Budgeting isn't as straightforward as it seems

[TastyChillySauce00]

It turns out that our income dictates our expenses.  I realized that because I was earning well each month, I was indulging in more without really noticing it.
So, when you're budgeting, always look at both sides: how much you spend and how much you earn. The latter figure has a much greater impact than most people realize.

Yep, and it's called lifestyle creep, when you got more income you become careless and buy much more because you thought you still have enough money left for living and savings and there is also cashless effect where paying with digital money have lower "Pain of Paying" making you easier to spend more, it's especially important because many of us here are holding bitcoin.

The thing that helps me manage my expense better is always to set aside money for the basic needs for the whole month and save up the rest to something that I don't usually spend as easily as cash or bank balance. It makes managing money easier because whenever you buy something that is out of your usual routine, you'll realize that it will both make your saving less in the future and you might not even need it in the first place.

[Oasisman]

I divided it into categories: public transportation, health, groceries, household items, taxis, cat, other expenses, entertainment, rent, and clothing.

It turns out that our income dictates our expenses.  I realized that because I was earning well each month, I was indulging in more without really noticing it.
So, when you're budgeting, always look at both sides: how much you spend and how much you earn. The latter figure has a much greater impact than most people realize.

That’s a lot of categories to consider.

How about you just have fewer categories like: Savings, Emergency, Expenses and Investment.
That’s a much more better category from all that you’ve got lined up. You’ve just got to be disciplined enough to not take money from either category to be used for another.

I was thinking the same. That is one meticulous way of tracking expenses, when we can just narrow it down to "necessary expenses". Set aside the amount needed for it and then move the rest to savings, emergency, and investments.

Yeah, setting aside some money for savings, emergency funds, and investments really takes a lot of discipline and patience.
We all know the 50/30/20 method is pretty common, and this is easier than tracking expenses meticulously like the OP, but then again it is not easy to execute because it needs discipline, especially when we are too luxurious with our "wants" expenses.

[Tonimez]

Why?

It turns out that our income dictates our expenses.  I realized that because I was earning well each month, I was indulging in more without really noticing it.
So, when you're budgeting, always look at both sides: how much you spend and how much you earn. The latter figure has a much greater impact than most people realize.

I learned that living a little less than your actual earning can keep you within check over time when things are no longer the way it used to be and I learned this around 2 years ago when I had a similar experience about income reduction. Normally, our income tend to decide our expenses in most cases because we find out that we end up increasing our expenses without knowing when there's a slight addition to our income.

But I also understand that this is human since every human crave for a better lifestyle and whether you planned for it or not, you will always find reason to go beyond your previous expense amount when you have an increment and when your income no longer flows in as usual, everything becomes difficult to moderate again.

Every rise in income will be default want to make you upgrade your wardrobe, upgrade your transportation, notice how small the upkeep you have been sending to a person under your care is, the need to give more arms and so on. So we just have to deal with it from the beginning and budget a little less than our income so that when it goes lower, you don't need to strain the hell out  yourself to adapt again.

[Pi-network314159]

It turns out that our income dictates our expenses.  I realized that because I was earning well each month, I was indulging in more without really noticing it.
So, when you're budgeting, always look at both sides: how much you spend and how much you earn. The latter figure has a much greater impact than most people realize.

You are right, if we properly analize our expenses on a regular basis we would notice how and where our money goes, or what we spent our money on. But honestly speaking I can't have that courage to keep record of any expenses because I will be dissatisfied with what I will get. Just like one of my friend who went to the bank and printed his statement of account for like 2 years, the money he saw that he has spent was enough to do reasonable thing in life and yet he is still suffering. He fell down in tears and said what have I been doing with all this money

[traderethereum]

Keeping track monthly of your expenses helps you to budgeting so you know how the situation. You can see how much you can saves monthly and prepare the future. You can monitor which expenses you can reduces so you can have more money to save. Budgeting helps you control your income and not just spending without purposes. You will appreciate your income because you don't use it for unnecessary things. It is worth to do and it's never too late to start because that is for your best.

[viljy]

If prices are constantly rising and incomes are not, then creating a budget is pointless. In such a situation, people simply adhere to the principle of cutting expenses on everything they can, as a preventive measure against unpredictable circumstances.

