At first I was like “Genius! Whey haven’t I ever heard of this before??” but the more I let it sink in, the more I started having doubts. Even though deep down I really REALLY wanted it to be the best idea ever! Haha… and it just might be, if you’re one to especially despise budgeting or tracking where all your dollars go.
Here’s what they say will cut out the stress of budgeting:
Stop counting. Calculate what you need to save each month for your long-term goals — retirement and college, say — then have the money automatically pulled from your bank account or paycheck, if it isn’t already. The remaining cash is yours to spend. “You don’t need to know where every dollar is going.”
Well ain’t that something! See, in theory this works out REALLY really well – and it’s super easy to understand. “I want to save $500 every month, so all I have to do is xfer it out into my savings and then voila! I just live on all the rest.” It’s hard to argue with that. Except that VERY few people can really pull that off. Because what we WANT to save every month, and what we actually CAN save every month can be completely different. And without budgeting or tracking your money for at least a few months to really *understand* your flow of money in and out, it’s hard to know exactly what you can easily afford to save every month.
On the other hand, if you pull that money out FIRST, and for real don’t touch it at all, then you may just force yourself to save and come up with a plan to live more efficiently knowing you only have $X left over. Which would be awesome! Until you slip and and have to pull money back from that savings account, pushing you toward that slippery slope of xfering money back and forth between all your accounts each week. Like I used to do the entire 7 years after graduating college ;) And the reason for it was because I wasn’t budgeting properly!!
In fact, now that I think about it I was doing EXACTLY what this article says to do: I was putting a few hundred dollars into my savings every month and TRYING to live off the rest. Wow… I totally forgot about that… and I can tell you damn straight that did NOT work, haha… unless it makes you feel better seeing money in your account for 28 of the 30 days each month ;) I know that’s what got me going. But every time I had to go in and pull it all out each month it just stung even more. Like I “failed to budget” yet again. And that’s because I WASN’T budgeting! I was only looking at one side of the game the whole time – my savings.
This anti-budget Money Mag presents leaves out the entire other part of proper money management — the spending! Or rather, our bills. If you turn this idea around, and pay the bills first and THEN save the rest (which I’m not advocating necessarily), you’re left w/ the same sort of problem except you never had to go through the trouble of pretend saving in the first place. And really, this is the way most of the world works — paying our bills first and THEN trying to save. Again, not saying that’s the best way to go here, just playing devil’s advocate.
At the end of the day, whether you save or pay the bills first, you’re still only gonna have a certain amount of $ left on the table each month. You don’t magically get more or less when swapping methods, so in my opinion it’s better to first FIND OUT where all your money is going (by tracking it for a few months), and THEN coming up w/ the plan to attack your savings/debt now that you know exactly what you’re dealing with. And each route is totally fine, all depending on your own personality. For me, saving first ended up irritating me the whole time, so I switched to paying the bills first and now I get MUCH better results at the end – both mentally and financially ;) So it’s always good to test out.
What do you guys do first? Save or spend? What do you think about this non-budget, budget?
(Photo, and likeness, by JMoneyyyyyy)
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|Personal Capital (FREE) -- If you’re looking for a robust financial tracker, Personal Capital is the way to go! They’re like Mint, but on steroids and have much better tools for investment and net worth tracking. // Full review|
|Digit (FREE) -- A super easy (and automated) way to save. Every day Digit analyzes your income and expenses and will push money aside for you any time it sees extra sitting there. I've saved over $4,000 myself using them so far! // Full review|
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