The single-most over advised, under-explained piece of financial advice given today is “make a budget.” So today, we’re going against that advice and we’re going to show you why you shouldn’t make a budget. We call it, the anti-budget.
What is an Anti-Budget?
If you’re one of the elite number crunchers that dig data, then you’re ahead of the game, but for the rest of us, budgeting is an overbearing chore that we dread, even avoid.
Except that it shouldn’t be, so we’re going to talk about having an Anti-Budget. Anti-budgeting is a way to gain control of your finances without doing any actual budgeting.
This is what you aren’t going to do:
You aren’t going to track how much you’re spending on various expenses-
You won’t be tracking what you spend on groceries.
You aren’t going to track what you spend on utilities.
You aren’t going to track what you spend on consumables like toothpaste, toilet paper, clothing, and that splurge this past weekend where you went out with friends for hot wings and beer.
So if you hate budgeting, the very idea of it, you’re in luck- because we aren’t talking about filling out long balance sheets listing all your expenses line by line, making you feel inadequate or dumb- because we’re not asking you to do that.
So, What’s the point of budgeting at all?
The entire point of “budgeting” is actually savings, it’s ensuring that you have money for retirement, for the kids’ college, for household expenses should someone lose their job or have a medical emergency, etc.
So let’s just cut to the chase, shall we? If you hate budgeting, skim your savings off the top of your income every week and whatever you happen to have left, is what you can spend.
Now, let’s not get too cheeky here- your savings includes three major areas.
1Ending Debt (this would be your house payment/mortgage, car payments, student loans)- those are your debts folks- they’re taking away from your savings!
2Savings in the Bank- as in money in an actual account.
3Creating Investments- whether it’s an IRA, 401K, buying additional properties/tax foreclosure saving, in this case, is any activity that improves your overall financial health, whether it’s eradicating credit card debt or squirreling away piles of cash.
How much should you save each month?
You should save a minimum of 20% of your income.
Still not sure you can save? Start Small, think of them as financial baby steps if you will save just 1%
- If you earn $2,000 per month, one percent is $20.
- If you earn $4,000 per month, one percent is $40.
- If you earn $10,000 per month, one percent is $100.
This month, save just 1% of your total monthly income.
Next month, save 2%.
The third month, save 3%.
Now it’s become a healthy financial habit and you’re getting the hang of it. Increase it by an additional percent each month.
Within 2 years you’ll be saving a whopping 24% more than you are today and in just 4 short years, you’ll be saving 50% of your income.