7 ms·

As a middle-aged, married man, my current view is: 1. I had kept personal accounts for a while, until I realized my expenses swayed month-to-month, but within

by somberi 10y ago

As a middle-aged, married man, my current view is: 1. I had kept personal accounts for a while, until I realized my expenses swayed month-to-month, but within a narrow band (+- 10%). This made the "insights" less interesting and approximations worked well enough for my use case. I suspect that this is so, for most people. For who have not kept personal accounts, what I am describing is similar to when you got your Fitbit - The first 2-3 weeks are full of glorious insights and a month goes by and you do not really need a fitbit to tell you how many steps you walked. Approximation approaches real count. Same for personal ledgers. 2. I now focus my efforts on income expansion rather than cost control. Some of you may say, recording costs is not controlling it. In that case, I find accounting, even less useful (once I have arrived at approximate cash outflow). Income expansion, puts me in a different frame, which I find strangely empowering. Even more so than the satisfaction that comes from having controlled costs.

mason55 10y ago
This was my experience as well. I used Mint and YNAB off and on through my 20's when I was less responsible with money. As I got older and was able to consistently reduce my expenses and my salary went way up I found that my spending was so far below my income that tracking just didn't make sense any more. Combined with a bunch of automated transfers for short- and long-term saving and keeping a large buffer of cash in my bank account, I don't really ever think about money any more.
- ndonnellan 10y ago
  Something that I haven't seen mentioned here is the benefit of budgeting for things that you want to spend money on but do irregularly enough that you might forget. I was never irresponsible with money, instead I just tended to save and save (and think I was saving a lot) and not really know what to do with it. Now that I'm consistent with budgeting (YNAB), I'm confident I'm saving for the future AND for things like birthdays, xmas, charity, cycling, etc and spend more on those things. It's like a contract with myself. I totally agree with a corollary you're implying to "you can't change what you don't track": - "It's meaningless to track something that doesn't change" I can see a future where I stop tracking incidental or recurring, automatic bills and just focus on those other things.
  - Infernal 10y ago
    My wife and I have been using YNAB for almost four years, right after the most recent non-cloud version was released. The biggest thing it has helped us with is accounting for regular but infrequent expenses, with respect to having reasonable expectations for the limits on our regular and frequent expenses. Before, if we had a month where our bi-annual car insurance bill coincided with our quarterly pest control bill and a higher-than-normal utility bill (say a hotter or colder month than usual), then we would have a very thin month and need to really cut back on discretionary stuff. Now, YNAB makes it super easy to set money aside each month for those infrequent expenses, such that there is always a just-the-right-size pot of money sitting there when the bill comes up. Now, for example, we never have to change our grocery buying routine in response to other expenses, as those other expenses are accounted for a piece at a time every month. Even utilities, I average the last 12 months of utility bills, and set that amount aside every month. When we have a low bill, that pot grows, and when we have a high bill, that pot shrinks, but no other spending or saving is affected by those fluctuations. It's great. I'm tempted to move to something like ledger/hledger or some other plain-text accounting tool when YNAB 4 goes out of support, but the thing I'm not sure how to implement in those systems is YNAB's categories, the "virtual envelopes". Does anyone have a better idea than this? https://gist.github.com/simonmichael/a1addcb652da4e78b183 https://gist.github.com/simonmichael/a1addcb652da4e78b183
    - bloat 10y ago
      There's a few options if you google "envelope budgeting ledger-cli".
- restalis 10y ago
  "I don't really ever think about money any more" I see myself in a similar situation, but in my case the thought is "I don't really ever worry about money any more", which is different. That large buffer cash can be invested, or (if it's significantly large to your interest) - hedged, at least. That requires thought.
  - mason55 10y ago
    Yeah I think that my key was automating the big pieces. By the time I automated retirement savings, short-term savings, long-term savings, and all my big expenses (really just rent since I don't have a car). With all that automated, and my savings levels being very aggressive, I just need to make sure the buffer in my checking account doesn't go down each month. If it gets a little lower then maybe I skip a few meals out for a month. But I will say, to get to this point took many years of trying to budget and "failing". Using those tools helped by letting me internalize my spending and re-baselining what "normal" spending felt like. I put "failing" in quotes because each time I went over budget or stopped tracking for a few months I felt like I had failed but in reality I was learning what worked for me.
restalis 10y ago
"Some of you may say, recording costs is not controlling it. In that case, I find accounting, even less useful (once I have arrived at approximate cash outflow)." Accounting is supposed to be a practice that contributes to your financial discipline, among others. Is financial discipline extraneous to you?
- bgilroy26 10y ago
  Corporations have to make good use of practically all of their money as a responsibility to their shareholders. People without major financial goals (or whose financial goals are predictable to be automated away in the case of the grandparent post's retirement) are free to run a surplus and do away with discipline as long as their behavior is regular.
CJefferson 10y ago
The fitbit point is I found particularly true. Similarly, I found it a huge improvement in my life to track every calorie I ate for 3 weeks or so. Now I have a much better understanding of my food. While I thought I understood where my calories were coming from, it turns out I really didn't. After a month, I no long found calorie tracking not useful, I knew at the end of each day approximately how many I had eaten, without explicit tracking.
ryanmarsh 10y ago
I, like you, focus the majority of my energy on income expansion. I also find cashflow forecasting to be essential because capital is necessary for growth. Accounting serves me best as a feedback mechanism for estimating and planning for cash. Cost controls are secondary but important.
- lloeki 10y ago
  Cost control becomes truly important when for some reason you unpredictably lose a good chunk of revenue. Happened to me, twice. Having a framework in place within which I could enter damage control mode ASAP to face that double-step staircase was quite literally a lifesaver.
wccrawford 10y ago
Oddly, this does not end up true for dieting, as I've found out. I dieted, lost a lot of weight with a prescription pill and then more on Weight Watchers. I thought I knew what I was doing, and could "count calories" without actually tracking them. What I found was that I might know certain things that I eat often, but anything even a little new ended up being badly estimated. If I want to continue losing weight, I need to track. And my estimates went both ways, too. I discovered this one day when I was crazy hungry, and it turned out I'd massively under-eaten that day (or the day before? I forget), which can be as bad for dieting as over-eating thanks to the lowered metabolism and then compensatory over-eating that eventually happens.
- marcosdumay 10y ago
  Counting calories is much harder than counting money. Also you have to count them while you are hungry - never a good time. At the end of every month, you have a precise measure of your expenses estimation error. Just take a look, if it's too far from the expected, look for the reason and recalibrate your counting. But there's just no way you can do this with calories.
- rsync 10y ago
  "Oddly, this does not end up true for dieting, as I've found out." I don't think yours is a proper analogy for the parents ... In your case, the analog to income expansion would be exercise and "banked exercise" in the form of muscle added that has a baseline caloric upkeep just to keep it around. I have no idea if that analogy works ... it's more complicated than his simple income behaviors ... this is just to say that your analogy is probably not a great one.
- CaptSpify 10y ago
  Interesting, because I've had the opposite experience. I learned how to count calories, and now I never need to look up anything specific, I can just make an educated guess. I never did pills or WW, so I wonder if that's related.
  - sliverstorm 10y ago
the_gastropod 10y ago
I don't really grok how income expansion and spending reduction are seen as mutually exclusive activities. Do both!
0xmohit 10y ago
> I now focus my efforts on income expansion rather than cost control. This becomes all the more important when the real rate of inflation is in double digits. (Sounds unbelievable, it's not in certain economies.) Unfortunately, the recurring expenses do not form even half of the total expenses. While it might not seem worthwhile to keep personal accounts, a cumulative view of the spends over an entire year does present useful insights.

