Budgeting, Tracking, or Neither?

I’ve added a new podcast to my rotation – Ric Edelman’s The Truth About Money.  I don’t know how well-known RE is nationally, but he works in the area where my parents live so I’ve heard of him a few times.  He has a totally different money philosophy than Dave Ramsey (low-interest debt is great!) so I started listening to it to safeguard against becoming brainwashed by DR.


During last week’s show the hosts were discussing meeting with clients and how easy it is to tell when they don’t have a budget – if they aren’t saving money and generally don’t have their stuff together, they definitely don’t have a budget.  But the hosts argued that if their clients are meeting reasonable savings goals they won’t insist on the clients making and following a budget.  Kathleen recently admitted the same thing on her blog – she doesn’t keep a budget but just has auto-withdrawals for savings and paying down debt and generally has her stuff together.  The rationale is that if you are doing the right top-level things – saving enough for the future, paying off high-interest debt, etc. – it doesn’t really matter how you choose to spend the rest of it.  Just live how you want and rest assured that you are meeting your goals.


This is idea is so foreign to me!  I’ve kept a budget and tracked my spending continuously since I graduated from college and started managing my own affairs.  I have literally never lived any other way.  However, we don’t keep a super super strict budget – we don’t always tell ourselves no when the numbers say we should – and there are lots of different interpretations of how to budget.  I can see how it might be possible to live without a budget, if we 1) were meeting all of our savings goals (we are not), 2) continued to be frugal without the budget telling us to, and 3) had more of a natural gap between our money available for spending (i.e. salary) and our typical spending.  But since we aren’t meeting our goals, because we’re apparently unable to balance all of them satisfactorily on our salaries, I feel we do need to keep a budget.


However, I draw a distinction between budgeting and tracking.  I don’t think I will ever stop tracking our spending, especially since it is so easy and automatic with Mint or your tracking software of choice.  If I’m ever going to venture out on the limb of not sticking to a budget, I’ll definitely want to have a baseline of data to work with if things go awry.


I wonder, though, if I have the personality to drop budgeting even while keeping tracking.  I suspect I’ll never be satisfied that we’re meeting all our goals.  If our only goal was well-funding a retirement account that would be possible to accomplish and then leave the rest up to whatever.  However, I think I’m such a planner that I’ll always have multiple goals – retirement, giving (we can always do more here!), travel, near-term savings, cars, children’s college – and I doubt we’ll be able to fulfill all of them to our heart’s content, so we’ll need a budget to help us prioritize.


Have you ever not budgeted or not tracked (while being responsible)?  Would you consider dropping budgeting or both in a different life situation?  Do you think it’s a personality issue?


photo by Tax Credits


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24 Responses to "Budgeting, Tracking, or Neither?"

  1. Liz Pulliam Weston used to have a great article on when you no longer need to use a budget– unfortunately I think it’s no longer up on MSN. Basically she says it’s when you’re out of debt and spend a lot less than you earn just naturally. Your savings are on auto-pilot and an emergency isn’t going to wipe you out.
    Nicoleandmaggie recently posted..Why academics don’t have Lazear contracts

    1. Emily says:

      That sounds like reasonable criteria. I suppose if I ever had money accumulating in my checking account I’d want a prioritized plan for which savings to put it in, though – not exactly a budget but still an in-advance plan.

  2. Emily too says:

    I budget, but in ranges rather than to the dollar because I know from experience that when something small-to-medium but unexpected comes up, I’m not going to save up for it for a month if I have enough room in my “groceries” or “personal spending” categories to soak it up. And this happens in some way or other pretty much every month, so I have a general idea how much extra to leave, just not always what I’m going to wind up spending it on! For me, it’s easier to do that than have separate monthly categories for “replacement running shoes,” “car tax bill” (because my 14 year old car is suddenly being taxed $100/yr by my state….grr), etc. that I only dip into once or max twice a year. When we feel like things are getting tight, we try to cut back on travel (we RSVP’d no to our first weddings this summer…aww!) or going out.

    Mint was so frustrating for me – I wanted to try tracking, but I tried it over the summer, and it just failed spectacularly. In some ways, my budget cycle is yearly and not monthly because my income is lowest and expenses are highest in the summer, so I have to prepare for that in other months – but Mint didn’t know that, so I just kept getting panicked emails about how I was about to go broke because I’d so badly overspent on category X this month. It would be one thing if it were just descriptive but it felt like it was trying to prescribe responsible habits over a timeline that really, really didn’t work for me. In the past I’ve done tracking by hand, but it hasn’t proven helpful enough to be worth the time as a long term habit. Any recommendations for purely descriptive software, though?

    1. Emily says:

      Sure, we do that too for unexpected small expenses – that’s why we use budget category maximums instead of averages.

      That is a weirdly high tax. I think my 10yo car is taxed at about $60 or less.

      That sucks that you had to say no to a wedding. I’ll do almost anything to avoid that but sometimes it just has to happen.

      Yes, Mint is very month-tied. I wonder if you can just leave out the budget feature entirely and just access the tracking and trends aspects? Our account is tied to Kyle’s email address so I don’t get the warning emails but can’t you turn them off? While I enjoyed tracking by hand, I think two people doing it together makes it a lot more difficult. I read of a few more free pieces of software at Money Under 30 this week so maybe one of those will better fit your lifestyle?

