If you hate budgets you’ll LOVE this. When we start thinking about saving money and getting our financial lives in order the word that comes to most people’s minds is the word ‘budget’. I know budgets work for some people, and if they work for you I’m really glad (tell me your tips!) but they’ve never worked for me even though I’ve really wanted them.
28 Reasons Why Budget’s Suck…
1. Budgets are boring
2. Budgets don’t work
3. Budgets provide too much gray area Does the dinner out of Friday night go into the entertainment category or the food category?
4. Budgets are too time-consuming Spending so much time inputting data into a spread sheet takes A LOT of time. Who has that much extra time?
5. Budgets are prone to A LOT of errors
6. Budgets are not empowering
7. Budgets focus on the wrong thing
8. Budgets are too subjective
9. They are hard to keep on your mind
10. Budgets are tedious Tracking every single penny day after day is not a recipe for long-term financial success
11. The word “budget” itself is cringe-worthy Ew. Budgets.
12. Budgets are abstract
13. Budgets are over-rated
14. Budgets have too many negative feelings attached to them
15. Budgets are more about tracking money then about what really matters to people Like, having a happy, hopeful life
16. Budgets are old-fashioned
17. Budgets aren’t realistic
18. Budgets fail more often then they succeed
19. Budgets don’t factor in the variables of life
20. Budgets are too structured while life is not
21. Budgets are discouraging
22. Temptation, temptation, temptation
23. Budgets can actually INCREASE spending! See this article: Self-imposed price restraints increase spending
24. Creating a budget (staring at that blank piece of paper) can be overwhelming Even though there are countless free spreadsheets online
25. They’re pointless
26. They’re frustrating
27. When creating a budget we usually underestimate our monthly spending and expenses
28. Paying off debt by budgeting takes F O R E V E R Why not suffer for a little bit of time, get out of debt, and get on with your life? See my suggestions on how to do just that below…
So what DOES work? Spending Fasts® and Spending Diets do!
- Keep it simple
- Make a black and white plan and eliminate the gray area with a ‘Wants and Needs’ List
- Cut your ‘Needs’ list down even more and buy in-season and generic whenever possible
- Be sure to think about and implement creative ways to INCREASE your income
- Shift the focus to what you CAN spend money on
- Get competitive with yourself and see how much you can send to the creditors every month
- Don’t worry about categories!
- Saying you’re on a Spending Fast® is way more fun than saying you’re on a budget;)
- A Spending Fast® is an extremely effective method of paying off debt
- While a Spending Fast® is difficult you can get through it, get the debt paid off quick (relative to a budget), and get on with the life you truly want to live!
Get all the details on how to do a Spending Fast® and if you’re ready to get started join the hundreds of other people who have also decided to finally change their lives by taking the Get Out of Debt Pledge. Also, be sure to head to the Community and connect with a whole slew of awesome pro-active people.
What do you think, am I completely wrong, and are budgets actually totally amazing and I have no idea what I’m missing? What’s worked for you?
image (sans text) boltron
I’ve outlined my 2013 spending fast. It’s my New Year’s Resolution. My question is this (and maybe you have blogged about it before),: Your spendng fast worked well for you. Please give us working parents with kids tips on how to get the whole family on board and how to pare down the wants and needs list! I have a 10-year-old and 8-year-old…got ideas on how they can feel like they are contributing and not consuming?
I would have the kids be a part of creating the ‘Wants and Needs’ list and have them also come up with ways to make extra money. Evaluate the items in your house that you’re all not using and decide together if you can sell any of the items. Going through their clothes and toys together will also empower them. I would suggest framing the paring down on toys and clothes as “getting a chance to help others who need the items more than you do”. Also, having the kids come up with free or cheap things to do will help them feel involved in the whole process. Try to keep the focus on the fact that you’re all CHOOSING to do the Spending Fast and the steps so you have a better future will (hopefully) help lessen any ‘woe is me’ feelings. It’d also be good to come up with a list together of the pros and cons of why you should all do a Spending Fast.
