Incredible job of summarizing the whole spectrum of budgets in this discussion. I did some heavy analysis one year on my grocery spending and found that, even with some serious sacrifices I could probably only save 5% by cutting out certain items from the grocery store. I need calories to live, and most of that money goes directly to calories. And so I was fretting over whether to optimize maybe $10 a month on groceries.. the life lesson was that it was a waste of time. Optimizing the big items in the budget are where the big savings are--smaller house, cheaper car (or no car), shorter commute, cheaper insurance (without losing coverage), cutting the streaming service we don't watch, etc. Categorizing groceries just taught me that I can't eat less food, no matter how hard I try, and so tracking the number was useless to me. Knowing my overall spending, however, showed me precisely how much I can save.
Needing to look at what you're spending your money on seems like a different exercise than budgeting. Because if you're paying yourself first based on ambitious but realistic targets, you're "forced" to cap spending that might have been previously out of control. A chill money audit night would help you reflect on that, but the budget sheet is just the facts 😂
Thank you for being such a positive light on motivating and informing people about the different ways to become financially independent! Afford anything is Great ! thank you Paula!
Needs vs wants is not a great way to organize your budget IMO. Aside from the fact that you buy both on the same receipt, actually separating the two is also almost impossible, because many people spend most of their money on what I would call "upgraded needs." You need a place to live, but you do not need a 3000 square foot house. You need food, but you do not need beef or organic blueberries. You need a car, but it could have been a base model Corolla rather than the RAV-4 you actually bought. You need a cell phone, but you do not need the new iphone. You need clothing, but not *that* clothing. If you do enough upgrades it is pretty easy to have spending that is 90%-95% needs. This is the trick in all those Financial Samurai budgets everyone loves to make fun of. There is nothing wrong with spending this way, although if you do it exclusively, you may become one of those annoying people who thinks "$250K doesn't go very far these days," because you're spending all your money on "needs" without appreciating how much you've upgraded everything in your life. My point is not to criticize the way people spend, only to argue that the need/want distinction is fuzzy enough that it isn't particularly helpful when analyzing your own spending.
If I could give this comment 1,001 likes, I would. This is such an important (and underappreciated) point that I'm going to read this comment in one of my future episodes or videos. Thank you for pointing this out. :)
I'm on Team Paula when it comes to budgeting!
Incredible job of summarizing the whole spectrum of budgets in this discussion. I did some heavy analysis one year on my grocery spending and found that, even with some serious sacrifices I could probably only save 5% by cutting out certain items from the grocery store. I need calories to live, and most of that money goes directly to calories. And so I was fretting over whether to optimize maybe $10 a month on groceries.. the life lesson was that it was a waste of time. Optimizing the big items in the budget are where the big savings are--smaller house, cheaper car (or no car), shorter commute, cheaper insurance (without losing coverage), cutting the streaming service we don't watch, etc. Categorizing groceries just taught me that I can't eat less food, no matter how hard I try, and so tracking the number was useless to me. Knowing my overall spending, however, showed me precisely how much I can save.
thanks for encouraging to simplify the categories. Will try this out and see what changes
Needing to look at what you're spending your money on seems like a different exercise than budgeting. Because if you're paying yourself first based on ambitious but realistic targets, you're "forced" to cap spending that might have been previously out of control. A chill money audit night would help you reflect on that, but the budget sheet is just the facts 😂
Thank you for being such a positive light on motivating and informing people about the different ways to become financially independent! Afford anything is Great ! thank you Paula!
Absolutely!! I'm honored -- thank you!
Needs vs wants is not a great way to organize your budget IMO. Aside from the fact that you buy both on the same receipt, actually separating the two is also almost impossible, because many people spend most of their money on what I would call "upgraded needs." You need a place to live, but you do not need a 3000 square foot house. You need food, but you do not need beef or organic blueberries. You need a car, but it could have been a base model Corolla rather than the RAV-4 you actually bought. You need a cell phone, but you do not need the new iphone. You need clothing, but not *that* clothing. If you do enough upgrades it is pretty easy to have spending that is 90%-95% needs. This is the trick in all those Financial Samurai budgets everyone loves to make fun of.
There is nothing wrong with spending this way, although if you do it exclusively, you may become one of those annoying people who thinks "$250K doesn't go very far these days," because you're spending all your money on "needs" without appreciating how much you've upgraded everything in your life. My point is not to criticize the way people spend, only to argue that the need/want distinction is fuzzy enough that it isn't particularly helpful when analyzing your own spending.
If I could give this comment 1,001 likes, I would. This is such an important (and underappreciated) point that I'm going to read this comment in one of my future episodes or videos. Thank you for pointing this out. :)
Qapital is $6/mo btw