Thread by @nateliason

Alright, this will be a little disorganized since I'm collecting my thoughts, but bear with me:

Above a certain income level, I think budgeting is a waste of time.

I don't think that income number is very high, either. Something like $45k a year.

At that point, you're earning based on knowledge / expertise, not just the lowest hourly you can get paid.

The primary goal of budgeting is to increase your net worth.

Either you need the cash to pay down debt, or want it for some kind of investment.

(Yes you might be budgeting for pure financial losses, like weddings and trips, but they don't affect the argument)

But budgeting isn't a great way to increase your net worth compared to the other options.

You basically have two levers: increase your cash flow, or increase the ROI of your investments.

Budgeting pulls the cash flow lever...

But it does so in a very limited way.

If you make $60k, take home $40k, spend $2k a month on fixed expenses (rent, student loans, utilities), $1k on other expenses, you have $4k left over end of year.

Good budgeting might get you an extra $2-4k.

That's great, but it's not clear it's a good return on your efforts.

If you scrimp on food, you hurt your health. Tools & tech, your productivity.

But the biggest issue is that a lot of budgeting results in spending time to save money.

If you drive across town to save on gas, you lose time.

Searching for deals costs time.

Getting groceries instead of having them delivered costs time.

And since you're already in the realm of earning $$$ for expertise, not just time, this is usually a bad bet.

Because going back to the original point: budgeting's goal is to increase your net worth.

You have those two levers, cash flow and investment, and there are better ways to pull the cash flow lever than reducing outflow.

(Side note, read this article: donellameadows.org/archives/lever…)

Freelance work, side projects, increasing your salary, all have higher returns than budgeting.

To get that extra say $3,000 a year as someone earning a $60,000 salary, you probably would only need to do ~50 hours of freelancing. 4 hours / month.

And unlike budgeting, you'd be doing something that compounds: driving across town to save on gas does nothing for your future earning potential, freelancing to improve your skills does.

Instead of putting mental energy towards denying yourself things you enjoy (bad feeling), you're putting it towards practicing a skill you enjoy (good feeling).

Not to mention, earning an extra $100 feels wayyyy better than not spending $100.

I feel nothing when I find a razor for $18 instead of $28, but when I get a $10 affiliate payment from some blog article I wrote a year ago it's at least a little hit of "yay!"

Obviously, I'm not saying you should be crazy with your spending, just that it's not worth meticulously tracking every little thing trying to get some ideal budget to squeeze out a few hundred more dollars each month.

The easiest hack for this is to use something like Personal Capital (share.personalcapital.com/x/wKog6q) and check on your Net Worth and Transactions each week.

Not to fit some budget, just to see where your money is going, which will quietly nudge you towards better decisions.

Aside from that, having auto-deductions go into your 401k, IRA, Savings Account, etc. helps make you think you have less money than you do.

Beyond that, though, I think your efforts are better focused on value creation.

Budgeting is popular because it's the only lever most people think they have access to, but you'll get way more out of focusing on increasing your cash flow.