Budgeting 101 : Why Budgets Are Horseshit And What To Do About It
Keeping a budget is one of the most common pieces of financial advice. But a budget might not be all it’s cracked up to be.
Depending on your financial situation, budgets may actually hinder your financial well-being. For some, budgets are important, but this is a small category of folks.
In general terms, I believe budgets are horseshit.
Why Budgets Suck
The type of budgets most often recommended are complete horseshit. These budgets just don’t work. They use the same tactics year after year with strict limits on spending spread across several different categories.
And then – boom – they fall apart, just like that, at the slightest hint of turmoil.
Even so, budgets can be a necessary evil. They’re especially important for those that don’t already have a firm grasp on their finances.
The key is to rethink your budgeting techniques, so you don’t make the same mistakes time after time again.
Budgets are horseshit because at the end of the day, you should just spend less. Sounds simple right, but most people forget this simple rule.
If you adhered to this, spending as little as possible, then you wouldn’t even need a budget.
Constantly think to yourself:
• Do I really need to buy this?
• If yes, is there a cheaper alternative?
If you abide by these two simply rules, then you don’t need a budget. That said, some people can’t follow these simple guidelines and need a line-by-line budget indiciating how much they can spend on various aspects of their lifestyle.
If that’s you, the maybe budgets aren’t exactly horseshit. Even though you should work towards not needing a budgets, here are some tips to help you break the budgeting cycle.
Welcome to budgeting 101. Here are the top ways to create an effective budget you can stick to for the long run.
Give Yourself Some Leeway
Strict budgets don’t work. They’re also not much fun. Sometimes we deserve to buy items that aren’t absolutely essential.
Give yourself some financial leeway by considering the trade-off. Want to buy a new jacket (even though you have a perfectly fine one at home)?
Personal finance expert Deena Katz recommends making a budgetary trade-off. Rather than spending money blindly or pulling out your credit card, see where money can be shifted from another area of your budget.
For instance, if you have money allotted towards eating out, put that money towards your jacket and limit how often you eat out for the remainder of the month.
Track Income and Expenses
Just because strict budgets don’t work, doesn’t mean you shouldn’t be tracking your income and expenses at all. DePaul University states that knowing where your money goes each month is the most important aspect of your financial health.
Just seeing how much money you spend on unnecessary expenses will give you the incentive to curtail spending in these areas in the future.
Find the Right Money Management Software
Money management software is the key to tracking your income and expenses, but you shouldn’t just use any old type of software.
Find the money management software that works for you. For a lot of people, this is Mint.com. For others, it’s Quicken or even just a simple spreadsheet.
You might even prefer to keep track of your finances by hand in a notebook.
If you hate budgeting, then automatic transfers will be your best friend.
Set automatic transfers up for essential expenses like rent, bills, insurance, retirement contributions, and your emergency fund.
It’s a completely automatic way to ensure all your expenses get paid and that money gets put into your savings accounts.
Earn More Money, Balance your Budget
Budgets don’t work for a lot of people because they feel that budgeting restricts the amount they can spend. While that’s the point of a budget, after all, that feeling might also hint at a deeper problem: you just don’t make enough money.
Add more money to your monthly income by monetizing your hobby, starting your own business, or exploring sharing economy gigs. The extra money you earn will give you more leeway each month and make your budget feel much less suffocating.
Our extremely handy sharing economy income calculator will give you an estimate on how much you can expect to make from these type of gigs.
I personally feel that budgets are horseshit.
If you are always thinking to yourself: do I need to buy this, or is there a cheaper alternative? Then budgets become obsolete. As they should be.
That said, some people do not have the self discipline to adhere to the above recommendations. So, in these cases, budgets might be a short-term necessity.
But you should work yourself off your budget. Develop amazing money habits that become engrained in your lifestyle.
If you do this, then you can violently toss that shity budget out the window and begin a less restrictive life.