Generally, creating a budget seems like a good idea... until the first unforeseen circumstance arises, such as expensive medical treatment, an unexpected fine, an accident, or the breakdown of equipment you rely on to earn money, anything can happen. And you realize that all those calculations are nonsense.

However, this is just an opinion based on my own experience. Someone else may have the exact opposite experience.

[Opiate32]

This is something many people don’t notice until their income drops. When money keeps coming in regularly, some expenses slowly becomes part of our normal lifestyle and we stop questioning whether we really need this things.

Budgeting works best when we don’t just calculate what we usually spend but also know what we can comfortably live on if things change. That difference matters especially when income is not stable. And being able to reduce spending by 20 percent without sacrificing basic needs show that some expenses were flexible all along. That is why we need to start learning to recognize those expenses early before a financial setback forces us to.

[Sulegzy39]

Earnings are not the only factor that determines financial stability. It also heavily relies on one's capacity to effectively manage earned income. Many people struggle to save enough money at the end of the month, even though they have a good income. It becomes challenging to guaranty financial security if they spend more than they make, regardless of how much their income rises.

Making a budget serves the dual purposes of ensuring appropriate financial management and cutting costs. in order to prevent it from becoming a barrier to meeting obligations and reaching future financial objectives.

[oll]

If prices are constantly rising and incomes are not, then creating a budget is pointless. In such a situation, people simply adhere to the principle of cutting expenses on everything they can, as a preventive measure against unpredictable circumstances.

Generally, creating a budget seems like a good idea... until the first unforeseen circumstance arises, such as expensive medical treatment, an unexpected fine, an accident, or the breakdown of equipment you rely on to earn money, anything can happen. And you realize that all those calculations are nonsense.

However, this is just an opinion based on my own experience. Someone else may have the exact opposite experience.

You're wrong on both counts.
First, inflation doesn't affect your view of your income and expenses; both values rise. Moreover, you'll see true inflation based on average values, based on your own experience.
Second, if you have an unexpected expense, such as medical expenses, you'll always mark it separately in the app. This way, you can always ignore it when calculating your average monthly expenses. I have plenty of such expenses, and they don't interfere with my overall budget picture.
There is no such thing as too much information, especially when it directly concerns your life.

[Dr.Bitcoin_Strange]

Especially if you have your own family (wife and kids), the need for making budget is very important, I feel it's much easier on someone when all the responsibility the person have is just theirself but when you have other people as your responsibility (maybe you are the breadwinner of your family), then it is very important to work with budget, otherwise you might not be able to even feel satisfied with your income even if the money is considered to be big. A bachelor could have less responsibility and can therefore be able to have more savings and investment even when they don't intentionally keep a budget list. So, based on your status in your family or otherwise, one should be able to know if it's important that they start to work with planned budget or spend without planning.

[pusaka]

Especially if you have your own family (wife and kids), the need for making budget is very important, I feel it's much easier on someone when all the responsibility the person have is just theirself but when you have other people as your responsibility (maybe you are the breadwinner of your family), then it is very important to work with budget, otherwise you might not be able to even feel satisfied with your income even if the money is considered to be big. A bachelor could have less responsibility and can therefore be able to have more savings and investment even when they don't intentionally keep a budget list. So, based on your status in your family or otherwise, one should be able to know if it's important that they start to work with planned budget or spend without planning.

When we're single, our expenses are limited to ourselves, perhaps only occasionally giving to our parents. However, after we get married, our needs increase, especially if we have children. Recording our expenses is crucial because it will determine our financial well-being.

Even if our income is relatively modest, if we can manage our finances well, we can still be financially secure, even if we may not be able to save due to our limited income. Therefore, we can find additional income to support this.

[davetremblay]

if your income changes a lot each month i think budgeting based on the average can be misleading. i would build the basic budget around a conservative low income month and treat anything above that as extra for savings or optional spending

[leonair]

Yes, this is really logical. When income is high, unnecessary expenses increase. We also purchase things that are not very important to us. But when income decreases, we think deeply about spending any amount of money. And because of this, we avoid products that we do not have a problem buying and try to fulfill our basic needs first. That is why those who earn less do not have extra money at the end of the month, and the same happens in the case of those who earn more. But those who have a good understanding of financial management and like to save can save some money even if they earn a home income, and they can save even if they earn more. Here I think the main thing is financial management. Those whose financial management is good have good savings, while those whose financial management is bad, no matter how much money they earn, they are disappointed at the end of the month and have no savings.

