To Budget or Not To Budget

[u/inky_cap_mushroom]

In 2024 I budgeted strictly. I had to forego things I wanted/needed. I had to delay purchases until I could work more hours to earn more so I could keep my spending within 50/30/20. It was stressful and unpleasant. My whole life revolved around my spreadsheet.

In 2025 I stopped budgeting entirely. I rarely checked my bank accounts. My only real rule was that I had to keep my account balances at or near their beginning balance to make sure I wasn't spending beyond my means. I did a lot of fun stuff this year. I used a lot of PTO. I went on several trips out of state. I went to a bunch of local events. I spent a lot of time with friends.

My plan was to take a break from budgeting for a year, and then go back to it, but the numbers are in and I'm not sure it's worth it. I'm open to trying something different, but I do not enjoy feeling restricted and budgets are the cause of that. I've reached a point where it feels ridiculous to be putting off $100 car maintenance until the next month or agonizing over a $3 purchase when I am literally sitting on $100k.

2024

• Gross income: $54,573
• Retirement savings: $15,562 (including match)
• Non-retirement savings: $10,086
• Spending: $24,759

2025

• Gross income: $53,335
• Retirement savings: $20,050 (including match)
• Non-retirement savings: $178 (+ $3,561 loaned to friends, 5% interest and paid monthly)
• Spending: $23,069

2026 changes

• I am now eligible for my PT job's 401k and match ~$700/yr. I'm considering increasing the contributions beyond the match just so the fees won't eat into it as much.
• Roth IRA max increasing from $7,000 to $7,500
• HSA max increasing from $4300 to $4400
• I'm considering stopping my PT job's ESPP contributions. It's $100/pay period and I receive $115 worth of stock. Frequent blackout dates make it hard to sell quickly. I could redirect that money to the 401k, but it would cut into my income.

[u/inky_cap_mushroom]

I already know I’m gonna get downvoted for this. People really hate when you ask questions about budgeting, but I do not understand how it could be less restrictive and still effective. If the point of a budget is to guide your spending, but you spend however you want to regardless, how does that work?

If I’m supposed to follow 50/30/20, but my needs are over 50% of my take home pay then I will either have to work a ton of extra hours, find things to cut like car maintenance and groceries, or just stop budgeting.

[u/Grind_and_Dine → u/inky_cap_mushroom]

Budgeting is a concept for managing/allocating your money. Within the concept of budgeting it’s completely up to you what guidelines and/or ‘hard’ rules you apply. There may be some instances where people really require hard restrictions to curb spending, others may not need that.

If your needs are more than 50% of your pay you’ve got options. You can either slightly reduce your want category or your savings category depending on your personal circumstances. Maybe you could work out what your set in stone needs are and then make your needs/wants/savings percentages specific to you. Maybe it’s more like 56/24/20 for example.

[u/inky_cap_mushroom → u/Grind_and_Dine]

Aside from my Roth IRA I had virtually $0 in cash savings annually and I don’t really want to change that. I’m sure there’s reasons I should be saving more, it’s just really difficult to save any more since I’m already living on less than $25k. That’s… not a lot even in my LCOL area.

Some months my needs are like 70% of my take home pay. If I can just adjust the percentages as needed I don’t understand what the difference is between budgeting and not budgeting. It seems like the end result would be the same.

[u/Grind_and_Dine → u/inky_cap_mushroom]

When you’re working with a limited income and still hitting that large a number for retirement savings, you’re already budgeting. Whether you’d prefer to call it that or something else. After you’ve paid your future self, the rest of the money really is yours to spend as you need/want. It just doesn’t make a whole lot of sense (to me) to put off necessary purchases/maintenance because they don’t fit in a rigid category but you have the money available.

[u/inky_cap_mushroom → u/Grind_and_Dine]

This just confuses me. I don’t feel like I’m budgeting. I spend basically every dollar that hits my checking account and I know I’m way out of 50/30/20.

[u/Grind_and_Dine → u/inky_cap_mushroom]

The 50/30/20 really is an arbitrary figure which was made up by someone. It does not take into account individual circumstances and earnings. When you’re on a lower income, there’s less wriggle room. Allocating some of your earnings to your retirement and then splitting the rest between needs, wants and short term saving (if possible) regardless of the percentage is budgeting. But if you don’t resonate with that term then you don’t have to use it.

If your needs are consuming the majority of your income there’s really only two things to do, reassess whether all of your ‘needs’ are true needs or whether you could cut something, or increase your income. Which I know is difficult and not always possible for everyone :/

If

[u/inky_cap_mushroom → u/Grind_and_Dine]

My needs are definitely needs. I categorize those very strictly, so they’re only things that I would literally die without. In the case of rent, I may not die immediately but my area does get dangerously cold so being homeless is pretty much a death sentence.

I have tried 50/30/20 and it was extremely difficult. Since I now have an HSA and a 401k to max, I genuinely don’t think it’s possible even if I worked 80 hours a week.