Some people don't seem to mind not really tracking their spending down to an extremely granular level (ie everything) because they make so much money that small outgoings on their bank account are worthless, or they have to dedicate their time to their family and can't be bothered to track it.
That seems odd to me because they could be paying for things they don't need, or odd subscriptions they really could live without. Small subscription services rely on you not noticing the "small" amounts, but many small items make a big item.
I think a spreadsheet to track everything is really helpful to ensure that you are only spending what you need to spend, particularly if you wish to simplify your lifestyle (work less!) and do your proposed lifestyle 2 (need less money to live).
So I have a simple metric: Is my money (cash + investments) increasing each week?
If it is, then once every ~6 months, I take a look at my family's spending and see if there is anything we would be happy getting rid of.
If at the end of the month, the spend on each card is higher than those figures I've failed.
With modern apps for card balances, seeing if you're near your budget helps.
The alternative is to get money physically out of the bank and put it into separate envelopes and spend out of the envelopes. You'll be amazed at how your spending habits change when you have to physically hand over cash.
If you are finding that looking down a list of 50 purchases at the end of the month "takes up too much time", I would wonder how much time you spend watching TV and compare the time values. One is surely more important than the other.
So far nothing big (some things on Amazon change price by a few dollars up or down after putting in the order), but I always wince a little when I see someone not bothering at all.
I understand exactly what you are saying here, however, there have been several times in my life where buying a coffee here or there will break my budget. I know that's a level of poverty that most people on HN have never experienced before, but it's a reality for many people.
You don't really ever want to go into panic mode. Living on a very limited budget is not the end of the world. I actually chose my lifestyle. I had this idea that there are 2 ways to be rich: make more money than I need, or need less money than I make. Sometimes the second one involves a lot less stress (which is admittedly quite difficult for a lot of people to believe).
If you are on such a limited budget, it is quite important that you know whether or not that coffee on Monday means that you aren't going to eat on Sunday. At the same time, if you do have some wiggle room, it's quite important to treat yourself occasionally.
What is important to track as your expenses has nothing to do with absolute value. It has to do with the value relative to your total budget. If nothing you buy costs more than $5, then obviously you are going to track smaller values. On the other hand, one of the huge advantages of having no money is that it doesn't take long to count it ;-)
So I would rather say that if you need to track down to the level of individual dollars for a personal budget, something like GnuCash is probably not the appropriate tool.