I’ve never tracked every penny. I gave up balancing my checkbook decades ago, although I always look over my downloaded register for both my checking account and credit cards.
We are in pretty good shape, financially - two paid-off houses, and no debt other than revolving credit, which gets paid off every month. Still - I agonize over spending money on toys. I decided to buy myself a new lens for my camera, and I waited until I had enough Amazon points saved up, and enough profit from selling stuff on ebay to pay for it. My wife would spend the money to fly first class. I can’t ever see doing that, even if I was worth 10x what I am now. I also find that regardless of how much money is in our retirement accounts, I always have the nagging feeling that we are one economic disaster away from ruin.
I’m another person who has never tracked expenses because I’m naturally fairly cheap.
I remember in university talking about money with a group of people and mentioning that I had $30k in the bank. One guy’s eyes opened wide and he instantly replied “If I had $30,000, I would buy a $30,000 car.” I think that’s when it first really hit me that people have very different views of money.
We used to track expenses, but mostly don’t, now. I view my post-retirement job as all “fun money”, and sometimes think, “upgrading those airline seats will cost n days of work. Is that worth it?” But if i want to buy the expensive local strawberries, i do, without thinking about it or tracking it.
I think this is always in the back of my mind, too. Sixteen years ago, we had to have a new well dug, and it was about $8K. From a thread on NextDoor, it appears the going rate around here is now closer to $20K or more, depending on how deep they have to go. THAT would put a pinch on us. And I’ll not go into medical issues. We have really good insurance (and pay well for it) but if we require special care, whether at home or away, that could put a hurtin’ on us.
One of my mother’s friends was a nurse anesthesiologist (I think) and her husband made a good living, so her earnings were fun money. She used to say things like “We’re going to [destination] for vacation, so I need to work X days to pay for it.” As a kid, I thought it was a joke, but now I know better. In fact, I took my first post-retirement temp job to pay for a trip with my mother rather than dip into savings.
Eons ago, I could tell you off the top of my head exactly what my monthly bills were - I wrote checks. Today, everything is either on VISA or a direct debit, so I kinda know about what all the bills are, mostly. I do track it all on the credit union website every couple of days, but best I can manage is a close approximation of our regular expenses. I have no idea when I last used a check register, let alone balanced a checkbook. I do know I write fewer than a check a month.
This is one of the main reasons I still use Quicken. It provides me with an up to the minute register, plus it’s a great aggregator of our various financial accounts.
I have $5million and while I don’t track expenses, I’m still fairly frugal, and still seek out deals and shop around for fairly small value items. In fact, it was that very trait that helped us get to where we are. It’s unlikely it would have happened otherwise. A person can always spend more than they can earn.
This reminds me of a Ron White joke: I don’t know how many bouncers it would take to throw me out into the street, but I knew how many they were gonna use.
This describes us exactly. My pension exceeds our expenses and so we are still saving. My pension is not indexed though so if I live to 120 I might have to draw on our savings. On the other hand, we still live relatively frugally. But I don’t track pennies, or even dollars.
Me too. I decided I would save up for a house, even if I ‘missed out’ on some stuff.
So I didn’t drink, smoke or take drugs; paid off my credit card in full every month; started saving in an interest-bearing account.
Luckily my hobby (chess) was cheap…
… so my answer to your thread question is that once I had habits that meant I spent less than I earned, I could simply save up for luxuries.
Once I owned my house (in my early fifties), I could afford to visit Las Vegas annually (I live in the UK) - provided I didn’t gamble!
When I was in my late twenties, I had about £30,000 (about $40,000) in my interest-bearing account.
A work colleague, Chris, asked me how many credit cards I had. I replied “one.” The he wanted to know what car I drove. I lived in London (with good public transport), so replied “none.”
He was amazed and stated “I own a top car, go out several times a week and enjoy life.”
I asked how he funded it … here it comes!
Chris had maxed out his first credit card, got a second card to pay the interest on the first … then maxed out the second card and got a third card to pay the interest on the second.
He was paying 25% on huge balances - I was earning interest on my savings.
