How to Budget Without a Budget

12 Jul

Pretty Smug by Simona via Flickr Creative Commons

Pretty Smug by Simona via Flickr Creative Commons

I recently drafted a response to a reporter query about how some people are able to “budget without a budget.” It took me very little time to whip up my tips, and I was feeling pretty confident about my chances of being included in the story. Then I re-read my advice and realized something:

I sound pretty darn smug about not having a budget.

While everything I drafted is true, it’s not the whole story and omits some important information. For example, I have a steady, well-paying job, very few debts, and a shared income with my husband. I also don’t have children or anyone else depending on me financially. So, while part of my budget-less success can be attributed to self-discipline and big-picture thinking, it’s also because I’m a lucky as heck to be who and where I am.

With that context, here are the ways I stay in budget without a formal budget.

I avoid common budget busters (most of the time). Often times, it’s the little things that add up to big money woes for those who struggle with overspending. I drink my coffee at work, bring my lunch from home, and dine out infrequently. I don’t have cable TV or a gym membership, and I don’t desire the latest tech gadget or designer labels on my clothing. These are not sacrifices because they’re not my priorities (though pricey cupcakes continue to be my kryptonite). Think about what your true priorities are and stop spending money on everything else. 

I don’t let lifestyle inflation level me. Lifestyle inflation is another common budget buster, albeit a counterintuitive one. Instead of celebrating a raise or a bonus by “buying” a cooler car or shopping at pricey clothing stores, I save the money. If I receive a raise, I put the difference into my retirement fund. If I receive a bonus, I deposit it into my savings account. This enables me to be more mindful about the best use of that money instead of impulsively spending it while I’m in a celebratory mood. (Disclaimer: My car is already really cool.) 

I work a side gig for “fun” money. I do occasional desktop publishing jobs for my former boss. I charge a rate that makes the task worth my free time, and I enjoy the work since it’s different than what I do at my current job. The money I make from this side gig usually goes towards travel expenses or splurges on food, which helps me from feeling deprived.

I’ve embraced minimalism. I used to love shopping. The high I received while spending money was addictive, yet I found that high subsiding faster and faster after the purchase was made. After cutting down the contents of my closet by two thirds and reading about those who live minimally, I realized how ridiculous it is to collect things that only provide momentary happiness. I’m more thoughtful about what I buy and still seek out ways to save on these purchases so I’m not overspending (translation: #Coupons4Ever).

We pay ourselves first. My husband and I set up an automatic transfer between checking and savings so we’re always squirreling away funds each week. This helps us afford vacations, home improvements and unexpected expenses without racking up credit card debt.

What’s your take on budgeting without a budget?

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