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Anti-Budgeting: simplify your life

Anti-Budgeting: simplify your life

Budgeting gets so much attention by the media, financial professionals, articles and all kinds of places. I have to ask, "why?" My personal feeling is that strict budgeting is similar to using heroin to treat medical conditions - it's outdated, it doesn't generally work, and it comes from a time when society knew very little about the field.

Some people love budgeting, and that's ok. This article is not for them. It's not knocking that approach for people that enjoy it and do it well. This is just providing an alternative for other people, which means most people in the world, because so many people hate sticking to a budget.

Budgeting is hard because it's effectively trying to predict the future. It's somewhat ridiculous to say "I know exactly how much I'm going to spend next month". It's even more ridiculous to say that about 10 years from now. Life is messier than that and most people that aren't accountants, financial professionals, engineers or extremely organised folks will feel all kinds of shame, guilt, stress and burden from making a budget and sticking to it.

Think about how tedious it is to add up all your expenses for the last year, and itemise them (Apps now make this easier, but not everyone uses those). Then for those that are trying to save more, they have to try to figure out which expenses to cut or reduce. This brings most people a lot of stress and why wouldn't it? Nobody really buys anything thinking, "I don't need this". People buy things they feel have value and are needed, so cutting each and every expense in a budget goes against our natural tendencies because it feels like denying ourselves something that we used to have. We are losing something.

Anti-Budgeting: simplify your life

What's the alternative?

Anti-budgeting. This can simplify your life. You don't have to track each and every expense (though you could if you wanted to?). It's just making sure that you are saving 'enough'. Enough isn't always an easy number to calculate, but the idea is that once you have an idea of how much you ought to be saving, based on the lifestyle you want to live, make sure that is set aside. This is the concept of 'pay yourself first'. If you set up automatic savings to take place and it's enough to be on track, then you've just essentially eliminated the need for the remainder of the budget.

Here's the hard part, whatever you are setting aside (for example, $100 or $10,000 each month) then you don't have that money to be spent on other things. This means you are now forcing yourself to figure out how to reduce your expenses without having to meticulously choose from a budget. If you're goal is to save $10,000 a month and you achieve that goal by the end of the month, great! If you didn't hit that goal, it means you simply have to spend less on other things in order to get there.

This won't be possible for everyone, but it does make the whole ordeal a lot easier. It also means there's reduced worry for people that tend to ask "can I afford this?" The answer depends on if you can still save enough to hit your goal. If you are saving enough, then yes, you can afford to buy something.

Without automatically saving money, people are more likely to spend everything they earn. This is a problem because without saving, there's nothing to build for your future. You can't amass wealth without having something to build up to. Having a goal in mind increases the chance of that goal becoming a reality (this is due to dopamine in your brain, and how people gain motivation). So by telling yourself you have a savings target, you are more likely to save that amount. If you leave that up to fate or say that you will see what you have leftover at the end of each week/month, it's much harder to follow through.

The point
  1. Calculate how much you need to be saving

  2. See what kind of investment makes sense for those savings (cash, bonds, shares, property, alternatives, etc)

  3. Set it that savings to be automatic

  4. Go live your life and worry about anything else

Here are some other articles that touch on the same idea, if you're still interested:

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