Financial Confession – I Don’t Budget

May 5, 2009

My wife and I don’t make or follow a budget, at least not formally.  We own a copy of Quicken and Microsoft Money and I’ve played around with some of the best personal finance software online but we don’t sit down every week or month, figure out what we’re going to spend, and track it to the penny.

Non Budgeting Strategy

This approach has worked with us for some of the reasons that Mighty Bargain Hunter describes and a few others.

Stable Costs

We have relatively fixed costs; our spending doesn’t fluctuate a lot from month to month.  We don’t make a list of all the costs we need to cover each month but we have a pretty good idea how much is coming in and how much we need for expenses.

Frugal Habits

I don’t like to spend money; perhaps this is why I’m a bad tipper. (By the way, I got a lot of heat for that one but if you read the whole thing I explain that I know I’m a bad tipper so I let my wife do the tipping for me since she does it fairly.  When she’s not around, I tip more than I think she would just to be safe.)

Thanks to her frugal Midwest roots my wife isn’t a big spender. Although sometimes she spends money on things I that I wouldn’t, I can’t really blame her since I don’t like to spend at all : )

Psychological Cushion

We have about 6 months of savings built up in our FNBO Direct and ING Direct accounts so we have a reasonable cushion.  Of course we don’t want to tap into it for monthly expenses but we don’t worry that we’re not counting every penny since we have something to fall back on if we were to need it.

Slow Spenders

We don’t rush into any major spending decisions.  It takes us months to decide on big purchases, which helps us make sure we really need what we’re thinking about buying and gives us time to save up for it.

Budgeting Strategy Shift

All that being said, we’ve been down to a single income family since 2007.  Although my wife does earn money with her part time job, she doesn’t work in the summers and she took off extra time this year for our new baby.

The new baby means higher insurance costs and now two kids in diapers.  To top it off, I took a pay cut for a better job.  So rising costs and shrinking incomes mean we’ll need to start counting our pennies more closely.

We sat down and had a money discussion before the baby came and will come up with a new budgeting strategy in the coming weeks once the initial baby blitzkrieg has subsided somewhat.

What about you?  Do you budget or do you “spend by the seat of your pants”.


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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20 Responses to Financial Confession – I Don’t Budget

  • Matt Bell

    I’m a huge fan of budgets, or as I prefer “Cash Flow Plans.” When you say a budget leads to a scarcity mentality, I understand that. A lot of people, when they first think about using a budget, think it’s about cutting back, tightening the belt, etc. Who wants that? But I’ve come to see a budget as being about more — more knowledge of where the money is going so I can be more intentional about where it goes so I have more for what matters most. Just as all the info on the dashboard makes it easier to drive a car effectively, I’ve found that a budget helps us drive our finances as well as possible.

  • Joe

    Yeah, me too. I dont budget. Dont spend too much too.

    Guess I am fortunate. Income greater than expenses.

    I did find a nice simple way. At work, I found I could direct deposit my salary into more than one institution. So I arranged for a large fixed amount to go to online saving bank, balance to checking. I use my checking account for current bills. So if it ever comes that I need more money than is in my checking to pay bills, I need to tranfer from another bank, which makes me stop and think.

  • Rachel

    Whoops–did I forget to mention savings and commuting costs—we never even see those–the first is 20% of our pay–because they are deducted before we get our paychecks!

  • Rachel

    My husband and I are of the “organic” variety of budgeters. We know exactly what is coming in and the big-ticket spending categories are easily quantifiable–insurances, mortgage, vacation and weekend trip costs, meals out, entertainment, groceries, utilities, clothing and gifts to kids and charity. Periodically I do a check on what we’ve been spending on these and it seems to tally up just fine. Putting everything on the Amex or Visa card, which we pay off in full every month, helps very much, as I look on the statement to see what’s beens spent. It’s me who has a flair for these things–definitely not my husband–so I would stress it is important to have the correct person in the family keeping an eye on it, which usually happens naturally.

  • KittyBoarder

    I am pretty addicted to the budget tool. but I don’t use it for the sake of budget, but knowing exactly where our money went.
    The monthly, quarterly, even yearly pie charts are so helpful so we know exactly the percentage we spent on each category such as restaurants, coffee, cars, etc…
    I tried once to skinny down our spending by making a real tight budget, but that didn’t work. When we have to send out a $100 check for our close friends last minute wedding, we do it even if our budget didn’t allow it…

  • Crystal

    We budget to keep an eye on our food expenses and make sure we are hitting all of our financial goals. Our spending is pretty stable, so we probably could get away with no budget…but it’s become a habit for me. We also get to pat ourselves on the back when we cut major expenses for a month…it’s addicting.

  • Cindy

    One of the best ways I can do better with my spending is a very simple approach. I have to stay out of the stores. I used to spend hours in Walmart just looking around and end up spending way more money than I should. Now, I AVOID the stores and it has made a major difference. Sorta like the tips on catalogs, etc., if you don’t see it, you won’t be tempted to buy it!

  • ctreit

    I think budgets are important but a budget’s biggest benefit comes from establishing spending habits. So, I agree with you that you don’t need to follow a budget for the rest of your life. Once good spending habits are established and you spend less than you make, it is okay to live without a budget. I go in and out of following a budget depending on whether things change in my financial life or if my headline numbers don’t look so good anymore.

