The freedom of budgeting

[Valvore]

I am not the most Mustachian person out here BUT three years ago I did start budgeting and paying off all my crazy hair on fire debt. I love telling people about FIRE and MMM (especially after a few drinks). There's a spectrum of people, but in response to the budgeting aspect some complain that they don't want to be subject to a budget or like to live a certain lifestyle and a budget would interrupt that. Most recently, this 24 year old gal I met who made 140K(!) last year said she wanted to "enjoy life now instead of putting it off for the future."  She has a mortgage, two new car loans, RV loan and eats out almost every single night.

The reality is, I have more freedom then I've ever had in my life and that BECAUSE I budget. This weekend, my DH and I went on a spontaneous weekend getaway trip up to the snow. We literally talked about it Thursday and left Friday. I was able to pay for hotel, ski lift tickets, board rentals and all food for less than $500 cash. I could never imagine spending that kind of money when I was in debt. We regularly exceed our savings expectations because of our budgeting and can do more of the things we value most (travel, experiences, visiting friends and family).

I feel more free than ever! I love budgets because I get to take control of my life instead and CHOOSE what I do with my money. Just wanted to share since this is the first time DH and I have done a spontaneous trip that costs this much (and no face punches please. DH got a bonus and we figured we deserved a little romance). The freedom of choice is magical.

I know you guys feel the same. Do you have any examples where you have more freedom because of your "limited" budget? (Obviously FIRE is the ultimate freedom but I am curious for the freedoms before you get to FIRE).

[Cool Friend]

I'm still paying off the last of my debt, so I'm not super comfortable making spontaneous plans like that yet, but I will say that it's given me mental freedom.  Money always terrified me and I buried my head in the sand about it for a long time.  But ignoring it wasn't relieving me of the stress of money, it just made that stress worse. What's amazing is that even though I can technically afford some fun purchases, my idea about what's "fun" has shifted.  I don't feel deprived of fancy consumer commodities because I know they don't make a significant difference in my quality of life.

[Parizade]

Do you have any examples where you have more freedom because of your "limited" budget? (Obviously FIRE is the ultimate freedom but I am curious for the freedoms before you get to FIRE).

On the 2019 Cohort thread some of us were talking about losing interest in travel while getting closer to FI. This has happened to me and I was a bit alarmed by it at first, but then I began to realize I'm just so happy with my beautiful life that I want to be still and live in it. Budgeting forces you to make choices, and to make those choices you have to think about what you really want long term. At some point along the way you realize that all those small choices have added up to a life that reflects what you value most. You look in the mirror and see that you have become your best self. What could be better or freer than that?

[SunnyDays]

My frugality over many years gave me the freedom to take 2 unpaid leaves from work - one when I was burned out and desperately needed a break and one to look after my terminally ill mother.  No amount of fancy stuff would have been worth not being able to do this.  Like the commercial says:  "Priceless."

[DadJokes]

I've led FPU classes for a couple years now, and it is amazing how much a budget can help people to see where they are spending their money. In many cases, where the most money is spent is not indicative of what that person values most, so it leads to greater intentionality with spending.

Even in our own life, when we receive money unexpectedly, it tends to disappear fairly quickly, whereas if we plan for it and put it in the budget, we are more able to put it towards our goals.

One thing that our budget gives us the freedom to do is have season tickets for the local professional hockey team (go Preds!), which is something we value much more than eating out all the time or going to Starbucks.

[daffodil2001]

Budgeting allowed my husband to finish his bachelors degree debt free. It also allowed us to buy the house we plan to live in until we’re too old to live independently, with a 20% down payment. We have some friends who are also looking to buy a house but have pretty much nothing saved. Our incomes are comparable; the big difference is our choices to live frugally and save vs. their constant new vehicles, vacations, and nights out at the bar.

[meandmyfamily]

Parizade-I love how you worded that!

