5 Reasons NOT to Budget AND 5 Budget Alternatives [Not Budget Variations]
Budgets, Budgets, Budgets
We live in a budget-centric society, where budgeting is championed as the solution to all our problems. We download apps named Goodbudget and You Need A Budget. We (falsely) believe that, if we can just make the budget work, all of our financial problems will disappear, so we Google…
What is the best type of budget?
How to create a budget?
How to stick to a budget?
Why is budgeting not working for me?
Why do I struggle to budget?
Agonizing over Excel spreadsheets and downloading the latest budgeting apps, we feel guilt, shame, stress, and overwhelm. Our financial problems persist yet we return to our budget. It must be the answer. After all, we have never been told that true budgeting alternatives exist, and even if we think to Google budget alternatives, we find Zero-Based Budgeting, Reverse Budgeting, Envelope Budgeting, etc. - hardly budget alternatives!
I Hate Broccoli.
If you told your primary care provider that you hate broccoli and that every time you even look at broccoli you feel disgusted, what would they tell you? To eat broccoli every day for the rest of your life? Absolutely not! I am not a medical professional by any means; however, I bet that your doctor would say something along the lines of ‘There are so many other nutrient dense foods that can get you the vitamin C, K and A that you need! Try brussel sprouts, asparagus, or sweet potatoes (yes, even sweet potatoes have almost the same nutritional value as broccoli!).’ Why force yourself to eat broccoli when you can live healthily without it?
Despite what society tells us, budgeting is one way, not the only way, to tend to our financial health. Budgeting is broccoli. Just as we all have different taste buds, we also have different financial management preferences. Broccoli and budgeting are not for everyone. Some people love (and I mean, love) their budgeting spreadsheets, but budgeting does not suit the vast majority of people.
5 Reasons NOT to Budget
1. Budgets are Hypothetical
Throwing Darts in the Dark
More often than not, budgets are completely arbitrary, based on nothing more than simple projections or estimates, ultimately setting people up for feelings of failure, shame, and inadequacy. Budgets attempt to limit spending in various categories using these projections - the key word here is attempt. The problem is that budgets are future-oriented, and humans are notoriously bad at predicting the future. Budgets do not account for the many unexpecteds of life. A check engine light on your dashboard. Impromptu happy hour with friends. Of course, your budget does not work - it is not real and life happens.
2. Budgets are Time Intensive
Time > Money
In order to account for monthly variances, you must recreate and update your budget every. single. month. After all, how can a 28 day February budget be used in March? How can a budget for a holiday, birthday, and vacation filled month be used in a mundane month? They cannot! Your time is valuable. You have 24 hours in a day. If you work 8 hours and sleep 8 hours, you have 8 hours to eat, shower, commute, exercise, socialize, decompress, run errands, etc. The amount of time and emotional energy spent budgeting could most certainly be better spent with friends, family, baking, gardening, etc.
3. Budgets are Over Complicated
Which Way is Up?
Most budgets have tens of line items, separating out how much is spent in every possible category of life. And for what? Do you really need to plan to spend $15 at mini golf this month? The answer is no. What ultimately matters is that you feel financially safe and secure, are working towards achieving your financial goals, and are improving your overall financial health and wellness.
4. Budgets are Constrictive
No Breathing Room
The intention of budgets is to limit, to constrict. Budgets require you to say ‘no’ instead of freeing you to say ‘yes!’. With budgets, there is often little to no wiggle room - once you have hit your dining limit, you must stop eating out otherwise the budget will not work…again. The constrictive nature of budgets can feel sad, hopeless, and stressful.
5. Budgets are Forever
A Band-Aid, Not a Cure
Budgeting is inherently short-term, completed on a month to month basis. Tediously looking at and stressing over a budget every month forever sounds exhausting. Most people budget for years and years and years. That could be hundreds of months of budgeting! Budgeting does not address the root of your financial behaviors or allow you to live freely within your means.
