5 Reasons Why You Don’t Need a Personal Budget

David Bakke is a financial columnist for the personal finance website, Money Crashers. David lives in Atlanta, GA with his young son and actively works to improve his financial situation and build wealth.

Most experts say that you need a personal budget to improve your financial situation. While this can be extremely effective for many, there are other options out there to live a financially responsible lifestyle. Many years ago, I found myself broke with more than $20,000 in debt. When I finally decided to resolve my financial problems, I eliminated all of my debt in less than three years – without budgeting. To this day, I have never relied on a budget.

Getting on track financially and eliminating debt takes hard work, but you don’t necessarily need to make a budget to eliminate debt or to save money.

Five Reasons to Avoid Budgeting

1. You Need to Adjust Your Attitude

Work to adjust your attitude toward spending and saving money. Debt often accumulates because you spend more money than you make. To eliminate debt and to accumulate savings, you need to decrease your spending or increase your income. Decreasing your spending involves a shift in focus every time you prepare to spend money. Adjust your outlook to better understand how money enters and leaves your life, rather than focusing on creating a budget.

For many of us, the best way to get out and stay out of debt is to focus on increasing our income. While this isn’t a quick-and-easy fix and requires a hard working attitude, you can accomplish this goal by switching jobs, changing careers, or finding ways to make money during your free time. There truly is nothing like starting your own side business to help you pay off your debt and save for the long term.

As an example of implementing this strategy, in the past few years, I have launched two side businesses that I run from home. Last year, I earned nearly $10,000 from these businesses. Identify your skills and turn them into profitable business ideas. Before you start earning extra money, allocate the additional income. If you know that you will make an additional $1,000 next month, plan to use this money to pay off a debt or to boost your savings.

Adjusting your attitude towards saving and spending money can help you eliminate your debt and increase your savings. If you can combine your efforts – decreasing your spending while earning more money – you can achieve your long-term financial goals more quickly.

2. You Can Eliminate All Unnecessary Purchases

Eliminating unnecessary purchases allowed me to emerge from my mountain of debt. Instead of following a monthly budget, take a good look at every single purchase that you make and determine what purchases you can eliminate from your shopping trips. Do you stop by a convenience store every morning for a cup of coffee? If so, invest in a coffeemaker and make your coffee at home. Do you eat out every day of the work week? Consider brown-bagging your lunches to save money. These small purchases add up, and may total hundreds of dollars every year.

In addition to eliminating unnecessary small purchases, carefully review your options when buying pricier items. Before you consider making any major purchase – including a new car, computer, or a flat screen TV – ask yourself some questions: Do I really need this item? Can I get by without owning this item? Have I researched this purchase to make sure I am getting the best deal?

Take extra time to thoroughly research consumer organizations’ reviews of the items you want to buy. Talk to friends and family members about their similar buying experiences, and conduct price comparisons. Oftentimes, if you shop around, you shouldn’t have to pay full price. When the time comes to make the purchase, you will know you’ve done your due diligence.

3. Budgeting Can Do More Harm Than Good

While seeking to ward off unnecessary expenses, you may create an unreasonably difficult budget to adhere to, unwittingly setting yourself up for failure.

For example, say you decide to eliminate a $100 monthly clothing expenditure. This part of your budget will theoretically save you $1,200 in 12 months – however, necessity may force you to make clothing purchases during the year. This can lead to guilt about your purchases, and budget-breaking activities can quickly devastate a financial plan. If you cannot follow your budget, you may give up entirely out of frustration and revert to your old spending habits.

Instead of eliminating clothing from your budget, try instead to buy only the clothes that you absolutely need, at the best prices. This mindset leads to financial victories and helps you build momentum to stay on track until you can emerge from your debt issues.

4. Budgeting Can Lead to Missed Opportunities

Budgeting can lead to missed opportunities. If you decide to slash your monthly $400 grocery budget to $350, you haven’t learned any lessons about frugality or comparison shopping. Instead, investigate every possible way to save on groceries, including using coupons, joining customer loyalty programs, shopping at farmers’ markets, and buying generic items instead of brand names. You could even learn how to extreme coupon. This approach may save you more than $50 per month.

Budget rigidity leads to another type of missed opportunity. If you have to replace your television this year, but don’t have the purchase budgeted until the end of the year, you might miss an opportunity to purchase a discounted television during the Thanksgiving weekend sales. Making a major purchase during an annual sale can save you a lot of money. If you have to stick to your budget, you may miss some excellent opportunities to get the best prices on your purchases.

5. Eliminating Your Budget Simplifies Your Finances

Eliminating a budget simplifies your finances, saving you valuable time every day. When you follow a budget, you frequently have to calculate expenses to see if you have stayed on track with your budget. You may have to regularly spend time using budgeting software.  If you stop following a budget, your finances are immediately simplified – you no longer have to spend time tracking and analyzing numbers, and can instead focus on adjusting your overall approach to spending as you reach your financial goals.

Final Thoughts

If you continually struggle to solve your financial worries, budgeting may be your only option. Creating and following a budget does have its benefits, but if you can adjust your entire financial outlook and limit your spending, you may solve your financial issues in a more effective, efficient, and simpler manner.

Do you follow a personal budget, or do you avoid budgeting? What approach works best for you?

8 thoughts on “5 Reasons Why You Don’t Need a Personal Budget”

  1. When I was working, we paid ourselves first by putting money in savings first each month. Since taking early retirement, we budget a certain amount that can be spent each month, but don’t specifically budget by category.

  2. I think budgeting is a good idea. However, if people obsess over it and spend tons of time optimizing a budget, they might be giving up time that could be spent earning more. There’s a balance, and budgeting is but a tool not the endgame.

  3. For a lot of people the ‘save first, spend the balance’ method tends to work. I think there is a subset that require a hardcore budget though – but for some people forcing them to budget might not have the desired effects. Your mileage may vary, I guess!

  4. I like the concept of a budget. It keeps me informed of what I can spend and what I cant. When the money is gone, then it is gone. I disagree that budgeting doesn’t teach to be frugal. If you had $80 on food to spend for 2 weeks, you make sure to stretch as far as you can.

  5. I agree that budgeting is never absolutely necessary, but it definitely can help.

    I’m not a budgeter myself. I look at the bottom line every month and make sure it keeps going up.

  6. I tried budgeting right after college, using Quicken, but by the time I had enough months on my own to know what a reasonable budget for each category would be, I’d also gotten hooked on saving everything I could, and budgeting became utterly unnecessary. After I got married, my wife and I tried tracking all of our expenses for a while but quickly realized that it took a lot of time and effort to do that, and since we both have saver/investor mindsets, we never gained anything from tracking. Now we track big-picture net worth on a monthly basis and make sure our cash flow stays high, and don’t need to worry about budgeting or tracking.

    As the article says, it started for us with #1, adjusting our attitudes (or rather, having the right attitudes pretty much from the start), #2, evaluating all purchases carefully (much easier once you master #1, because you master the desire to do much purchasing in the first place). We also do #4, waiting for sales, and as I mentioned above, #5, our finances are much less of a headache because we don’t worry about budgeting.


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