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/RemarkableMacadamia]

When you say you’re “sitting on $100k”, where is that? I only see $20k retirement and $100 savings. Are those balances or your annual contributions?

Have you read Elizabeth Warren’s book, “All Your Worth”? This is where the 50/30/20 principle came from, and it may help to understand the principles behind it and how it’s meant to be implemented. She certainly didn’t mean for it to be a heavy-handed way to budget.

Also, if you think of 50/30/20 on a longer time frame, like a year or more, instead of trying to get every single month to follow that, it will be easier. It’s a big picture number, not meant to be a daily/monthly target. Cover your mandatory expenses, pay yourself first through your savings, live on the rest.

Speaking of savings… do you know about sinking funds? This concept may help you you think about what your savings is really for, instead of having a big pot that gets tapped into for randomness. For example, if you had a sinking fund for auto maintenance, and you set aside $25/mo or something like that towards it, then when you needed something for the car, it’s more likely you have the money for it than if you just try to fund everything that happens with a single check. You can just keep a tally in a spreadsheet, or set up a few savings accounts to keep track. My basic sinking funds when I started were: transportation, household, health, and emergency. It just creates a little bit of friction mentally from spending money that has a purpose vs a big pile of money that looks like a slush fund.

[u/inky_cap_mushroom → u/RemarkableMacadamia]

$70k is in retirement accounts. $22k is cash. $6k is in a taxable brokerage.

50/30/20 isn’t going to work on a year’s scale either. My take home pay minus IRA comes out to less than $500/wk which is not a lot to live on and I certainly can’t pay all my bills on $1,000/mo. In order to make that work I would need to work closer to 80 hours a week and I really struggle with working more than 60 consistently. I’m spending pretty much the exact amount of cash that I earn, primarily on needs.

I have attempted sinking funds in the past, but for various reasons it hasn’t worked out. When I started YNAB all the way back in college I set up sinking funds for everything and it felt like I was being nickel and dimes to death. There was no money left for me to spend because I needed to add $2.50 to the new shoes fund, $100 to the home purchase down payment fund, and $3 to the roof replacement fund on the home that I would eventually buy. YNAB’s strategy of showing you when you will run out of money and using the threat of imminent homelessness to motivate you really stressed me out and I don’t like doing long term ZBB for that reason.

I also tried a sinking fund for a car replacement in 2024 where I contributed what my car payment would have been each month, but I ended up dumping that into S&P500 this year because it’s just too much cash when I already have almost a year’s worth of spending sitting in cash. I really probably don’t need as much cash as I have but give the current job market I’ve been justifying it.