The Personal Finance Hour, Episode 25: Why Does Everyone Hate Budgeting?
Published on - October 26th, 2009 (by J.D. Roth) 
On today’s episode of The Personal Finance Hour, I’ll join Jim from Bargaineering to discuss personal budgets. What works and what doesn’t? And why are so many people scared of them? (Personal finance writers especially seem afraid to talk about budgets.)
This show will air live at 3pm Pacific (6pm Eastern). It’s much more entertaining for everyone when you call in to participate. If you have some thoughts on budgets — are they good or are they evil? — then join us on the show. (When the show is over, I’ll update this page to give a brief run-down of what we talked about.)
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This article is about Administration, Budgeting
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I missed the show, but I think I can tell you why I don’t budget. I spent too much time living above my means, being unemployed in an expensive area. It was incredibly depressing to try to figure out how much I spent on things like rent, groceries, electricity, and always come up short. That experience comes up for me every time I try to make anything budget-like.
These days, while things have improved, they have not changed. I make enough money but I share a household with the king of not budgeting. Trying to budget based on both our incomes and expenses is crazymaking; trying to do it with just mine when we share so much is inaccurate, messy, and complicated.
Instead I shovel everything I can into savings and live off the rest. It doesn’t always work – sometimes I spend my savings – but I have not carried a balance on my credit card in quite a few years.
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I spend a lot of time at work helping people budget, but I’m not good at doing it for myself, and here’s why:
I make enough money that my regular costs are not even close to what I make in a month. For people who get $694 each month in social security and have rent of $500, you bet there’s a budget. Even if you have food stamps, you have to make sure you have money left for toiletries, a phone bill, etc.
But if your household income is, say, $5000 per month, and your rent, utilities, and loan payments add up to, say, $2500, what’s the point of a budget? The other $2500 gets divided up between savings and food and things you need and trips and so on.
*Note that I’m NOT saying it’s easier or more fun to budget when you make less. Just that it’s more necessary and might make more sense. I’ve been in the “making less than $1k/month” camp and I budgeted like mad.
It seems that every month my expenditures come out to roughly the same amount, but some months (Nov & Dec) it’s $1000 worth of plane tickets and other months (June & Sept) it’s when we both realize we need $400 worth of new clothes for the season. In July or August it’s a vacation. Some months it’s $1k in car repairs. Some months we eat out 5 days a week, some months less than 1x/week. It’s not very predictable.
I’m not a big spender, but every time I’ve done a budget I find myself wondering where the heck the rest of the money goes. And that makes me feel bad. And I don’t think I should have to feel bad since in the end I’m living well within my means and saving a ton. And that’s why I don’t like to budget. I can’t help but think others may be having the same experience.
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I don’t know if you would call what I do “budgeting.” I just know exactly how much money I have on any given day and how much is already spoken for!
A few times a year I write out a schedule of payments. I take the estimated net pay due each pay period, subtract the payments I know will be due (including minimum payments due and monthly offering to savings account), then subtract the generalized amounts for consumables, then subtract allowance, and what’s left over is targeted for debt repayment (we already have an emergency fund).
I have a weird memory and once I write something down, it’s generally in my head for good, so planning my spending this way I never forget what my commitments are.
I don’t always hit the target; something always comes up. But this rather informal budgeting system has worked pretty well for me for years, and has the virtue of being easily adjusted on the fly.
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I don’t mind budgeting… It’s just part of solid personal finances. Some may find it boring but it doesn’t take much time or effort to do every now and then.
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I would go insane without our budget. With our budget in place we know how much is coming in, where it needs to be allocated for needs and the rest gets divied up between this or that savings or spending account. Without the budget I would feel guilty about every single purchase that wasn’t a need and constantly question whether or not something was really a need. With the budget and savings in place, we can freely spend the portion that we allowed ourselves to spend without guilt.
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I’m not a big spender, but every time I’ve done a budget I find myself wondering where the heck the rest of the money goes. And that makes me feel bad. And I don’t think I should have to feel bad since in the end I’m living well within my means and saving a ton. And that’s why I don’t like to budget. I can’t help but think others may be having the same experience.
That’s pretty much how I feel!!
I budget myself pretty harshly, just what my paychecks are, where the money’s going, etc. I have a built-in amount of spend money, and that’s for whatever I decide I have to have in that two-week period. (Usually $35, it’s surprising how few things I really want when I limit myself and I know I have to save for the bigger things; that and I appreciate the bigger things that much more! I love my $149 coat to pieces.)