  • Ben

    Alyson, using I don’t see anything wrong with using credit cards, as long as you pay off the balance each month. That’s what we do. Of course if you can’t pay for what you buy on the card then it’s not a good idea to use them.

    Alan, I wouldn’t say your method is dangerous. If you’re reviewing it in the middle and at the end of each month then even if you over spend you’ll catch it pretty quickly. Just make sure you’re putting aside some of your money for savings so you don’t spend it all.

    Michael, congrats on your upcoming retirement! I agree, if you can spend less than you make and put away money for savings without making a budget you should be fine. Of course for people who have a problem managing their spending, a budget can help them stay on track.

  • Michael

    My wife and I are now looking forward to retiring in less than 6 years. I will be 60 and she will be 57. We are hoping to have a retirement income about 3 times the average industrial wage. Despite that rosy outlook we have never created a budget, even when we lived in Africa for 2 years making $300 a month each or when we were both unemployed for 7 months and we ineligeable for EI benefits. Our secret is simple – we always spend less than we make. I remember back in the mid 1980’s when we both got full time jobs and were each making $24,000. We never felt so rich in our whole lives. We are careful spenders and consult each other on any item over $100. All our money has always been in a joint account so we do have to trust each other 100% on financial issues. We try to not get committed to ongoing expenses. We would rather save and buy the item for cash, rather than borrow – even for cars. My wife has some very expensive business suits and in fact each one likely costs more than I spend in a year on clothes, but she needs it for her work – so it is a good investment.

  • Alan @ Saving For Serenity

    I don’t budget.

    I keep track of my spending though. On a regular basis I’ll go back through all my expenditures, tally them up, and take a look at where I am at. I like to do this at the end of the month and usually in the middle of the month as well.

    Like some of the other comments, its not a budget, but I do get a chance to see if anything is “out of whack”.

    I think that it might be a lot more dangerous to do it this way. I mean, if you’re budgeting, you’re keeping track on a daily basis, and you know that you can’t go over a certain limit. If I keep track AFTER I spent all my money, it’s too late, the damage is done. I suppose if you have a buffer it is okay, but that’s money you can never get back, no? What do you think?

  • Alyson

    We have our retirement funded, have an emergency fund.
    We took the financial class. Our problem is still credit cards so need to work on being more frugal/reserved before buying (with a new cutie 2.5 year old and two granddaughters, it is hard!!).

  • Ben

    good point moot, it is nice to have a snapshot of where your money went.

    you’re right SaveBuyLive, if you’re not careful your spending can creeep up on you

    frugalscholar, I guess budgets are formal boundaries, but if you’re frugal your boundaries are built in so you can make it work informally, good point.

  • Jon

    My wife and I live much the same way, financially. I have a very good idea where all of my money is going, and I’ve been tracking my expenses for over ten years in MS Money. I have a target amount for spending in variable categories, like fuel, dining out, books and movies, entertainment, etc. If I go over a bit one month, I’m just mindful of it and try to watch that category more closely the following month. I put a fairly large percentage of our income away in long term and short term savings, and have a good cushion for unexpected expenses. Like you, it also takes us months or years sometimes to make a decision on major purchases, like new vehicles or furnishings. Having a large margin between income and expenses makes things easy.

  • marci

    In the beginning, when the debt outweighed the income, it was necessary to budget or not eat…. However, once the debt was paid off, the need to budget was gone. The frugal habits by then were ingrained and if anything, now I have to force myself sometimes to spend money. Quite the opposite.

    But, because of the time it took to become debt free, I know that I will never willingly go into debt again… therefore, knowing I won’t overspend and that I always pay myself first, I don’t worry about a budget as it is ingrained in my spending habits firmly.

  • moot

    I do a kind of “after-the-fact” budget. Once a month I import all the prior month’s transactions for all my accounts & credit cards into some software. It all gets categorized mostly automatically and I just take a quick look to make sure nothing was too far out of balance. Most categories have a trend that is either on average fixed or varies seasonally. It becomes obvious quickly if something went very far over the norm for a given month. And if anything needs corrected, it shows me what areas to pay more concious attention to over the next month.

    I don’t feel the need to monitor my money as it gets spent, but a brief look over my shoulder once in a while to see where I’ve been just gives me a good sense that everything is still on track.

  • SaveBuyLive

    I used to be like you, where I didn’t worry about a budget because I had generally frugal spending habits and mostly fixed expenses.

    Then at some point my spending took on a life of its own and started a slow but steady increase towards unsustainable levels. Eventually I finally figured out what was going on and decided that keeping and maintaining a budget was the only way to prevent that from happening in the future.

    Later on in life as I’ve come to have a better idea of where I want to focus my financial and temporal resources my budget has become a tool to help me do that. I use it to help me identify both where I can cut spending and just how much I can increase spending on those areas that I want to devote more resources towards.

  • frugalscholar

    I don’t have a budget either because I am basically frugal-by-nature (ditto spouse) and have an emergency fund. I do know about how much I spend per year in various categories. People who are not frugal-by-nature benefit from boundaries, which is why budgets–or spending plans–can be helpful.


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