My Personal Finance Confessions

I have a confession to make.  I’m not a perfect person.  I know.  It’s hard to believe.

But seriously.  I know there are so many rules that you’re supposed to follow when it comes to personal finance.  And I think I do a pretty good job at following most of them.  I spend less than I earn.  I transfer money automatically to my savings account every month.  I contribute to my 401(k) up to the company match.  I fully fund my Roth IRA every year.

There’s one thing that I don’t really do.

I don’t budget.

There.  I’ve said it.

I was talking to a friend the other day, and she was lamenting how her mother was so impressed with her sister, because her sister budgets and has a vacation fund.  This friend was unemployed, but had been staying above water thanks to her savings that she’d built up.  She wanted recognition from her mother on this fact.  I commended her!  I’m very impressed by her high level of savings.  I assured her that, once she got back to work, she could start a vacation fund if that’s something that is important to her.  And that’s when my admission came out.  I told her that I don’t have a budget, either.

Why don’t I have a budget?

I don’t have a budget because it would be really boring and not very useful.  I have many consistent expenses every month (rent, utilities, car payment, student loans payment, etc.) which I know will happen each month.  Most of those costs are pretty non-negotiable, though I would consider paying more towards my loans to lower the principle.  The expenses I have every month that aren’t exactly the same each month are things like food (grocery store, lunches, dinners) and gas.  But in those cases, I have a total that I try to stay under.  I keep my grocery spending under $100 a month, and also keep my dining out to once a week, maximum, (and trade-off who pays with my boyfriend when we go out), and try to keep those expenses below $100 as well.  I’m trying to cut down on how much I spend at the cafeteria (i.e. trying to bring my lunch more often, buying cheaper options) but I try to keep my expenses in the cafeteria below $30 a week.  Yes, when you add up all this money over a year,  it’s quite a bit of money.  But I like going out to eat every once in a while.  And I need to have groceries.  I tend to spend less than any of the budgets.  But I don’t actually budget the money, i.e. figure out what money I have available to spend, then divide it between all of my expenses.  And I’m not really sure where I can lower any of my expenses (outside of the variable food), since I rarely go shopping.

So, am I making a big mistake by not budgeting?  I know where my money goes by tracking my expenses (after the fact) with Mint.  But I don’t plan things out.  I just inherently know my limits, and try to avoid spending money when possible.