Educating the kids about why you are doing the Spending Fast and explaining all the parts as you go along will help them immensely with their adult financial lives. Keeping them involved in everything will be exciting for them too.:)
Keep me posted on your progress!
Those are good ideas and we did talk about wants vs needs. I asked the kids to ask these questions before they say they want something: Do I need it for school? Do I need it to eat? Do I need it to wear? (most likely not, since they wear uniforms to school.) Do I need it to live at home? (no drama allowed in answering that question–I’ll-just-die-if-I-don’t-have-it is not an answer.) Then, in a rare brilliant moment, I came up with an idea! I took the three big debts, pulled a puzzle/coloring picture off the internet of a scary monster and assigned each piece of the puzzle a dollar amount. The three “debt monsters” are hanging on the refrigerator and the kids will color in the dollar amount we pay on the debt monsters each pay period until it is dead. Then we bury it! They are so excited about ‘killing” the monsters. Above the monsters is a sign that says, “Please don’t feed the monsters. Do you “want” it or do you “need” it? Wanting feeds the monster!” My daughter cannot wait until this weekend when we attack the monsters–which is a change for her as she is often one of the chief “wanters.” The new rule of he house is that everyone’s job is to remind the person who “wants” something that they are (gasp!) going to feed the monster and who would want to feed an ugly monster? We are all very excited! Pay periods are now being called “starving the monster” days. This morning, my daughter asked, “How long until we can starting killing a monster? Can I pick which one we kill?” We are going to make a big deal of coloring in the pieces and keep that energy going all year long! Death to the Debt Monsters!
WOW! That’s brilliant!!
Though I find it difficult (because my income is currently fixed and rather small), I’m a big fan of my budget. After I’ve subtracted necessities from my monthly stipend payment (rent, electric, internet, phone, savings), I have a set amount left over for groceries, anything “fun,” train fare, savings for haircuts, and random household expenses. Months wherein I have cash leftover in the grocery or fun categories are good months! I can either use it for something I “want” or I can stock up on organic meat (for example).
Keeping to my budget this way (and seeing how long it takes to build my savings account!) keeps me from using my credit card most of the time.
I agree with you. I’m a big nerd and while I enjoy creating budgets, I hate living by them. What’s worked for me is taking our different streams of income (even very small ones) and giving them different jobs to do based on our financial goals (i.e. freelance blogging income goes to college expenses for my daughter, part-time bookkeeping income goes toward college savings for my son, and miscellaneous “found” money goes toward beefing up our emergency fund).
What about once you’re not on the Spending Fast/Diet anymore? I.e., your debt is paid off, now you just have to avoid racking it up again. It seems like a budget is mandatory for that.
I love Mint.com. That, along with a lot of Anna’s advise, has combined my needs vs. wants list and a budget into ‘goals’ and it makes me NOT want to spend because anything that doesn’t go towards my budget/goals goes straight towards my debt.
I can see how those things are valid to an extent. I think they work depending on your personality. I agree with so many things, yet I do one anyway because it has helped me so much. Even if I go over (which I do), even if I miss tracking something, or have trouble figuring out what category something goes it…it’s still better than what I was doing, which was nothing. There may be a better way than a budget, but for now I know I’ll stick with what has helped my financial situation. One of the biggest struggles I have with them is I’m a freelancer, so I have variable income. Makes it even harder!
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I enjoyed your post, Anna, and agree with many of your points.
Most of us associate the ‘B’ word with very negative feelings like deprivation, lack, shame, guilt, panic, stress and more. It’s virtually impossible to follow and stick to something that generates such emotions. Our minds won’t allow it.
I believe one of the answers lies in our core financial values. What’s more important – spending $100.00 today or getting a credit card bill for $120.00 next month that represents our purchase plus interest? How many additional hours will we have to work to payback what we just borrowed on a credit card? What are we trying to mask, avoid and forget when we ‘spend our feelings”?
Marc Sandor Woolf
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Budgets don’t work for me, what does work is being content with what I have, so apart from eating and housing, there is not much more I need.
If you don’t tell your money where to go (aka BUDGET), you’ll wonder where it went.