[Arbitrage]

Budgeting did a lot of things for us - helped identify where the fat was, helped allow us to make educated saving decisions, and helped give us a lot more comfort about big, irregular expenses.  Rather than getting all worked up about the big car repair, tax bill, vacation cost, or whatever, we could allocate money in the budget regularly, so that when those unexpected expenses popped up, we knew that it was already in the budget (or if not, we could tell exactly how much to adjust by).  I currently find it very nice for identifying exactly how much to lump into my taxable brokerage account each month, without worrying that I might need some extra cash set aside for whatever I forgot about.

[Apple_Tango]

I agree!! I love budgeting and it actually feels like freedom/permission to spend more!

I used to just pay my bills and plop some random amount of money into savings and investments, and as long as I had money left over in my account, I felt like I had “budgeted” well.

The thing is, I was not being intentional with my money. I frequently felt deprived because I wasn’t sure how much I could spend and still be “safe” for the month. Now I know the average of what I spend per month on everything. I know if I go too far on a line item this month, to just reel it in next month. To me a budget is not limiting at all!

I think people get frustrated because they don’t make their budgets realistic. They make ideal budgets based on dreams and wishes and feel frustrated when they can’t stick to it. What I found worked well was tracking my purchases for about 2 months before I started making my budget. Also, I use plastic to buy pretty much everything, except for the categories where I tend to overspend. (Food and clothes). I use cash envelopes for those budgets and it works great! Can’t spend money that I don’t have with me!

[efree]

Sure, a budget can be helpful in some situations but not to me. I don't budget at all and never have and hopefully never will. I don't see any upsides to it, only downsides. A budget would limit me, not free me, and I value my freedom too much.

[undercover]

Jocko Willink would agree with you: discipline = freedom.

https://www.amazon.com/Discipline-Equals-Freedom-Field-Manual/dp/1250156947

Not saying you should go buy the book just saying there is some definite truth to this.

And I agree as well. There is a paradox in choice. Budgeting requires you to make choices. I don't actively budget (as in write it down), but I mentally remind myself on what I do and don't value and try to only spend on the things I do. That said, writing it down is an excellent way to visualize it and stay motivated so I'd recommend it.

[HPstache]

I agree.  I teach the Dave Ramsey FPU course which is geared for people who do need the discipline of budgeting.  I often hear couples who have money problems say that budgeting actually gives them freedom.  It seems counter-intuitive, but when you have the "permission" to spend money it feels very freeing and it also solves a lot of marital problems and makes spouse actually happy for each other when they buy things within the bounds of the budget.

[HBFIRE]

I'll admit I've never had a budget.   I do track our expenses closely though, and look for leaks/unnecessary spending.  Personal Capital is pretty great for that.  Each month I"ll evaluate our spending and see what holes there are.  My philosophy is to try to optimize our finances/lifestyle and what we value.  If something in our finances is not optimized based on what we value, it nags me until fixed like a rock in a shoe.

[sparkytheop]

I did not created a budget until I wanted to more aggressively save to build a house, and help my son with school.  It helps me to see that I am actively working toward the goal, even though it isn't that tangible.  I also set up some spending money for myself, so I don't feel "guilty" about taking some money away from going to that savings.

As a single person with a now-adult (though still in school) child, I don't know that I'll have an actual budget once he is done with college and I have built the house.  At that point, the bigger things will be done, and I'll still be young-ish.  So, as long as I'm saving what I need to meet future needs, the rest will be there to do whatever I want with.  That will be freeing in a different way.

[Valvore]

Interesting array of responses. Thanks everyone. I'm not a super strict budget-er either. I have my budget, I track what I spend but I regularly go over or under in some categories. I readjust my budget every 6 months to a year to try and get an accurate idea of spending and stay mindful if I'm creeping up too high in one category.

I've led FPU classes for a couple years now, and it is amazing how much a budget can help people to see where they are spending their money. In many cases, where the most money is spent is not indicative of what that person values most, so it leads to greater intentionality with spending.