[boyptc]

It's true. An emergency fund is essential for a comfortable life. It's more important than it seems, because living paycheck to paycheck is a stressful existence that affects your health.

Having an emergency fund isn't given importance by those people who have someone that they can ask for help. But they don't know that those people that they're going in times of need are not always there to help them.

Someone who's responsible despite that they earn just enough, still are saving some cash for their emergency fund.

Because when you have experienced those dire times and you have asked everyone you know and none helped you, that's the reason why having an EF is going to save you and will give you peace of mind.

[Taricoins]

One way that was advocated is to set aside the first X% of your income (regardless of how much it is) for retirement/investment. So if your income goes up, so does the absolute amount that goes into investment/retirement. This makes it more sustainable.

Or you could even increase the X% more when your absolute income goes up. That way, your investment/retirement goes up more when your income increases. I tend to do this.

The problem with this is if that wholesome investment goes south, like what the OP said and you have already used the bulk of your income to invest ? I thought it was the other way round, budget your basic need then keep substantial for investment, maybe it's just my approach.

Another thing about budgeting you didn't account for is inflation without the source of income increasing, how to you do that when the price of everything is going up whilst your income dwindles

[9ja Amaka]

In budgeting, how frequently income comes in helps to make the right budget. Budgeting when income varies from month to month is very had and if the income is not paid at the right time. Remember, many factors can influence the scheduled budget.

Salary delays are one factor. Extra responsibilities are another factor. Having a straightforward budget seems difficult when discipline is poor. However, at times we have to set aside discipline if we really want to take care of our responsibilities.

[yixichloro2xx]

Keeping track monthly of your expenses helps you to budgeting so you know how the situation. You can see how much you can saves monthly and prepare the future. You can monitor which expenses you can reduces so you can have more money to save. Budgeting helps you control your income and not just spending without purposes. You will appreciate your income because you don't use it for unnecessary things. It is worth to do and it's never too late to start because that is for your best.

Without proper budgeting and tracking of your income, you may end up spending most of your money into things that aren't necessarily.  The funny thing is you won't realise it quickly until your whole money is exhausted whereas you still have  many unsettled bills on ground. This is a very common issue from which people are battling with. I remembered when a friend of mine who works in a construction company, always complain that he doesn't usually have any money left with after he receives his paycheck, most times he will have to borrow money from loan apps just to survive. His issue was he spends extravagantly, it was until he started budgeting, from there he was able to separate his important needs from wants, and got some cash left to save. Even in our bitcoin investment, you also need to budget how you want to use your discretionary income, like how many percent goes into buying, emergency savings and consumption. All these things are normal financial knowledge a person must have, to save themselves from any  unexpected situations, like debt.

[SUPERSAIAN]

Budget planning is incredibly difficult. Something always slips my mind, and getting it right is a real challenge. As you earn more money, your desires grow, and new things you want or need constantly pop up in your life. Just calculating priorities and figuring out where to cut back is exhausting ,often more exhausting than it needs to be, because while our income stays the same, our expenses always keep rising.

[Japinat]

This is something many people don’t notice until their income drops. When money keeps coming in regularly, some expenses slowly becomes part of our normal lifestyle and we stop questioning whether we really need this things.

What you said is right. You think that just because you can afford because of your high income, then automatically you don't question whether its necessary or just a waste of money. You instantly buy what you can easily afford, but when the income stops, suddenly you start to explore tips on how to save some money and get rid of unnecessary ones. If you have done it before, you could have save a lot and won't worry if your flow of income temporarily stops.

Financial management and discipline are a must. And you will only see their worth when you got no money to spend anymore.

[yhiaali3]

I have tried several times to adjust my budget and record everything I buy during the month to know exactly what things or necessities I spend the most on and which might be adjusted to reduce spending, but then I got bored and forgot about it.

Yes, I've come to the same conclusion as you that the amount of income determines the amount of spending. That is, the more your income increases, the more you will spend, and vice versa. Therefore, I manage my budget instinctively, without apps or complicated calculations.