If you aim at nothing (NO BUDGET), you’ll hit every time.
Budgets drive spousal communication over money (which is good because money fights are the number one cause of divorce in North America).
You get to plan and create your budget (it doesn’t plan and create you).
The key to getting out of debt and building weath is behavior. The budget is the plan for that behavior, and the whistle for when you’re out of bounds.
Emergency funds take care of unplanned EMERGENCIES that aren’t in the budget. Dump the stupid credit card and get an emergency fund. Then, make a budget.
A budget is about being intentional with your money.Intentionality IS EMPOWERING.
Your budget will allow you to see where your wasting money. That’s concrete. Not abstract one bit.
Budgets are supposed to be subjective. YOU (the subject) will have a different budget than me (a totally different subject).
The only time budgets aren’t realistic is when you lie to yourself or are too wimpy to follow through on a promise to yourself.
When you take a road trip, do you use a map?
Advising people getting out of debt not to do a budget is like advising them to buy a car on a loan, stock up on credit cards, borrow money from their family, and generally stick their head in the sand.
Budgets are difficult to learn at first, but they are WORTH doing.
Your income is your number one weath building tool. Why wouldn’t you plan your work (wealth building) with that tool?
Hi Ben, thanks for the thoughtful and passionate comment. I’m not advising people to not have a plan, I’m suggesting that they look at money and financial planning in an entirely different, more effective way than we are traditionally taught. The Spending Fast and Spending Diet are plans and very effective ones at that.
Sure, the thing is that the spending fast and the spending diet are about behavior modification. A good budget process is also about behavoir modification. Really, the fast and diet are components of a budget process, not an entirely different financial plan. I’ll give 28 not-so-passionate-counterpoints to prove it:
1. Budgets are as boring as fasting, dieting, and going to Las Vegas.
2. Budgets are as effective as the person using one.
3. Budgets are black and white. Undisciplined spenders lie to themselves to make the shades of grey.
4. People work their butts off to make money. May as well sit those butts in a chair once a month and decide where to put that money.
5. Errors in a budget are opportunities to learn more about yourself, your spending, your saving, and what you need to change in order to win.
6. Intentionality and choice are empowering.
7. Budgets focus on the right thing.
8. Budgets should to be subjective (each subject creates their own, customized to the unique financial situation and goals).
9. That’s why you right it down. It’s on paper. On purpose. (not on your mind)
10. Budgets aren’t near as tedious as spending time on the phone with crummy credit card companies, bill collectors, student loan corps, etc. A budget is not about tracking pennies, it’s about telling them all where to go.
11. True. The name has been misrepresented, and ATWS has capitalized on that fact (kudos!)
12. If you build your monthly budget on paper, with real numbers connected to real money, they are as concrete as a sidewalk (to success).
13. Who rates budgets?
14. Budgets don’t have feelings. People have feelings.
15. Budgets are about going somewhere (like a happy, peaceful, hopeful life).
16. Budgets are timeless and classic elements of a financial wardrobe.
17. People who make unrealistic budgets are unrealistic people (see congress and my broke uncle).
18. People sometimes fail at sticking to a budget. Just this morning, I failed at the perfect merge into traffic. Oh well, I’ll try again tomorrow.
19. Budgets and Emergency Funds take care of the variables of life.
20. Budgets give structure to your money, so you can party all month long.
21. Budgets give hope, peace, and light to all.
22. Not in the budget. In the budget. In next month’s budget.
23. Diets make me fat (see my waistline).
24. Income – Outgo = WEALTH
25. Fasts and diets are just fads.
26. Having money is not frustrating.
27. Who’s we? I do my own budget.
28. A budget is a plan. You can use it to buy lotto tickets or to crush debt. You get to decide.
You’ve got some great, thoughtful points here, and I’m glad you’ve found a successful method that works well for you.
Great points, but #15 and #18 – than not then?
