the little book. We can keep track of things like annual car insurance and property taxes.

Years ago I took the time to set up spending categories in Quicken which have of course evolved over time. We track our personal spending to the penny - recently my husband charged a $.53 newspaper ;)

So at any time, we CAN see how much we are spending, but nowadays we don't care that much. We are pretty conservative but will buy the food and clothes and household goods that we want. Can't take it with you.

One "hat" my father wore was a aerospace engineer for more than 35 years. Almost every day he packed a bagged lunch to take to work while most of his fellow engineer's went out to lunch almost everyday.

So I asked my father whey he was being so cheep to himself. He responded with the following:

a) by saving his lunch money everyday, he would be in a much better financial position.

b) then he could retire 5 years earlier, having saved over $100,000 during the 35 years.

c) also with those savings, $100,000 lunch money, he invested in real estate so on the day of retirement, his lunch money real estate holdings were worth half a million dollars -- all from "lunch money".

Sometimes, when we're not saving as much as we'd like, we'll save a month's receipts and go through the expenses. That gives us a good baseline as to what utilities/gas/groceries/etc cost in a regular month, and helps us figure out if something was odd for the month--- car repair? insurance due? property taxes? Christmas presents? hosting a gathering? etc.

So, suppose I run out to buy supplies for a renovation, and DS2 and I grab lunch while we're out. The two of us might eat for $10-$20, depending on whether we hit a drive-thru or a sit-down restaurant, but if you multiply that times nine or ten times in a month, you're suddenly looking at an expenditure of $100-$200.

Before, I always liked putting all my spend onto credit cards, which were paid off in full every month. I liked collecting the points, and then getting to use those points on something interesting, like Amazon. (Books! Wahoo!) I also liked having a record of everything that got spent where.

Now, DH gives me $x twice a month to spend on household stuff--- gas, groceries, eating out, etc. And I found that it changed my spending habits. I'd be less inclined to break a $100 or a $20 than I would be to whip out my card. If I take only $5 to the grocery store because I want to buy three things, then that keeps me from putting 20 things in my cart, because I had forgotten I also wanted x, y, and z. Seeing money physically leaving my hand with each transaction was very helpful, and it became more of a game to see how much I had left over at the period before my next $x came in.

Great to hear your story from college, RathdrumGal. I had to look up what a fiber studio was. I thought it had to do with fiber optics and light, but now I know :-)

As I see it, what you do now, which makes good sense to me is: keep track of the big stuff like annual payments and taxes, while spending on what’s important to you, like a Fiber studio.

David, I agree, you’re not going to cut much from groceries, and I think it’s best to focus on the bigger things. That’s one thing I like about tracking net worth, it allows you to see the whole picture of your finances at once, and see what the big things are. And yes, the Credit card statements. I just saw the citi card we use breaks our spending into 10 areas, including restaurants and Auto Rental. Geeze we spent $6k last year eating out. (it one of my favorite things to do:-)

Charlie, I don’t think organic cows are all the same color, like chocolate milk cows. I don’t think they can smoke, though.

Razorback Tim, what do you mean when you say: “We do a personal budget each month.”? Does that mean you plan what you will spend on, or do you track how much you already spent, or both?

WMH: do you still track your spending to the penny? If so, why, if you don’t care that much anymore? We too have been tracking every penny, but I don’t think it does that much for us, and it’s better, easier and more fun, just to track net worth every month.

Plenty, I like the "lump sum allocated to credit cards" and like David mentioned above, and I see that with our citi card, our spending is broken down into 10 catagories, on their website.

I do have some concern though, right now when I save every receipt to categorize ever expenditure, it also acts as a security check. That is, if there is a charge on my card and I don't have a receipt for it, foul play may be involved. That has happened at least once to us. So, if I don't enter every receipt I might not notice a fraudulent charge.

Deanna, that seems great, when you need to figure out where the money is going "save a month's receipts and go through the expenses". That seems like a nice comprimise.

My kids convinced me to download “Mint” application. It is designed to track all money coming in or out, not cash, but all cards and bank transactions.

Honestly, I don’t look for budget expenses. (If it dead it’s dead). ;)

I still track it. I think it's important to reflect sometimes on where one's money is going. But since we are not in active "savings" mode these days - not saving for retirement, college, housing anymore - but instead are living in the days we saved FOR - we spend what we want when we want to.

Very difficult question.

If you took any of these rich landlords and sat them down and spit out the breakdown of their spending, they would learn volumes. Their instincts would catch some immediate changes.

But, you would risk killing the artist. The crazy landlord that cuts the caulking tube down at the base and finishes the job ahead of schedule. That spirited landlord needs to be free of the credits & debits so they can dream through the next goals.

Knowing the spending averages is advice that comes directly from you to you. The only advice you can trust without suspicion.

For me it is a joy to see every penny counted. I glance at reports and spot patterns.

This past year I learned that skipping breakfast until I first did some physical activity resulted in more work getting done. A dreadful thought for some, but that indicated that they didn't necessarily enjoy the day ahead.

By changing projects, enjoying work more, I was able to keep weight off, avoid distractions, and compose priority lists. Yep, all this because I counted out how much money was being spend here and there.

Budgeting is great for those who find themselves with too much month at the end of their money. But for those who have developed the kind of mindset that Robert J(CA) describes, it's not necessary.

Since day one of our marriage, we've vied to see not what we can spend, but what we can put away/invest.

Still Learning: I just told my wife “in two years (our daughter) will be ‘off the payroll’”. She got a good laugh out of that. Thanks! It does seem important to know about your spending when you retire. Especially what expenses will go away (hopefully our children off the payroll) and what will increase (travel?)

I hear you, Luba! when I started tracking net worth, seeing our net worth go up, as your mortgage liabilities went down, was the biggest kick I got out of it.

JR, That’s a real good point: “assuming that you net worth is going up most every month at a rate acceptable to you, that detailed budgeting is not necessary” And if it’s not, then it’s time to look closer at all that stuff your buying from Costco :-)

Thanks, WMH, for explaining why you still track spending. I guess a lot of deciding what to track is a personal decision, and there’s not one right answer. And I can see the “Once you've learned frugal habit, you don't often lose” so much in my wife. During college she wrote down every penny she spent in a book, because she didn’t have much. Now that we have more, she hasn’t changed much. I think she wishes I would be more like her.

Smokowana, that’s interesting what you said about “That spirited landlord needs to be free of the credits & debits so they can dream through the next goals.” For me, it means the importance of not to be penny wise and pound foolish. And funny you mentioned skipping breakfast, I’ve recently started to do some work before breakfast and then reward myself with breakfast. It’s funny how we do things like eat breakfast after we wake up, because that’s what we do. I think it’s great to try another way.

As for personal finances, I’m going to see if I can get my wife to read this post so we can come to an agreement on future strategies for spending.

My thinking is to track the rentals with Quicken, only track net worth on a spreadsheet, look at the credit card statements for spending categories and if our net worth is not going as we like it, then track every penny until it gets to where we want it.

Thanks everyone!! Bill

I don't budget but I did during the lean years.