If I’m being completely honest, I don’t really follow a budget. Now, that’s not to say I don’t know where my money goes, don’t save and spend frivolously. In fact, I do the opposite of all of those things. But an actual budget? I’ve just never really taken the time to create it and follow it. It seems too time-consuming and stressful, and I personally like my method of managing money. It’s allowed us to save, move across the country, invest and work for ourselves. Not to say not having a budget is for everyone, but here’s why I don’t follow one and what exactly I do instead.
Why I don’t follow a budget
Ok, strict budgets just seem too confusing. If I go out to eat, does that go in the food category, the entertainment category or the fun category? Or are the entertainment and the fun category the same? What if my electric bill is more than I budgeted for? Do I take it out of a different category, and if so, which one? What if I run out of diapers for my girls? This isn’t an expense I’m going to go without, so where do I get this money from?
Too many categories, too much room for error, too much thinking. If I’m going to do something fun, like take a visit to the pumpkin patch or go on a day trip, I don’t want to stress about the budget. It would take all the fun out of whatever it was I was doing! Also, what if I budget $40 for entertainment and then don’t use it? Do I roll that over to next month or save it? Or…do I spend it anyways and “force” myself to do something even though I didn’t really want to?
See – confusing.
I came across an article on Inc.com titled “5 Frugal Millionaires and Their Best Advice” and I couldn’t help but notice what millionaire #5, Matthew Tuttle, said. “What I am much more a fan of is, save as much as you can, and if you’re saving as much as you can, as long as you’re not going into debt, then I don’t necessarily care where you’re spending your money.” – Matthew Tuttle
Yes, yes, yes! This is exactly my philosophy. Instead of trying to monitor every dollar and set tons of restrictions on yourself (do I want $50 in clothing and $100 in entertainment, or $75 in each?), I just try to save as much money as possible. The rest of the money I can spend as I please.
I’m sure some people will disagree and say that if you ARE on a budget, you will SAVE even more. While I do believe this could be true, it’s not worth it to me to save an extra hundred bucks or so. Plus, I really think I save MORE money by doing it my way 🙂
How I save money each month
As I said above, my husband and I both work for ourselves. I get paid twice a month – but it’s a different amount every month. My husband gets paid as he completes jobs. This can range from a few times a week (like this week, woo-hoo!) to once every few weeks. This makes it extremely hard to budget (plus I hate to budget anyways!), so here’s what we do instead (or, if you like to budget, here’s how to simplify your budget):
Do not impulse buy. We buy things we want, sure, but we discuss it first and plan on buying the item before actually buying it (I would say this is true about 90 percent of the time). I spent about $100 this year on fall decor (when we moved, my holiday decor was one of the things that didn’t fit in the moving truck), but we knew I was going to spend that. I also purchase a few of my favorite Bath & Body Works candles each season. John and I discuss these expenses and plan for them. Easy peasy!
Buy items on sale and generic when possible. Want a great way to save money? Only buy what’s on sale (every item at the grocery store has a sale cycle – typically once every 6-12 weeks the items go on sale, watch for this and stock up!!) and buy generic when possible. You don’t really need name-brand milk when the store-brand is equally as good. Same goes for cereals, breakfast bars, snacks and even sodas.
Have a savers mentality. John and I both try to live as cheaply as we possibly can. We eat out on occasion and pick less-expensive restaurants, we love doing free activities with the kids such as going on walks, going to the park and going to the library. We make our coffee at home instead of going to Starbucks every day, John brings his lunch to work and I eat at home, and so on and so forth.
How much do we save every month?
Well, since our income varies, what we save every month varies (and being honest, we haven’t saved anything since moving to NC). This is what we do though:
- One of us gets paid
- We pay all bills that we can, even if they’re not due for a few weeks
- We leave $100-$200 in our account for groceries, gas and living expenses
- We transfer the rest into savings
- Repeat, repeat, repeat
See, told you it was easy! No budget, no late bills, lots in savings!
Note: If you have a spenders mentality, a budget is probably necessary.
What do you guys think about not having a strict budget, or any budget at all really? Are we nuts for paying bills and transferring almost everything that’s leftover into our savings account?