I am ambivalent about budgets. I like making them, because it gives me a sense of control and plan for the next month, but I hate living by them, because the ones I make are inflexible. What I have found that works for me to keep my spending under control, is to this: when my paycheck arrives in my bank account, I divide the money into three – my monthly bills (rent, electricity, phone, debts payments etc.), my savings, and whatever is left I get to spend as I see fit. The “whatever is left”-category amounts to about 25 % (I have a good income), as I try to stay frugal. On my mobile phone I have a notepad app where I write the amount that is left for spending, both cash and on my debit card (e.g. $300 on card + $25 cash). Whenever I spend money, I substract the amount, and update the note (e.g. $275 on card + $23 cash). This way I know exactly how much money is left to spend, and it takes me only seconds to update the info. I find I don’t need a budget, because I always know what I have left, as well as how many days there are until my next paycheck. My goal every month is to have as much as possible left over, that I can use to pay off extra debt. I find it also chastises me, because I have to update the info an see the amount decreasing each time I spend. Works for me!
Thanks for explaining the details and insights to how budgets work for you.
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I only “budget” the things that I need to spend money on. Mortgage, utilities, etc. We give ourselves discretionary money, but I believe that saying “I can spend $100 at coffee shops this month” it tells me TO spend $100 at coffee shops.
Ha! I could see that. It’s like, well, I guess it’s “in the budget”!
I love our budget. We use the software from You Need a Budget and it works great for us. Our budget ebbs and flows and doesn’t “punish” us if we are a little over in a category here and there. It also budgets off of money we already have, not projected income.
We are debt free, so not in need of doing a spending fast, but definitely want to live frugally while we save for some goals. Our budget helps us project just how long it will take to save for a goal, which motivates to live lean.
As others have mentioned, it also helps my husband and I communicate with each other about where our money is going. We very rarely fight about money and I attribute that to living on a shared budget.
This is crazy to even admit – but just the idea of saying, “let’s just not spend any money, no matter what” has been revolutionary to us the past three days. We just keep marveling on this idea. Thanks. ha! Pathetic I know, but it gives a new light to our budget! We can budget money but with a goal of “spend no money” we view it so differently.
I agree with Ben on this issue and I fail to see how anything presented in this article is revolutionary. The reason financially intelligent people have budgets is because they WORK. I run a small business with variable income im also married and have two young children. It wasnt until i actually created a budget with my wife till we were able to WORK TOGETHER on our financial goals. What is presented in this article IS A BUDGET just used differently than traditional methods of budgeting. You can incorporate a spending fast into a budget and when you create a budget you also SHOULD BE considering your wants and needs. Am i missing something here? Ifeel like telling people to not budget is misleading people and directed them toward financial destruction.
One thing people always have a hard time doing includung myself but I’m getting better at is CONFRONTING THE BRUTAL FACTS OF LIFE. A budget HELPS you do that. Budgets are not of the devil NOT having a budget is of the devil because without a budget you are walking through life as a victim vs. taking charge of your financial life. Theoretical or easier ways to think about financial budgeting are just a cop out. Budgets are the difference between rich and poor people and the sooner we all accept that the more we can ALL start improving our financial lives. Budgeting is not easy but I am confident from experience that it sucks a whole lot more when you spent more money than you should have eating out only to find your short on rent money.
Lets get real..sure there are a lot of different ways to budget and we can call budgeting a lot of diferent things but in the budget is anything on paper that helps you focus on where your money is going so this article is wierd because it talks about how bad budgets are and then goes into talking about how budgets work.
Ill use methods of budgeting that work instead of trying to re-invent the wheel any day
I agree that traditional budgeting doesn’t factor in the variables of life. That’s why I prefer Forecast Budgeting as a way to manage my expenses.
Instead of creating these “per category” plans that never end up matching reality, I just track my spending and forecast my checking account balance.
When anything unexpected comes up, I don’t have to feel guilty. I just enter the transaction, and take a look at how that expense will affect what really matters: my future account balance.
If my balance isn’t going negative in the next 12 months, I know I can afford the expense. No Guilt!
I think part of the problem with regular budgeting is that it doesn’t help you connect your current expense with how it will actually affect your future.