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Can someone explain the value of tracking expenses in detail? Seems to me expenses are either routine and ongoing or they are voluntary or unexpected. If they are unexpected, they can’t be predicted in any case.
Some people say they need to know what they spend. What you spend is easy. It is the difference between your net income (after taxes and saving) and what you have left the day before for the next payday or end of the month. Can it be anything else – except if you live on credit, of course, in which case you probable don’t want to know what you spend anyway.
Do you need a budget? Why? Your budget is set by saving first, and never ending a month with a unpaid credit card balance. Spend the difference any way you like. In a month or so you will know what life style your income can sustain. If it is not the life you want then you must increase your income or look for what spending must change …as I write this in my local Starbucks.
Am I exaggerating the simplicity? No doubt many people think so, but look closely, what am I missing?
We too limited our spending to what remained after taxes and savings, and not incurring credit card debt and we did not need a budget. After a few years though, we found that a spending plan, or “budget” helped us to spend that cash more efficiently. So not required, but we prefer using one.
You mentioned unexpected expenses. As you know, some authors in the financial media refer to future expenses such as a new roof, replacement of HVAC, and others as “unexpected”. Unpredictable yes, but not unexpected. We guesstimate what these future costs might be, whenever they might occur and escrow away cash. As for any actual unexpected expenses, like anyone else the best we can do is to spend our assets prudently and hope for the best.
In the last month we needed repairs for a leak around our chimney-$3500 and repairs/replacement of front steps – $5,000, both on our vacation home. Neither expected nor anticipated, but a pool of cash set aside for nothing but if stuff happens will take care of both. Neither cared if I was working or retired.
I agree wholeheartedly Dick if you have regular income. As I have written we are utilizing our retirement accounts to pay bills while awaiting claiming Social Security in ‘28. But still I don’t track expenses. We are frugal by nature and have no debt. Every expense that can go on the credit card without a surcharge does. Each month the bill comes in and we pay it. Every quarter I tally up our year to date withdrawls from our retirement accounts. This is done mostly to be sure we don’t exceed the 12% tax bracket. And that’s it. I don’t tally up the credit card bills quarterly because the withdrawls tell me how much we have spent including occasional teller withdrawls for a little jingle in our pockets/purse.
Again, I follow Thoreau’s philosophy of: Simplicity, Simplicity, Simplicity.
I find it enjoyable to Track spending. Sort of like how some people find jigsaw puzzles or crossword puzzles enjoyable.