Do You Need a Budget? (🎉 Happy New Year’s 2024)

People ask me, “Jon, do you budget?” My answer is a simple: Nope! I have concluded that only one thing matters to staying above water financially: Cash Flow

Happy New Year’s and welcome to the first topic of this New Year 2024.

Let’s talk!

Jon’s Theory of Money Management

My theory is simple. I need Awareness of:

1. what money is coming in (income)
2. what money is going out (expenses)
3. ensuring that income is always > expenses.

That’s all there is too it. I don’t use envelopes for budgeting. I don’t use budgeting features in Quicken.

What I DO use is regular weekly reviews of my finances, and understanding how my cash is flowing. The old school way that Quicken works is a wonderful way to enforce this rigor by simply keeping it up to date!

Each week on Monday morning, I set aside 25 minutes to sit down and review my finances. I go through all my accounts, assets, and liabilities in Quicken to update my records down to the penny. And to people who don’t like to get down to the penny, I say to you: that’s okay too, BUT just make sure you’re reviewing your high-level big macro numbers, so you have situational awareness of your financial picture.

For me, 25 minutes is all it takes! That adds up to only a couple hours a month and just a half-time workweek over the span of an entire year. Talk about time well spent! I don’t obsess over my numbers every day, usually, just once a week in that 25-minute time box, and that’s all it takes to be aware of the state of my wealth snowball. Is my growth growing? Yay! Is my growth flatlining? Uhoh, why and what do I need to do to get back on-track.

Money Management is simple. It’s just math! Do you save more money than you spend? It’s a yes or no. It’s rather simple and I don’t understand how people don’t see that it’s simple math. I don’t understand how people can rack up loads of credit card debt and other debt buying things they can’t afford and dig themselves into a hole! That’s a grave of their own digging. It’s Living Beyond Your Means.

Kill Your Subscriptions

In the past few decades, many companies have been pivoting their business model to the lucrative Annual Recurring Revenue (ARR) business model. As a consumer, this is a terrible business model. Businesses try to sell this model by saying that it will allow them to provide ongoing “value” and that it allows them to continue to develop and grow their services and offerings. That’s a load of bullshit.

Case in point. I have a subscription to the DayOne App for $2.92/mo. That’s a whopping $35 per year! For a simple journaling app. I started using DayOne when it cost a one-time purchase price of $5 and I used that App for several years. Then the creators changed their business model to a subscription model under the premise that it would continue to fund development to fix bugs and add new features. The reality is that I’m not paying 7x more money, every year, for a product that is just as buggy as it was when it was an inexpensive $5 fee.

I’m not saying you shouldn’t use DayOne, or pay for subscriptions! I pay for subscriptions too! I pay recurring subscription fees for DayOne, Quicken, Amazon Prime, and many others. All of these seem small and manageable costs: “Oh, just a couple dollars here and a few dollars there. Less than a cup of coffee at Starbucks!”. But all those recurring fees start to add up, and fast.

Subscription costs easily and sneakily creep up and will consume use if we’re not careful. Here’s how I manage this ongoing risk.

First step is to collect a list of all your recurring subscriptions and charges. That’s your Netflix accounts, car insurance, and so on and so forth. Next, take their monthly charges and extrapolate them out over a full year. And then extrapolate them over 3-5 years. Wow, maybe that $20/mo Netflix subscription that’s $20*12 = $240/yr is not actually worth it! Or maybe it is–only you decide for yourself. What I’m trying to say is to be aware of your recurring subscriptions, extrapolate their costs on a larger timeframe and use those numbers to consider if the value that thing is providing is really and truly worth it to you for that cost.