Why Budget?
I follow the budgeting for dummies method. I save $X every month, and whatever is left over can safely be spent. That way I am sure to meet my savings goals, and I don’t have a lot of overhead keeping track of what I am spending my money on or if I am over my estimates for the year on a given category.
Why categorize and track every dollar spent when my way is so much easier?
Well, it clicked for me last week why anyone would want to do it the hard way, and track where each dollar is spent and compare those numbers to an annual budget. What did I discover? I don’t need a budget now and my method works great. But in the future, what happens when I don’t have a job and my income is not a predictable and steady stream? Aka, when I retire, how will my lack of discipline now adversely affect my retirement? Easy, I will have no clear idea how much it costs me to live the life I lived while I worked, nor will I have the information available to determine if I have the financial resources to live the retired life I want to live. Instead, I would live in fear that I did not save enough to retire, and either post pone retirement indefinitely, or spend the first several years trying to figure out how much I can spend each year without knowing if I am forgetting something that will burn through my retirement savings before I am done being retired.
Now I need to start budgeting more traditionally to prepare for the future. The question remains, how am I going to build a yearly budget, and track my expenses with the plan of using the information gathered over the next 30 years to aid in determining how and when to retire.
This information will also be useful if a discussion of semi retirement, relocation or career changes comes up. I imagine in the next 30 years, at least one of those will come up.