Comment by BeetleB
1 month ago
And then you get married and have kids and wonder why you have trouble paying the bills despite having a household income in the top 5%.
Then you discover that you really do need to know how much you are spending on sandwiches.
I went through this a bunch of times. Always hoping for an obvious smoking gun expense I could just cut. It always was many little things adding up.
If your income is in the top 5% and you struggle paying bills, it's nearly always an issue with to much of your money stuck in mandatory expense: you are over mortgaged, or have to many car loans, or pay too much for the kids schools.
Budgeting can make that manageable by significantly lowering your living standard but small expenses are rarely the root cause.
It's not that your wrong (you are), but that budgeting will give you a fuller picture and help you align your spending with your values.
Paying too much for school? If cutting on those sandwiches means you can suddenly afford the school, would you choose to cut the school just because it's a clear, known large expense?
Earlier in my career I always wondered why people earning a lot more than me would not get lunch from outside or the cafeteria but would spend a lot of effort cooking and prepping the food for their work. Now I fully understand where they're coming from.
The little things do add up.
The point of my comment was that I too believed as you did. Always easy to believe things until you track your spending and see the actual numbers.
It's also how I know getting an 8 year old car without too many miles is the way to go.
I think you underestimate the amounts some people spend on things like clothing, coffee, going out to eat and other stuff you wouldn't even think about
Top 5% earner, we are talking at least 350000$ a year. That's a lot of coffee.
2 replies →
> Budgeting can make that manageable by significantly lowering your living standard
I’d say that budgeting allows you to see how far off your ideal standard you are living. Spending too much on the kids school can be a deliberate choice or an afterthought from 4 years ago. Budgeting lets you see that and be deliberate about those choices.