Budgeting gets a bad rap. A lot of people think a budget is restrictive, time consuming, and means you must be poor. While none of those are true, you may feel like you don’t want to be bothered with a budget or even that you don’t need a budget.
I was talking with my dad about budgeting recently when he and my mom were in town visiting. As recent retirees, they are traveling across the country in their RV to see new places and visit family.
My dad has never been a budgeter. He uses the classic excuse that a budget is too restrictive. He hasn’t seen the budgeting light yet.
In the year or two before retiring, he talked about how after retiring he would need to start budgeting because he’d be on a fixed income. My mom was excited at the possibility of introducing a budget into their marriage after nearly 40 nears without one.
Knowing that budgeting and personal finance are favorite topics around here, he was eager to get my opinion (or, I daresay, my approval) on his non-budgeting plan.
Instead of keeping track of and categorizing his expenses, he just checks his account balance monthly. He leaves a certain amount, maybe a couple thousand dollars in his checking account as a buffer. He spends whatever he wants during the month, then just makes sure that they haven’t dipped into the buffer. If he sees that they are dipping into the buffer a couple of months in a row, he will back off on spending so much, evaluate their overspending and make any necessary changes.
“See? I don’t need a budget,” he told me. “Isn’t that good enough?”
I agreed that his system was working fine for him.
His situation, however is exceptional. He has a pension that pays him something like 70% of the average of his salary over his five highest-earning years. Staying within that income isn’t much of a challenge right now.
At the same time, he doesn’t really have any financial goals. Besides living within his monthly pension check and keeping a buffer in his account, he isn’t working toward anything in particular.
Times when you might not need a budget
While I think that most everyone can benefit from a budget, I suppose there are some circumstances where you would be fine without a budget.
1- You have no financial goals.
If you’re at a place financially where you aren’t trying to achieve anything in particular, then you might be fine without a budget.
Budgeting is not an arbitrary set of restrictions on your money. Budgeting is the vehicle to reaching your financial goals. The more precise your goals, the more precise your budgeting.
If you have a financial goal that stretches you, is measurable, and is time-bound, you’re going to be more dedicated to tracking, managing, and making the most of every dollar.
2- You have a consistent track record of living within your means
Maybe you’ve been frugal your whole life and have an easy time living within your means without trying very hard. Maybe you’re just not a spender. You might have really good system of checking your spending total and have a cushion of money in place.
Keeping track of your spending and telling your money what you need it to do might seem like overkill since you’ve been doing fine on your own.
Either of these situations on its own isn’t necessarily a free pass out of budgeting though.
For example, just because you don’t have goals doesn’t mean you can wisely manage your money and stay afloat. Additionally, people who consistently live within their means may still live by a budget as they work to reach their goals.
However, if you have no financial goals and you easily live within your means, then you might not need a budget.
I haven’t always been a budgeter
Until I was married, I never budgeted or tracked my spending. I was naturally frugal during college and kept mental track of the money I had available. I didn’t have any financial goals aside from feeding myself, housing myself, and paying for school. I felt like my finances were simple enough that I didn’t need a real budget.
I managed to pay for school without debt and without a written budget. But that wouldn’t work for us any more, and I don’t think it works well for most people.
Most people need a budget. Most people need goals. Living within your means is hard for most people.
It’s been nearly 11 years that my husband and I have been budgeting. It has taken different forms over the years and slowly evolved into something that I love.
Do you need a budget? It’s up to you!
I’m going to guess that the answer is YES for most of you, but I’m going to let YOU be the one to make that call.
Budgeting is absolutely essential for us to reach our goals right now, but it might not be for everyone. What about you?
What do you think?
- Do you feel like you’re an exception to needing a budget?
- In what circumstances does someone not need a budget?