Budgets: Why We Need Them and Why We Don't (anymore)

Why we need budgets: In my mind, a budget is a tool used to categorize spending and limit how much spending occurs in those categories. I believe a budget is a useful tool for those who overspend or for those who have no idea where their money goes. I do not consider myself an over-spender, but before I started keeping a budget, I had no idea where my money was going.
I needed a budget because I was completely clueless about my personal financial life. It wasn't until I started my budget that I became knowledgeable about where my money goes. It's true that knowledge is power because the only way I've been able to bring my expenses down is knowing where my baseline is. For example, it was only after I saw how much we used to spend on groceries that I realized we could do much better.

Why we don't need a budget anymore: We already now know exactly where our money goes. As a couple, we have been keeping a budget for 7 months and personally, I have been keeping one for almost 2 years. After keeping a budget this long, we know exactly how much we spend in any given category every month and we generally stay within that range. Therefore, keeping a monthly budget at this point would be a waste of our time.

So what now? Do we never look at our expenses again? Nope. We need to figure out a new way of tracking our expenses that's less cumbersome than a traditional budget but just as valuable. It's going to take a little brain-storming and discussing with the boyfriend to figure out how, but tracking personal finances doesn't have to end with the budget.

The evolution of our budget

Like most things, our budget has undergone some changes in the past and will need to undergo more changes in the future. This constant evolution occurs because we are constantly changing and requiring different methods to keep us on track.

Of course we didn't always have a budget. When we first moved in together we kept our money separate; my income was mine and his was his. We used to divide the bills between us so that every month we would both pay about the same amount. For instance, he would pay the rent and I would pay the rest of the bills including groceries and going out expenses.
After moving to DC, I went to grad school and barely made any money and my boyfriend got a wonderful job that supported us both. For 2 years, his income paid for all of our bills so things were pretty simple. But because I did have part time jobs here and there, we agreed that I would pay for my own personal bills (cell phone, metro, going out food). This is when I started keeping track of my expenses with a budget. There wasn't much to keep up but after I graduated we decided that in order to achieve our financial goals faster we would combine our income (on paper only, we still have separate accounts) . So we began to do a combined budget where we estimated our expenses for the month and then attempted to fall at or below that mark. Of course this is not as easy as it sounds, especially when two people are involved. So over time our "budget" has turned into a document that simply tracks our expenses. The column that lists the amount we hope to spend has become meaningless and we actually ignore it now.

Should we even bother with this "budgeting exercise" every month? I don't know. At least it tracks what we spend and at the end of the year (which will be 6 months of us combining our income) we can look at our spending patterns and trends and decide if we need to make any adjustments. (My poor boyfriend will think I'm punishing him by doing this but I promise it'll be ok ,babe!) In the mean time we need to figure out if keeping a budget will benefit us or if we should turn to another method. I've heard many people say budgets don't work because they are like a diet: you stick to them for a while but then decide it's not practical and do what you want in the end. We are definitely not sticking to a budget although we're not frivolous with our spending.

The thing is I prefer to have structure in my financial life. I'm much more comfortable when I know exactly where we are in our "alcohol budget" so we know we can absolutely go out for drinks this weekend. My boyfriend, on the other hand doesn't see the point in tracking every penny because we're doing fine financially.
Bottom line is we're due for a budget change. Somehow we will need to come up with a system that works for both of us and keep trying until something sticks.

(photo: scoobay, flickr)