Technically, a budget is probably defined as plan forward, track backwards, but it’s more often used as plan and track forward. Track forward as having everything planned out already – $X for this, $Y or that, and 42 other things that have already been planned or estimated out (like christmas presents in Feb). Not really a bad thing, especially if a person has problems with that (and many do), but as you note, it’s the extreme planning that’s at issue, and that’s sadly how people learn to budget by planning and estimating ever possible little thing.

I don’t want to do that, and hence, I don’t budget (although technically I probably do budget to some extent). What I really want is a stream of my purchasing habits tracked over time, but only there for me to look back on, not to match up to some preplanned “forward tracking” budget. Deemphasize the money and smaller items for the big longer term goals. If I’m having problems hit those bigger goals, then maybe my smaller items are getting in the way, and more hardcore tracking/budgeting is called for. I haven’t myself needed that though.

But that’s exactly what a budget is, or should be!

You take a look at your situation, you ask yourself what you want, what you value, what you need, and you plan how you’re going to get there.

You look backward to see how well you’ve done. It’s goal-setting w/ money. Granted, some people take it to a granularity that is (IMHO) a complete and utter waste of time, but taken in moderation, it’s extremely powerful to have a monthly (or whenever) time to sit down and see how you’re doing, where you were, where you’re going…

You’re right about the one number at the end of the day, but one number is almost too high, too grob, to be reachable by most. It needs to be broken down into, excuse the cliche, bite-sized pieces.

I see budgets as a solution for persons with really bad spending habits. It does work for certain types of people, and yes the world would be better if everyone did it, but the reality is that most people won’t do it, so we need an alternative. The bare minimum is, the essence of setting up a budget, is understanding where you money is going, so yes, tracking is key, but I actually track only one number now because I’ve learned that the one number I track defines how well I’ve been spending and saving, so I plan some big things I’d like in the future, but when I track, I’m looking backwards instead of looking forwards like budgeting makes you do.

Plan forward, track backwards. That works for me, may not others.

I have a lot of friends that I work with or go to school that have no idea how much money they are spending every month on eating out, or on clothes. I think if you have no realistic idea of where your money is going, you’ll never have control of it. I always tell them to write down everything they buy for a week to get started and then let shock set it.

So more important than an envelope with $12 in it that you will only buy T-shirts with, I think it is important to track and understand your spending and make appropriate adjustments.

Not budgeting, exactly, just being smart about money.

Part of the reason I trash budgeting is because it has that bad stigma that you note. I still think people need to do it to some degree, but it’s like talking about global warming, the word itself is almost too loaded to get beyond the stereotypes.