Why I Never Budget

You can’t be involved in personal finance without someone bringing up the subject of budgeting.  Many people are passionate about budgeting and they want to discuss every virtue and detail.  Some people even post their budgets online for the whole world to see.  It’s a popular subject, with many supporters and many opinions.

I Hate Budgeting

For me, budgeting seems like a colossal waste of time.  I would rather bang my toes with a hammer, then spend time dividing up my paycheck into categories.  I know I’m not the only one who feels this way.  So, I would like to speak on behalf of my fellow budget haters.

Budgets are Unpredictable

After preparing a budget, it is almost guaranteed that something will go wrong.  Your car will break down, you will get laid off from your job or you will need to entertain someone from out of town.  Budgeting can’t change these circumstances.  So, if gas prices hit $5 per gallon, then your travel budget is shot.  You still have to get to work, whether you have budgeted for this increase or not. Life and finances rarely fit into a predictable budget.

Budgets can be Risky

Relying on a break-even budget can leave you vulnerable to emergency expenses. When this happens, people often resort to a credit card to bail them out. And, there is rarely enough room in a break-even budget to catch up from a financial setback. Credit card debt can stress a budget even further. Many budgeters recommend an emergency fund of at least a couple of months pay and I completely agree. If you aren’t budgeting for emergency expenses, you are taking a big risk.

Budgets Waste Time

Have you ever thought about what you could do with the time spent budgeting?  Would this time be better spent increasing your income or studying investment opportunities?  What is the ROI for creating and following a budget?  If budgeting helps you to invest more money, then keep doing it.  Otherwise, consider a more lucrative use of your time.

Budgeting won’t increase your income.  And, it’s not very likely to reduce your expenses.  So, why waste your time on it?

Budget Alternative

Instead of budgeting, I prefer to Pay Myself First.  That means I save some money as soon as I get paid, then I pay my bills and then I live on the rest.  I don’t worry about spending too much money on food versus travel versus entertainment.  Instead, I enjoy my food, my travel and my entertainment, knowing that I’m getting ahead each month. 

After I have invested some money and paid my bills, there’s no need for me to budget or ration the rest of my paycheck. I usually spend it wisely, but I spend it for my enjoyment.  After all, if you can’t have some fun with your money, then you need a new financial plan.

Budget Wisdom

If you budget all of your income for expenses and you never save any capital, then your budget becomes a liability, instead of an asset.

The Bottom Line

The bottom line is that budgeting doesn’t create wealth.  Saving and investing create wealth.  It makes no difference knowing where your money goes each month, unless some of it goes into investments.  If you aren’t saving, then you aren’t getting ahead.

“A budget tells us what we can’t afford, but it doesn’t keep us from buying it.”

William A. Feather – American Author & Publisher

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5 comments to Why I Never Budget

  • Anne

    I think this is very true for families of a smallish size who expect to have at least a modest surplus at the end of the month.

    I’m single, have fixed expenses that don’t come near my monthly net pay, and agree that a break even budget would be a total waste of time for me. I know what I bring in, what goes out regularly, and I set basic targets for monthly things like food, gas, and savings. It works well for me.

    I’m just not sure it would work for a couple with multiple kids who are trying to make things work on one income that leaves very little left over at the end of each month. For them a fixed, break-even budget that is revisited often seems like it would make sense just to keep financial order.

    I do think there should be some disclaimers on posts proclaiming that a break-even budget is the only way to orderly finances.

  • CJ

    Budgets are a pain, and I agree, take a lot of time that don’t seem to add a lot of value (who cares how much we spend on toothpaste each month?). To me, the big thing is to a) know how much you have to spend; and b) pay attention to your spending so that you stay within that limit. Budgets force you to do both things, which is what most people DON’T do today. I like your system, it’s similar to mine. Which is maybe one reason why we’re both doing ok in this down economy…

    Love the quote, BTW! I’m going to “borrow” it. 😉

  • I hate bugets it’s a time waster

    I save 30% of my income and work with what’s left

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