I think that difference is going to be different for everyone. To plug a pf podcast I listen to; “How to Money” always tries to focus on the why behind your money. To try to figure out what your joys and goals in life are and then make your financial situation work towards that. So one person shouldn’t buy a fancy car just because they can afford the payment. But another person might justify a car that stretches their budget because cars and driving give them a lot of joy. Some people are super into FIRE and will live like paupers for 15 years in order to retire at 35. Some people enjoy their jobs a lot and don’t mind working until their 75.

Figure out how much money you need to live (housing, food, not having to work til your dead), then figure out how much it costs to live the life you want (travel, early retirement, new gadgets) and make those two work within your budget.

I have also seen people tout budgets as not just a tool for the financially irresponsible, but also for those who feel guilt around spending (which sound like it might be you). If you have a line item for concert tickets, then you don’t have to feel bad about buying that pricy concert ticket instead of investing in an already plump retirement fund. You’ve already planned for the expense so it’s okay to spend it.