  3. Jason @ WSL says:

    I envision that I’ll get to a point where budgeting isn’t a big of a priority; although, it’s seriously engrained into our lives that I realize it may be difficult to stop.

    Ultimately it will come down to income. If our income continues to go up I don’t see as much of a need. I know my wife and I are both frugal and we’re not just going to blow money on a monthly basis, but it would be nice to not have “limits” on all of our spending categories. If we’re making enough money and we want something, then I’m fine with just buying it and not making sure it “fits” in the budget.

    However, if our income closely exceeds our expenses, then yeah, we’ll be budgeting forever. 🙂
    Jason @ WSL recently posted..Yakezie Blog Swap: What’s Your Worst Money Mistake?

    1. Emily says:

      I’m not sure I trust my frugality like you do. I grew up with a spender mindset and I suspect the only thing keeping me from acting it out is our low income!

  4. reneeg says:

    We budget and track expenses meticulously right now, and I expect we will until we have a down payment. But that’s because things are just so tight at this point, and the future is so uncertain. I hope one day we won’t have to be this fixated on the numbers, and we’ll be able to switch over to more general guidelines for our money. Perhaps we’ll employ Quicken to do the tracking for us and have a monthly review session. But I, personally, can’t wait to be free of the weekly categorical analysis.

    1. Emily says:

      Same same except that I enjoy keeping such a close eye and hand. 🙂

  5. Leigh says:

    I’ve *always* tracked and I would never consider not tracking. Last year, I actually tried an experiment to see how often I needed to do my manual entry (I was doing it way too often for my sanity). I found that if I did it too infrequently, it just got tiresome, but too frequently was also a pain. I’ve settled into once a week and the 2nd business day of the month (to do the end of month round-up) that seems to be a good balance.

    I actually never budgeted until I graduated from college. I always was good at saving and not spending, so it wasn’t a problem, but with the huge income jump and going to a consistent monthly income, I wanted to budget my money and I’m so glad I did. Having that data from all those years (I started tracking just before my 16th birthday…) made starting to budget easier since like you said, I had somewhat of a baseline to start with.

    I honestly don’t worry too much about the numbers and I mostly use the budget as a forecasting tool to make sure that I can save what I feel is “enough” or that my cash flow won’t crunch if I have to throw some extra stuff into cash flow one month.
    Leigh recently posted..The Limiting Reagent on Travel: Vacation Days

    1. Emily says:

      It’s funny you say you don’t worry about the numbers in your budget too much when I know you have a very detailed breakdown!

  6. Jessica says:

    I’ve always tracked since I started college. I didn’t start having a budget until I graduate. I know I will always track…it’s ingrained in me. I may possibly get to a point where I don’t need a strict budget.
    Jessica recently posted..Saving Money with a Scooter

    1. Emily says:

      It’s totally ingrained for me too – and Mint makes it so easy!

  7. Thanks for the link — I absolutely track my spending and Mint does make it easy. I skip the budget section and simply use the goals and the transactions. I think you could do it, Emily, but you wouldn’t want vague goals — like “save more for retirement” — I have four goals currently in Mint, and two completed. Pay off student loans, pay off car, six month emergency fund, max out IRA.
    Kathleen @ Frugal Portland recently posted..Weekend link love

    1. Emily says:

      I totally agree on the necessity of specificity when formulating goals without a budget. Congrats on your progress!

  8. bogofdebt says:

    As of right now I need to budget and track. I like to have the control as I know how I was in the past. It also helps me to have estimates of when I can save enough money up to do something (whether its for the wedding or paying of a debt or whatever). Eventually I would hope that I would be on autopilot and be able to save/pay bills/debt etc. Near future? Probably not–eventually I want to have a family and I think that would definitely mean I need to have a budget in order to stay on track.
    bogofdebt recently posted..Firday’s Link Loving

    1. Emily says:

      I can see us going in the same direction. Maybe when we get real jobs for a while we might not need the tight budgeting, but later in life with kids it will become necessary again.

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  11. When my now-husband and I first started to live together, I paid the bills from our accounts and that was that. Other than writing down how much I paid every month, we didn’t do anything in terms of tracking or budgeting yet we still were able to save money pretty easily.

    However, once we found ourselves in a bit of a financial pickle, I started to really pay attention to our spending and we didn’t spend anything we didn’t have to. I think a little under a year ago, I finally put together a budget and we have been pretty decent at sticking to it.

    I have to say even though we saved money without a budget, we definitely save more money with a budget. I wonder if those without a real budget would accept the challenge and be willing to try it out for a month or two and see if there is a difference.
    thethriftyspendthrift recently posted..The Emotional Cost of Purchasing a Home – Part One

    1. Emily says:

      I would think that a budget does make a difference – just being aware – but for some it might not be worth the effort or they like having a little less awareness. Particularly if one is totally anal about finances like I am, it might help to be a bit more relaxed and not keep a budget if you are on track to spend within your means and meet your goals anyway. Congrats on finding a system that helps you work your way out of your pickle and save more!

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