So is tracking your spending important?
Well, to me, I think the answer is half half, yes and no.
It really depends on the person.
Take for example someone who isn't too disciplined with his spending. He earns a sufficient salary and buys whatever he wants. At the end of the month, he wonders where all the money has gone to as he is unable to find excess to save. I think, for such a person, it would be wise to track expenses. And to track it diligently. So that the person can understand where he spends his money. Maybe he spends a lot on transport, taking a lot of taxi/uber. Or maybe he likes buying gadgets. Or spend on fancy food. So it's good for him to find out where he spends his money. So that after he finds out, he may want to make adjustments to his spending. Or maybe he doesn't want to make adjustments to his spending. That's ok too. But it's always good to find out and know where you are spending your money and if you want to, then you can set a budget for each category.
However, for my wife and I, we typically don't spend much. We track our total expense monthly. But I don't really consider it a budget. We spend around SGD500 on each of our UOB One cards, then maybe around SGD300 on our ANZ Optimum card. But we don't limit the spending. For instance, this month is December and we expect to be spending more on gifts and festive eating. So we will just adjust our miscellaneous spending on to the UOB card and put all our dining expense on our ANZ card. Which is expected to go past SGD500 this month. We do shift our spending sometimes to different month's to even out our cashflow. But we don't track it by food, transport, etc. It's just a total spending. So for example if by mid month, we have already charged SGD500 to both our UOB cards, then we would just make a conscious effort to just keep the remaining spending on just food and charge to our ANZ card. However, it we still needed to spend, we would just continue to do so. It's not like we have a budget to adhere to. Maybe some of you readers may think that this in itself is already a budget.
Well, anyway what I'd like to highlight in today's post is. You can get used to anything. And once you are used to low spending or having low desires, you don't really need to track your monthly spending. It just works its way out. You just buy stuff that you need, which is quite regular.
Like food would typically be SGD5-10 per day per pax.
Weekend dining may be more but you can keep it at SGD30-50 per pax.
And transport is also quite stable at SGD4 per day.
Even if you have a Starbucks every day, it's also fixed at SGD6 or so.
Handphone bills are fixed.
Internet bills are fixed.
Many things are fixed.
So generally, most people's monthly expense needs fall within a certain manageable range.
The only issue comes about when folks have more desires or discretionary spending.
Example, I want to try out that new restaurant at SGD100 per pax.
I want to buy that latest phone that just came out.
I want to buy that nice Burberry wallet that's on discount.
Not saying that you shouldn't enjoy those stuff. Just pointing out that it is usually the discretionary spending which isn't fixed. And that can go into large amounts.
Sure it's ok to try a new restaurant once in a while, or buy something nice once in a while.
That's all fine. As long as it IS once in a while.
More often than not, I hear this once in a while term, NOT once in a while.
Every week there is something else which is once in a while.
Maybe it's the restaurant this week. Yep haven't tried a new restaurant since last month.
Then next week it's the new phone cos that's once in a while, changed it last year.
Then next week it's a new watch. My old watch has been around for months.
Holiday's and all that. There's always something new to buy.
So the thing is there's NEEDS and there's WANTS.
If the watch is spoilt, then you MAY need to buy it. Phones tell the time these days.
If it isn't spoilt then it is a WANT.
Same as that phone or bag or wallet or whatever.
So if it's someone who always indulges in their wants, then I highly recommend them to follow a budget and track their spending to be more disciplined.
If someone basically doesn't really spend much and just fulfills their needs, and only buys stuff when things are spoilt, then his/her spending would generally fall within a range every month and if that range is acceptable for them, then I think maintaining a budget might not be as necessary.