People keep confusing "budgeting" with "thriftiness". A household budget is nothing more than

1. Having a plan
2. Trying to stick with the plan
3. Making adjustments when you can't stick with the plan.

You absolutely will not be able to stick to your plan, billion dollar businesses with whole teams of professionals dedicated to managing financial performance cannot make an org stick to their plan. No plan has ever survived contact with the enemy.

The magic of budgeting is that when you go through the planning process, you actually will account for some Dumb things that happen. Known unknowns. I have no idea what will go wrong with which car in the next year, but I know something stupid is going to happen.

When said stupid thing happens, I have a pile of money set aside that I didn't spend on something else I wanted, even needed, because I knew that having a car would be more important. If i didn't save quite enough, the belt tightening I do now won't hurt as much.

But on a fundamental level, I haven't reduced my actual expenses. I just got better at planning for them and matching my revenue (paychecks) to the expense.

That's managing cash flow, not reducing expenses.

Everybody sucks at budgeting, and the richer you are the worse you probably are at it. But when your revenue is big enough your inherent resilience to surviving stupid events is higher.

That's all the magic. https://twitter.com/esp1371/status/1239982607263121408?s=19

It's extremely simple math. If you make $120K a year you have roughly $5000 coming in every two weeks. If you make a $200 dollar mistake or accident, you still have 96% of normal income to get by. At $30K a year you have 84%. Same issue, different consequences.

We can add complicating factors, like the fact if you make $120K you probably get paid sick leave when you don't at $30K, which means at lower levels of income an surprise expense can also be surprise revenue loss.

A lot of that is gifts if we're honest. Having rich relatives is good financial advice, but not entirely actionable. https://twitter.com/Pullingaclaudia/status/1239975211413504001?s=19

Also, as someone doing pretty okay, stuff is cheaper for me than it is for a poor person, through the magic of Costco and Amazon Prime. I can use my higher revenue and better cash flow to buy better goods, that last longer, at a cheaper per unit price than comparable goods.

This remains true for expenses that are small and frequent and large and infrequent. I have enough credit worthiness that I can apply for a new Costco card, get approved over the phone, and add two years of warranty on a washer and dryer. That's a savings tied to SES.

I go on these rants because you should have a budget, but it's not good social policy!

I used to suck at budgeting! I got better and my life is much better now! You should have a budget.

But the biggest material change to my life was doubling my paycheck!

Oh, also getting married and/or forming a single financial unit with someone you can trust is really helpful to. That one is actionable.