Why ‘Budget’ Is a Dirty Word
I have a confession to make: I don’t follow a budget. Just the thought of sitting down with bank statements, bills, a notebook and a calculator to devise one causes my eyes to glaze over. When it comes to spending and saving money, there are no hard and fast budgeting limits, no spending categories, no spreadsheets for me.
But how can anyone control their financial situation if they don’t have a set of rules governing how they do it? Obviously, my finances must be a mess.
Let’s get this straight — I may not set or follow a traditional budget, but I do know exactly where my money is coming from and going to at all times. In fact, the freedom of having no budget to constrain my spending habits allows me to be flexible and avoid the financial stress that comes from struggling to conform to a strict set of parameters.
Conventional Budgeting Process is Now Pointless
The budgeting process may have made sense when the only way to set goals and track progress was by manually writing it all down. However, with the advent of online banking, account tracking tools and finance apps, you can not only see exactly how much money you have at all times, but track it obsessively.
The practice of writing out and following a budget is just as outdated as balancing a checkbook. I could write down every dollar I spend, then cross reference it against the guidelines I set for myself at the beginning of the month, but why would I waste my time when I can log into my account and find out exactly where I stand in 3.5 seconds?
These days, telling someone they have to follow a budget to keep their spending in check is like telling a kid he has to go to college in order to get a good job. It’s just not true.
Like college, budgets aren’t for everyone, and I don’t believe the common budget process is all that valuable to most people. Perhaps the initial time spent reviewing and tallying income and expenses is beneficial to a person who has paid no attention to these things in the past, but the traditional, monthly budget is simply pointless in today’s world.
Stop Budgeting and Start Prioritizing
Like me, your paycheck is probably going to be the same amount every time you receive it, your cell phone and cable will definitely be just as overpriced this month as the last and you will always need to save money — budgeting isn’t going to change any of those things.
Budgets are compared to diets for a reason — they’re restrictive and intimidating, and create a pass or fail mentality. And just like eating that brownie at lunch, screwing up on your budget just once often derails your motivation to continue on your plan.
The world will not come crumbling to an end if you exceed your fast food budget by $10 for the month — but seeing the fact that you did on paper (or computer screen) somehow takes a virtually meaningless fact and turns it into a devastating realization. This is just misplaced attention and energy.
What you should really care about is whether you have met your top priorities before spending money on the frivolous, fun stuff. Is your credit card paid off? Did you put money into your savings? If you make it a priority to pay yourself first, it really doesn’t matter what you do with the rest of your money. Donate to a charity. Buy a boat. Whatever.
How to Stop Budgeting
If you’re tired of being a slave to dreaded monthly budgeting, here’s how you can keep your finances in check without stressing over the numbers.
1. Pay Yourself First
I am paid by direct deposit, and when it’s pay day, money is automatically siphoned from my checking account to my 401(k). I then log into my account online and transfer a couple hundred dollars to my savings account (the exact amount depends on whether or not rent is due that week). Finally, I log into my one credit card account and check to see if there’s a balance. If there is, I pay it.
Getting in the habit of paying yourself first eliminates much of the worry that results from overspending before your debt and savings priorities are met.
2. Remain Aware of Your Obligations
Because I like to remain hyper-aware of my income and expenses, I’m not a huge fan of automatic bill pay. While certain monthly budgeting expenses like Netflix and my car insurance are automatically charged, I prefer to be notified by e-mail when a bill is due and then set a reminder in my Outlook account.
Since I spend most of my waking life in front of a computer, I never miss a due date but still review all of my bills for discrepancies before paying them.
3. Use an Online Budgeting Tool to Identify Trends
There are a number of online budgeting tools like Mint, Manilla and Learnvest that you can use to gauge how well you’re sticking to your priorities and identify any worrisome spending patterns. I signed up for Mint.com a while ago, and now use it to get a snapshot of where my finances stand every week or so.
My bank, credit card and even investment accounts are all there, so I can check every account balance all at once. I can see any fees I’ve been charged and be reminded that I spent a ton of money on food.
However, a word of warning: Anyone who has used Mint knows that the glossy online budgeting tool can turn into a time-consuming preoccupation. I was caught up in categorizing expenses, projecting savings timelines and creating beautiful, detailed graphs for a while. None of those things helped me better manage my money — it’s really just an easy way to lose an hour or two. Be careful.
Some people love creating detailed budgets and following every cent they make. I’m not one of those people, and I don’t think many are. Budgeting is a waste of time, but remaining cognizant of your entire financial picture is definitely not. With a combination of technology, prioritization and will power, you can stay on budget without ever having to follow one.
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Image: Inha Leex Hale