I’ve never had a budget. I’ve worked and studied hard and lived far, far below my means which allowed me to get a bit ahead 20 years ago when it was more possible and a choice. I see people doing some of the things now I did and it’s not as effective because of corporate price gouging.

I like saving money and loathe accumulating stuff I know is only a fleeting want. I enjoy buying quality things if they are lasting and fit into what I want my life to be. I enjoy things where I don’t have to repeatedly spend money to enjoy them. Some sports work for this, some don’t. Outdoor activities can be very cheap or free if you aren’t convinced you need something with a motor to make it fun. Libraries are a blessing.

Because of the above, I’ve never had a budget. At times I’ve worried that I don’t when so many people talk about them so much but I’ve slowly come to trust myself to not need a budget with the realization a budget just helps others achieve what I’m lucky enough to have, organization and self control.

We use some sort of holistic approach. We don’t have specific envelopes or accounts for saving. We do have specific accounts for asset allocation although it’s not relevant for budgeting.

1. sometimes in January, I look at our yearly income, input that through a model along with other things such as discount rate, net worth etc. The model shows us the projected time it will take to reach the table flipping point* (TFP) based on what we decide to spend.
2. Generally, as with most people, income increases over the years as our career progresses so we usually have three options: increase spending and keep the TFP the same, keep spending the same and reach TFP sooner, or a mix in between. I show that to my wife and we decide which option we want.
3. We now have a target spending for the year. I allocate it into categories in our budgeting app. I try to predict bills based on previous years. For example I try to account for likely increases in housing, etc.
4. every couple months, I look back and adjust the categories based on actual spending. Reallocate between under budget categories and over budget categories. I look at the ratio year-to-date spending / year-to-date projected spending. It generally fluctuates between 90% and 110%, because actual expenses are not linear throughout the year. Vacations are discrete events for instance. If it goes over 110%, we start slowing down on lifestyle. Maybe eat out slightly less, etc.
5. next year, repeat the process

With practical numbers: in 2023 for instance, we set our target spending to about 25% - 30% of our income at the time. Money comes in, and as long as we control what money goes out, the rest is bound to stay saved.

• Table flipping point: the point in time at which the amount of income provided from your portfolio becomes equal to the amount you are spending. From this point in time you have the constant option of flipping the table in your boss’s face, say I quit, and live from your investments from now on. It is usually called early retirement, but I don’t like that word because it assumes that you plan to retire when you reach it. Table flipping point means you keep working, but you do it because you enjoy your work, not because you need the money. You don’t have to take crap from your boss, you don’t have to worry about AI replacing you, etc…

I think 2 or 5 is closest. Basically, we pull our savings target on payday, and we track spending for each category, but we don’t check up on spending until the end of the month, and sometimes not every month.

We discuss deviations every few months and make adjustments as needed. For example, our restaurant spending was steadily rising, so we set a goal to cook more and try to prepare new foods, and that cut the desire to eat out.

I think this works because my wife and I are both quite disciplined and frugal. We do make more than the average household, but we spend a similar amount I think ($60-65k for a family with three kids; median household income is >$75k for my area).

When I was a student, I did envelope budgeting because most of my expenses were fixed (housing, tuition, etc) and I didn’t have a lot extra. When I got married and my first real job, we lived the same way for a couple years until we had a nice cash cushion, then gradually expanded our spending as needed. For example, we got a bigger apartment when we wanted kids, got a house when we planned for a second kid, had a single car when I could bike to work and bought a second when I couldn’t. Each spending increase was intentional.

I’ve been utilizing “pay yourself first” for over a decade and it works for me. I preset my saving and investing goals which are set to auto deduct from my accounts, I have recurring bills on auto pay, then everything else remaining is fair game to spend guilt free. Could I invest more if I spent less on luxuries? Yes, but then I should have factored that in at step one then redone the exercise again for the following month with less obligated money remaining.

That being said, I do see the value in a formal budgeting solution since at the moment I only track my savings/investments and have a large blindspot to my expenses.

I use YNAB which I guess is technically zero based budgeting but we refer to the categories as envelopes. In my mind I’m doing the same thing as when I had cash in envelopes I just don’t have to deal with cash. I group my categories by the 50/30/20.

So I guess 4 with a bit of 1 and 3?