by somberi 10y ago

mason55 10y ago

This was my experience as well. I used Mint and YNAB off and on through my 20's when I was less responsible with money. As I got older and was able to consistently reduce my expenses and my salary went way up I found that my spending was so far below my income that tracking just didn't make sense any more. Combined with a bunch of automated transfers for short- and long-term saving and keeping a large buffer of cash in my bank account, I don't really ever think about money any more.

ndonnellan 10y ago
Something that I haven't seen mentioned here is the benefit of budgeting for things that you want to spend money on but do irregularly enough that you might forget. I was never irresponsible with money, instead I just tended to save and save (and think I was saving a lot) and not really know what to do with it. Now that I'm consistent with budgeting (YNAB), I'm confident I'm saving for the future AND for things like birthdays, xmas, charity, cycling, etc and spend more on those things. It's like a contract with myself. I totally agree with a corollary you're implying to "you can't change what you don't track": - "It's meaningless to track something that doesn't change" I can see a future where I stop tracking incidental or recurring, automatic bills and just focus on those other things.
- Infernal 10y ago
  My wife and I have been using YNAB for almost four years, right after the most recent non-cloud version was released. The biggest thing it has helped us with is accounting for regular but infrequent expenses, with respect to having reasonable expectations for the limits on our regular and frequent expenses. Before, if we had a month where our bi-annual car insurance bill coincided with our quarterly pest control bill and a higher-than-normal utility bill (say a hotter or colder month than usual), then we would have a very thin month and need to really cut back on discretionary stuff. Now, YNAB makes it super easy to set money aside each month for those infrequent expenses, such that there is always a just-the-right-size pot of money sitting there when the bill comes up. Now, for example, we never have to change our grocery buying routine in response to other expenses, as those other expenses are accounted for a piece at a time every month. Even utilities, I average the last 12 months of utility bills, and set that amount aside every month. When we have a low bill, that pot grows, and when we have a high bill, that pot shrinks, but no other spending or saving is affected by those fluctuations. It's great. I'm tempted to move to something like ledger/hledger or some other plain-text accounting tool when YNAB 4 goes out of support, but the thing I'm not sure how to implement in those systems is YNAB's categories, the "virtual envelopes". Does anyone have a better idea than this? https://gist.github.com/simonmichael/a1addcb652da4e78b183 https://gist.github.com/simonmichael/a1addcb652da4e78b183
  - bloat 10y ago
    There's a few options if you google "envelope budgeting ledger-cli".
restalis 10y ago
"I don't really ever think about money any more" I see myself in a similar situation, but in my case the thought is "I don't really ever worry about money any more", which is different. That large buffer cash can be invested, or (if it's significantly large to your interest) - hedged, at least. That requires thought.
- mason55 10y ago
  Yeah I think that my key was automating the big pieces. By the time I automated retirement savings, short-term savings, long-term savings, and all my big expenses (really just rent since I don't have a car). With all that automated, and my savings levels being very aggressive, I just need to make sure the buffer in my checking account doesn't go down each month. If it gets a little lower then maybe I skip a few meals out for a month. But I will say, to get to this point took many years of trying to budget and "failing". Using those tools helped by letting me internalize my spending and re-baselining what "normal" spending felt like. I put "failing" in quotes because each time I went over budget or stopped tracking for a few months I felt like I had failed but in reality I was learning what worked for me.

