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It's because once I started doing it I found that I didn't actually know what I spent money on, not really. I found that my rough estimates for where my money w

It's because once I started doing it I found that I didn't actually know what I spent money on, not really. I found that my rough estimates for where my money was going were way off and lagged actual changes in my behavior by a number of months. Just as an example, I still don't feel like my family is spending close to double what we used to on groceries during the pandemic, but I know that we are because I have months of history to compare against. So then you could say, great, so you know that for sure now, so what? Well, this is actionable! Continuing with the example, now we can look at the upward trend in groceries and ask whether we're happy about that. Is it an overall upward trend, or is it coming from something else that we've deprioritized? In this case, yeah, it's pretty directly coming out of eating out and socializing, so not something we need to worry about. But in other cases it has provided data to inform hard decisions about where to cut. And that actionable trade off thing isn't even my favorite part! My favorite part is peace of mind when we buy stuff. I don't have to wonder whether we can afford things, we either have the money for it, or we can move money for it from some other thing we were gonna spend it on, or we just can't afford it. But there's no guesswork, which is so much more relaxing than what I used to do (guess and hope). Your mileage may vary, but for me, it's some of the best invested time I spend.

alexmingoia 6y ago
Do you put savings and necessary expenses aside when paid? To each their own. If it works for you great. I can’t imagine sitting down and tracking whether my grocery expenses fluctuated from one month to the next, since it can’t impact my ability to pay bills and save. If I was worried about not having money for groceries I would set that money aside when I get paid. I also have a family and am the sole income earner. I just set aside everybody's spending money / allowance and they can do with it as they wish.
- sanderjd 6y ago
  Your system sounds simpler but more rigid than mine. In my system, everything is a negotiable trade off. There is not static bills and savings to set aside, there is a trade-off between those things and spending. If I want to spend more on groceries or socializing or vacations in some period of time, that is just a trade-off against all the other things in my budget. Maybe I'd rather find ways to lower my bills than my spending. Maybe I want to save less in some month so that I can spend more on something that will bring us more joy that month. It is easier to make these decisions on trade offs with good visibility into all spending and saving. But I would also suggest that it seems like you're actually doing the thing you said you don't understand why people do. You have a budget, it just has a relatively small number of categories. But the answer to your question is that people do this for the same reason that you do your setting aside of money for bills, savings, and spending.

alexmingoia 6y ago

Do you put savings and necessary expenses aside when paid? To each their own. If it works for you great. I can’t imagine sitting down and tracking whether my grocery expenses fluctuated from one month to the next, since it can’t impact my ability to pay bills and save. If I was worried about not having money for groceries I would set that money aside when I get paid. I also have a family and am the sole income earner. I just set aside everybody's spending money / allowance and they can do with it as they wish.

sanderjd 6y ago
Your system sounds simpler but more rigid than mine. In my system, everything is a negotiable trade off. There is not static bills and savings to set aside, there is a trade-off between those things and spending. If I want to spend more on groceries or socializing or vacations in some period of time, that is just a trade-off against all the other things in my budget. Maybe I'd rather find ways to lower my bills than my spending. Maybe I want to save less in some month so that I can spend more on something that will bring us more joy that month. It is easier to make these decisions on trade offs with good visibility into all spending and saving. But I would also suggest that it seems like you're actually doing the thing you said you don't understand why people do. You have a budget, it just has a relatively small number of categories. But the answer to your question is that people do this for the same reason that you do your setting aside of money for bills, savings, and spending.