Why You Don't Need a Budget

So, I’m not a natural rule follower (Sorry mom!), even when I create the rules for myself. They’re too restrictive, sap the joy out of what I’m doing, and generally leave me with an icky feeling. That’s probably why I hate the idea of following a strict budget.

In case it wasn’t clear, I don’t like budgets, I don’t have a personal budget, and I don’t recommend budgets to my clients. That doesn’t mean I am pushing them to go #yolo all day every day, but there is a happy zone to be found in between #yolo and meticulously tracking every penny in a spreadsheet. That’s the zone where you’ll find me.

Contrary to popular belief, you can be financially successful without a budget, but you need a general outline for your monthly spending, a list of your goals and how you’re going to achieve them. This rough plan should prioritize your future goals, and allow for guilt-free spending afterward. I recommend clients follow the basic formula of Income- Savings = Expenses. 

So the basic steps are :

1. Have a good handle on your income, i.e. really look at what’s coming in from your various sources. Check your paystubs or bank statements for this.

2. Choose/identify a few goals, then back into a monthly amount you need to allocate to each of them your goals to achieve them in your desired timeframe. For example, I want to go on vacation in 2 years. It should cost $3,000, therefore I need to save $125/month between now and then to make it happen. (the 50/30/20 budget model is also a good rubric to follow).

3. Spend the rest! 

Yeah, it’s that simple! I think one of the biggest reasons people neglect their finances, is that they seem SO DAMN boring and cumbersome. Why would I tell myself “no” for everything I want, live with anxiety over what I’m spending, and then spend hours inputting every cent I spend into a spreadsheet? That sounds super miserable and I’m a big believer that you don’t actually have to live your life that way.