restalis 10y ago

"Some of you may say, recording costs is not controlling it. In that case, I find accounting, even less useful (once I have arrived at approximate cash outflow)." Accounting is supposed to be a practice that contributes to your financial discipline, among others. Is financial discipline extraneous to you?

bgilroy26 10y ago
Corporations have to make good use of practically all of their money as a responsibility to their shareholders. People without major financial goals (or whose financial goals are predictable to be automated away in the case of the grandparent post's retirement) are free to run a surplus and do away with discipline as long as their behavior is regular.

CJefferson 10y ago

The fitbit point is I found particularly true. Similarly, I found it a huge improvement in my life to track every calorie I ate for 3 weeks or so. Now I have a much better understanding of my food. While I thought I understood where my calories were coming from, it turns out I really didn't. After a month, I no long found calorie tracking not useful, I knew at the end of each day approximately how many I had eaten, without explicit tracking.

ryanmarsh 10y ago

I, like you, focus the majority of my energy on income expansion. I also find cashflow forecasting to be essential because capital is necessary for growth. Accounting serves me best as a feedback mechanism for estimating and planning for cash. Cost controls are secondary but important.

lloeki 10y ago
Cost control becomes truly important when for some reason you unpredictably lose a good chunk of revenue. Happened to me, twice. Having a framework in place within which I could enter damage control mode ASAP to face that double-step staircase was quite literally a lifesaver.

wccrawford 10y ago

Oddly, this does not end up true for dieting, as I've found out. I dieted, lost a lot of weight with a prescription pill and then more on Weight Watchers. I thought I knew what I was doing, and could "count calories" without actually tracking them. What I found was that I might know certain things that I eat often, but anything even a little new ended up being badly estimated. If I want to continue losing weight, I need to track. And my estimates went both ways, too. I discovered this one day when I was crazy hungry, and it turned out I'd massively under-eaten that day (or the day before? I forget), which can be as bad for dieting as over-eating thanks to the lowered metabolism and then compensatory over-eating that eventually happens.

marcosdumay 10y ago
Counting calories is much harder than counting money. Also you have to count them while you are hungry - never a good time. At the end of every month, you have a precise measure of your expenses estimation error. Just take a look, if it's too far from the expected, look for the reason and recalibrate your counting. But there's just no way you can do this with calories.
rsync 10y ago
"Oddly, this does not end up true for dieting, as I've found out." I don't think yours is a proper analogy for the parents ... In your case, the analog to income expansion would be exercise and "banked exercise" in the form of muscle added that has a baseline caloric upkeep just to keep it around. I have no idea if that analogy works ... it's more complicated than his simple income behaviors ... this is just to say that your analogy is probably not a great one.
CaptSpify 10y ago
Interesting, because I've had the opposite experience. I learned how to count calories, and now I never need to look up anything specific, I can just make an educated guess. I never did pills or WW, so I wonder if that's related.
- sliverstorm 10y ago

the_gastropod 10y ago

I don't really grok how income expansion and spending reduction are seen as mutually exclusive activities. Do both!

0xmohit 10y ago

> I now focus my efforts on income expansion rather than cost control. This becomes all the more important when the real rate of inflation is in double digits. (Sounds unbelievable, it's not in certain economies.) Unfortunately, the recurring expenses do not form even half of the total expenses. While it might not seem worthwhile to keep personal accounts, a cumulative view of the spends over an entire year does present useful insights.