Now, for my husband’s checks… Good freaking luck! I can never be sure of what bills will come in when, how much they’ll all be or how much time we’ll have to do things. I take out what I can for savings, and the rest is taken as it comes. I’m responsible for the emergency savings, so that’s under my strict control. (I’m also responsible for investing and travel savings. I have more discipline in this regard.) That way, we’re still able to make good progress towards goals, but my husband doesn’t feel punished by having to follow some sort of spending plan. (He also gets his own amount of “blow money” from each of his checks, and it’s a lot more than mine! Mine’s low because it’s self-imposed to keep impulse purchases non-existent.)
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I personally like budgeting because it helps me put my money where I value it most – so it actually helps me enjoy life more.
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I like a budget because it gives me a sense of control over something that can feel out of control. But when I have money conversations with clients, I’m always amazed by how few have budgets or are willing to create budgets. There’s a huge emotional context around money, and many times people would rather be in denial than look at the emotions that arise from it, because it is too painful. And if you’re part of a couple, it can be even more difficult.
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Patty (#8) hit the nail on the head. I love budgeting for the same reason…it makes me feel in control of something that can easily get out of control. I live very much on the edge as far as finances go…every little bit of money counts, so a budget is essential to make sure I’m both keeping track of every dime spent, plus following a plan to save whatever I can. I’d be lost (financially) without my budget.
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I actually like budgeting – it helps me to feel in control of my money. I like knowing that the bills are covered, and that ‘spending money’ is really ok to spend, since it’s planned for. I also enjoy squeezing out extra money to save and invest.
I was irresponsible with money when I was younger – I not only squandered a small inheritance, but then got into debt too (and I didn’t have a budget then, unsurprisingly), and spent several years paying it back while living on a very small income, so budgeting was essential. As a result of all that, I’ve kind of gone to the other extreme these days, and become super-sensible! I can’t imagine living without a budget now. It doesn’t take a lot of time or effort, and I don’t see it as a restriction – it’s just a tool to help me manage my money so I can enjoy it both now, and in the future.
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I think people hate budgeting because it feels restrictive, I can only spend a $100 a month on entertainment or whatever. Budgeting feels like someone saying no, no you can’t spend your money on that, no you can’t undertake that activity because its not in your budget, etc.
This is one of the reasons we use a spending plan. We get paid – we pay ourselves first (401k and short term savings) – we pay bills – our allowance – anything left over goes to savings. We use an allowance system, so we each get a set amount to spend (the same amount) for half the month with covers all discretionary spending which for us includes gas, groceries, dry cleaning, personal care, eating out, clothes, etc.
So I can spend my allowance on shoes if I bring my lunch every day to work or I can eat out every day and not have any money for anything else. I have control over a set amount of money and when I run out I can’t spend anymore and better hope I’ve got some bread and peanut butter in the pantry at home. This works well for us. Technically we have a budget but we don’t have set budget categories.
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I budget but not a traditional “track every expense” kind of budget.
I mainly keep track of my account balances and make sure I’m spending less than I earn. I have a lot of money automatically going toward retirement savings.
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I think we should change the name of budget to “spending plan.” No one likes the word budget because it sounds restrictive. If you say I have a 3 month spending plan it takes away the sting. I’m in gazelle mode for debt repayment now. Soon in my spending plan I will “pay” for savings for various long term and short term purchases.
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Most persons dislike budgeting because it tells the truth. It outline the lifestyle that he/she lives and need to stop in order to have a better personal finance but the individual prefer to live the high rolling life and stay in a debt ridden lifestyle and so neglect sticking to a budget.
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Ok I think I DO budget but only one month at a time. I just made a list of items: paycheck less automatic savings, less fixed expenses, plus other money coming in – savings to cover property tax, reimbursement from work, husband’s share of mortgage etc, for example. Based on that I know I need some extra money from savings to cover everything and leave me some to pay for utilities, groceries, and screwing around. Usually something comes up and I have to adjust later in the month. It doesn’t look like a budget to me because it’s just scratched out on post-it notes or whatever’s handy, and I almost never stick to it. But it keeps me from overdrawing anything, keeps me aware of what’s available, and helps me put the max into savings while still having some play money. Just cuz I can’t think ahead more than a month or a couple of weeks, doesn’t mean it’s not a budget.
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I attempted to listen to the broadcast live; the stream buffered fine, but the audio was missing…
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Listening now I think partly it’s about motivation. JD, you mentioned you tracked to the penny when you were trying to get out of debt, but now that you are, you’re more relaxed about it. Partly it’s that you’ve got good habits that keep you “in goal” but also you don’t have that big motivational push.
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budgeting is scary for many as it’s time consuming and takes a lot of work. check out mint.com, it’s a new site that does all the budgeting for you. pretty handy tool if you need the motivation.
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