When i was a young actuary, i worked with a lot of people my age and I’m pretty sure we all earned about the same income. And i noticed that some of my peers, like me, never seemed to worry about money. Nine of us lived extravagantly, but we all drove a reliable older car and, lived in a small apartment or condo, and seemed comfortably well off. And other of my peers were always worrying about money, had bill collectors calling (well, just one, but he was a friend) and we’re trying to scrape up enough money for something, be it a new car or a downpayment on a condo.
So what distinguished the two groups?
The latter drank recreationally. Going to the bar with your friends is a freaking expensive hobby.
MDs are anesthesiologists. Nurses are nurse anesthetists. An arcane distinction mattering only to them and insurance coders. The nurses have to do a very arduous 2 year graduate course after a bachelors in nursing, it’s a very competitive process to be admitted to a program. Afterwards they tend to be the highest paid nurses out there.
I think the OP is asking something slightly different, and that’s at what level of income do you have enough surplus that you don’t have to sweat whether or not you buy small-ish things.
I’d say that as long as you have a surplus, there’s always some level of expenditure that you don’t have to sweat, and until you get to absurd, Walton-ish levels of wealth, there’s never a point that you can literally buy anything you want without considering any of them.
For example, when I got out of school and got my first full-time job in about 1997, there was a threshold of about $20 where I just didn’t sweat things in that price band. I didn’t buy enough that they dented my finances, and if I felt like buying something, I just did. As I got older and my income increased, that threshold went up. Now my wife and I have a $200 threshold whereby we basically agree to discuss or inform the other of any purchases over that amount. Anything under we can just unilaterally buy without really having to check the bank account or clear it with the other. Realistically we just inform the other, but it’s more like “Ok… we should keep an eye on the credit card bill because I bought X last week also.”, not “You can’t buy that or we’ll be eating ramen until our next paycheck.”
That’s separate from being cost-conscious or anything like that. We still clip coupons electronically, use loyalty cards, buy sale/special items, and all that good stuff. That’s just good sense.
As far as tracking expenses goes, Wells Fargo has some pretty cool tools that automatically categorize expenses and give you a breakdown of where you’re spending. I use those as a basic sanity check- if I notice that one has gone way up, I’ll dig in and figure out why.
I certainly don’t make a lot of money, but I also live within my means and am always looking for good deals. I pay off my bills in full every month, and have always done so. If there is a $40 tee-shirt that catches my eye and I want to get it, I can do so, because it’s not like that’s a daily purchase. But I also hate wasting money when I could spend less for something, so yes I will look to see if I can get a discount or free shipping on that item.
I lived for many years on a student stipend. From primary and secondary schooling when my parents covered my expenses and all I had was a meager allowance, to undergrad when my tuition and board were covered and I had a small lump sum grant to last me four years, to grad school when I lived on a tiny stipend.
Once I had a professional job, money hardly mattered anymore, because I lived more or less like I did when I was poor. My monthly income was far above my monthly outgo, so I didn’t need to budget. Surplus goes from checking (ideally keeping a full months income) into savings regularly, and then from savings (keeping six months income) into index funds at a weekly fixed pace.
Getting married and then buying a house rejiggered that some, but we intentionally had a mortgage that we could handle with one income. The second income goes straight to retirement.
The trap people get into is having a living standard based on their income, rather than what they need.
I remember when my grandmother died and when the estate was settled, my mother and aunt decided to split the money between her grandkids (no will, complicated family, long story), so I got a small chunk; a little less than a year’s income for me at the time. When I mentioned it to the housemate I had at the time, her first reaction was ‘Oh wow, so what are you going to spend it on??’ When I said I had no plans to spend it, I was going to save it, you could almost see the error message appear in her eyes… does not compute.
If she had £10 before she hit her credit limit, in her opinion, she had £10.
We continue to track every penny/cent but we don’t have any major spending limitations. If we need to spend a few thousand dollars on something, we can, but it is all tracked, we know how much we have and how much we can spend.
After we sold our last home, we had enough money in the bank, along with retirement incomes, to not have to pay much attention to balances or costs. I keep an eye on the bank accounts to preclude theft, but if I got a sudden urge to go buy a new car, I could write a check for it and not worry about the balance. Our needs are minimal at this point, with our biggest expense being rent. Now, it took us until age 75 along with a lot of hard work and good decisions to get to this point.