5 Budget Alternatives, Not Budget Variations
1. Automated Finances
To automate finances, start by identifying your short and long term goals. Open a savings account for each goal - you can have as many checking and savings accounts as you want! A savings account for a trip to Taiwan next year, a savings account for a newly used car in three years, a savings account for a future home downpayment. Then, work backwards - calculating how much money you need to set aside each month to achieve your goals. Next, through your employer’s portal or HR, you can indicate how much money you would like to be automatically deducted from your paycheck and deposited into each savings account. You can also automate your retirement contributions and any debt payments.
Now the fun begins! All of the remaining money that hits your bank account is meant to be spent. Once you have paid your necessities, how you spend the rest is up to you. Want to spend $150 on Nikes? Go for it! Want to spend $125 on Bad Bunny tickets? Vale! You can now enjoy spending while simultaneously working towards achieving your goals.
2. Intuitive Finances
Intuitive finances starts with manually tracking your income and expenses for two months (just two months) every year. Tracking your income and expenses will give you actual data (as opposed to projections) and will open your eyes to your spending and savings habits. Paying attention to your habits during these two months will help you to act more intuitively throughout the year. The remaining ten months, you can live intuitively - not budgeting or tracking, simply enjoying. Through intuitive finances, you will be able to live more freely and enjoy life, without scrutinizing over every expense. *Do not forget to track your income and expenses annually, as there can be changes in your income and habits as well as inflation or deflation.
If you do not yet trust yourself to practice intuitive finances, alternate tracking your income and expenses and living intuitively every month or two months. As you increase confidence in yourself, you can gradually extend the amount of time that you are living intuitively.
3. Categorized Finances
If you hate budgeting but are still really attached to the idea of budgeting, you can try categorizing finances. Start categorizing finances by looking at your past three months of expenses. Again, data is always better than projections. Start by categorizing expenses into five (or six) different buckets: Housing, Transportation, Food, Recreation, Savings \ Investing, (and Kids). Looking at fewer, larger categories helps you to make more significant financial changes.
By categorizing expenses, you no longer need to nitpick over each little expense, as people often do with budgets. By looking at broader categories, you have more useful information. For example, the most you can save on a $15 Netflix subscription is $15. However, if you notice that you spend $1,600 a month on food, you of course cannot save $1,600 as you do need to eat, but you may be able to save $300, which is a lot more than $15! Consider quickly categorizing your finances at the end of each month or every so often to monitor your progress.
4. Dual Income Finances
If you have joint finances with a partner, attempt to live exclusively on one income. If one partner’s income can cover all major expenses (housing, food, transportation, utilities, insurance, recreation, student loan payments, etc.), the other partner’s income can be used exclusively for savings, retirement, and vacations. Depending on feasibly, you may choose to live off the larger or smaller income. Regardless, you will be saving a significant amount of money. The clear cut nature of dual income finances helps you to live within your means. The major advantage of this method is that, if one partner loses their job unexpectedly, while you will temporarily not be saving or investing money, you will be able to manage all of your expenses based on a single income. What peace of mind!
If you do not have joint finances but you work two jobs, you can create your own dual income finances by living off one income and saving and contributing to your retirement with the other income.
Read The Two Income Trap by Elizabeth Warren (the Elizabeth Warren)
5. Therapeutic Finances
If none of these options feel good to you or if you want to improve your relationship to spending, saving, investing, debt, retirement, etc., consider therapeutic finances. Through therapeutic finances, you will gain insights into your financial habits and financial decision-making, which will ultimately improve your financial health and well-being. To start your journey to financial wellness…
Follow Certified Financial Therapist Aja Evans and pre-order her book Feel Good Finance: Untangle Your Relationship with Money for Better Mental, Emotional, and Financial Well-Being
Listen to Certified Financial Therapist Lindsay Bryan-Podvin’s Mind Money Balance podcast
Participate in a Money Relationship Makeover with Certified Financial Therapist Haylie Castillo
Start working with a Certified Financial Therapist today!
A Final Thought
I hope that this post has showed you that there are so many ways to effectively manage your personal finances. These are certainly not the only budgeting alternatives that exist, though others may be difficult to find. Feel free to adapt and combine these budgeting alternatives until you find a method that works best for you. Get creative! You do not have to feel shame and stress when managing your money. Aim for feeling in control, relieved, free, and accomplished!