Even in our own life, when we receive money unexpectedly, it tends to disappear fairly quickly, whereas if we plan for it and put it in the budget, we are more able to put it towards our goals.

One thing that our budget gives us the freedom to do is have season tickets for the local professional hockey team (go Preds!), which is something we value much more than eating out all the time or going to Starbucks.

This is exactly what I'm talking about! It's being intentional and directing money where you want it to go, like season tickets. That's so awesome. I bet when people hear your have season tickets they assume you make big bucks but really you're just smart.

Budgeting allowed my husband to finish his bachelors degree debt free. It also allowed us to buy the house we plan to live in until we’re too old to live independently, with a 20% down payment. We have some friends who are also looking to buy a house but have pretty much nothing saved. Our incomes are comparable; the big difference is our choices to live frugally and save vs. their constant new vehicles, vacations, and nights out at the bar.

Wow! Debt free bachelors degree. That is freedom. Student loans are still lingering in my life and I can't wait for the day they are dead.

I agree!! I love budgeting and it actually feels like freedom/permission to spend more!

I used to just pay my bills and plop some random amount of money into savings and investments, and as long as I had money left over in my account, I felt like I had “budgeted” well.

The thing is, I was not being intentional with my money. I frequently felt deprived because I wasn’t sure how much I could spend and still be “safe” for the month. Now I know the average of what I spend per month on everything. I know if I go too far on a line item this month, to just reel it in next month. To me a budget is not limiting at all!

I think people get frustrated because they don’t make their budgets realistic. They make ideal budgets based on dreams and wishes and feel frustrated when they can’t stick to it. What I found worked well was tracking my purchases for about 2 months before I started making my budget. Also, I use plastic to buy pretty much everything, except for the categories where I tend to overspend. (Food and clothes). I use cash envelopes for those budgets and it works great! Can’t spend money that I don’t have with me!

This is 100% true. When I help friends with their budgets I always start with the "how much you think you spend" budget. Then I tell them to track to figure out "what you actually spend" budget. Then we go to "what you should/realistically spend" budget. Good for you using cash envelopes, I envy people who can do that. I have the memory of a goldfish and if I did cash everything I'd forget what I spent things on. I also really love travel rewards. I'm a firm believer in making personal finance personal. You seem to know yourself well. Keep it up.

Sure, a budget can be helpful in some situations but not to me. I don't budget at all and never have and hopefully never will. I don't see any upsides to it, only downsides. A budget would limit me, not free me, and I value my freedom too much.

 

I think everyone should make a plan for themselves and if you feel budgets don't work for you then so be it. But you're highlighting my point in that the general public see budgets as limiting where I see it as permission to spend. For example, I have a $200 "entertainment" budget each month. I can spend this on Netflix, going to the movies, bowling, whatever I want as long as it all stays under $200.

[TSpacagna]

I used to track my expenses top down, by which I mean saying "ok, I spent this much, what is left?" Usually it was nothing and went to credit cards from there.
Now I'm planning a few days before the month starts, and as the Dave Ramsey crowd will say, it really felt like I got a raise.
I actually feel in control with a predetermined budget, and it has significantly powered my charge towards being debt free... and it is flexable...if I spend too much on one category, I just shift it from another.
So the exact opposite of a restricting force for me.

[efree]

Sure, a budget can be helpful in some situations but not to me. I don't budget at all and never have and hopefully never will. I don't see any upsides to it, only downsides. A budget would limit me, not free me, and I value my freedom too much.

 
I think everyone should make a plan for themselves and if you feel budgets don't work for you then so be it. But you're highlighting my point in that the general public see budgets as limiting where I see it as permission to spend. For example, I have a $200 "entertainment" budget each month. I can spend this on Netflix, going to the movies, bowling, whatever I want as long as it all stays under $200.

I understand your point and it's nice that it works for you. However, I don't need a budget to have a permission to spend, I already have it by default. I always give myself permission to spend as much as I want. The key is to not want much.