Erin @ Journey to Saving saysat
I love that first part. Budget categories can get confusing, and I try to be as specific with mine as possible for that reason. However, I wasn’t always like this. I decided to try an experiment of “active budgeting” back in June, tracking our expenses almost as they happened. When we moved here, we weren’t saving much, either, so I figured it could help.
Sometimes it’s just a matter of getting adjusted, and I’m not sure if we’ll keep this up past the rest of the year. We’ll have to see how it goes! Otherwise, I share your views. I only buy what’s on sale, we don’t impulse buy, and we basically keep our spending to a minimum. You’d probably like Frugalwoods.com – they have a similar method. =)
Yeah – I think for us it’s difficult too because of the girls. They get sick, they outgrow clothing at the speed of light, they’ll need an extra pack of diapers for the month, etc. It’s just much easier to have the mentality of “only buy what you need and buy what’s on sale” rather than trying to categorize everything. I’ve read Frugalwoods!!! I love their blog!! 🙂
You are not nuts! My boyfriend actually uses the same method you do, and has managed to save up quite a bit of money. Since I am a bit of a spender (hee hee), I prefer to have a very specific budget.
Awesome!! Yes – you have to do what works for you. My husband tends to be a bit more of a spender, which is one of the reasons we only keep a few hundred in checking haha!
Jayleen Zotti saysat
I don’t think you’re nuts at all.We each do what works best for our families! I made the most amazing duct tape zipper pouches to use as our ‘envelope system’ however we tend to have a set amount for all expendables and rarely use the envelope system … although I would like to get to that point;0) You kind of do have a budget that adjusts each month!
My cousin uses the envelope system for his family and it works GREAT!! It definitely is a big commitment at the start of every month to get organized. I’m just not quite there yet haha!
Kalen @ MoneyMiniBlog saysat
I love your money saving tips! As far as the budget, the first article I ever published on MoneyMiniBlog was called The 5-Minute Budget and it was about exactly what you’re saying. Give, invest and save then spend the rest of your money on whatever you want. As long as the important stuff comes out first, it doesn’t really matter where the rest of your money goes. As long as, like you mentioned, you stay out of debt. Great article! 🙂
Hi Kalen! Thanks for the comment! Yes, the way I see it is as long as we are saving as much as we can, who cares if our fun money goes to a dinner out or a trip to the mall! And I don’t want to decide that in advance as that takes all the fun out of it 🙂
Hope you have a great weekend!
I don’t see anything wrong with your strategy. You’re meeting your goals and that is all that matters! =)
I prefer to have a budget because I like to see my progress. I also find that we save more if we use a zero-sum budget and allocate all of our income to bills and savings.
Thanks for the comment!! I love your blog 🙂 One of these months I want to try experimenting with an actual budget in place to see how much more we save, it’s just a matter of getting our ducks in a row haha!
We would also have to adapt a slightly different strategy since we really don’t know what will be coming in each month (on my husband’s end, anyways…which is the main supply of income lol!). My cousin moves X dollars from savings into checking at the start of every month (he’s also self-employed), and then whatever income him and his wife take in goes straight to savings. I think that would work really well for us, but again we just got to do it!
Hope you have a great weekend, Holly!
Stefanie @ The Broke and Beautiful Life saysat
I think it depends on the person. Some people really need targets. I think paying yourself first helps a lot though. If you do that, you can’t get to the end of the month and say, “well I guess I have nothing left for savings”.
Brian @ Debt Discipline saysat
It really depends on what works for you. They call it personal finance for a reason. 🙂 I like to have a general budget down on paper (spreadsheet) as a guide line. I found racking overall net-worth too help keeps an eye on the big picture as well, not just the day to day. But as long as you are meeting your goals do what ever works best for you.
DC @ Young Adult Money saysat
We’ve never had a “true” budget. I’ve tracked our spending and income for two and a half years now, and I think that’s been invaluable. Our expenses really don’t fluctuate much each money so it pretty much comes through as “expected.” We make efforts to save money through couponing and whatnot, but I also am very focused on increasing our income, as is my wife.
Genevieve @PFTwins saysat
I know you saw the approach we’re trying out to keep an eye on our expenses with my new freelance career.
I’m glad I get to peek into your way of doing managing everything. 🙂