How I Practice Conscious Spending Without Having a Budget
(Almost) All budgets fail
Budgets fail because it's tedious and time-consuming. I have yet to met one person who's my age and has a budget they stick to, let alone track where all there money is going every month. Tracking everything you buy for a month is so boring.
Here's a few reasons why budgets fail:
- It's hard to track and prepare for our monthly expenses. Most people have fixed monthly expenses such as rent, food, car, power, etc. Although we can get a good idea of what we roughly need a month to pay our expenses, it still fluctuates too much to really know for sure. Things like getting into a car accident or having to get a few house repairs done can de-rail your entire month.
- Humans cave in the face of temptation. Frugality is not a good long-term strategy for wealth. If you tell a woman who loves shoes to stop spending money on shoes, she will succumb to temptation at some point. Tell a pizza lover they aren't allowed to order pizza for a month. Not a great plan.
- It's time consuming tracking everything you spend. Especially cash. Collecting receipts and updating spreadsheets of our spending is just plain tedious and awful.
Making it simple
Since I don't budget, I check my bank accounts a couple times a week. This ensures I know exactly where my money is going on a weekly/monthly basis. I never use cash to help make the process easier to track. I'd recommend using credit cards for all your purchases, but if don't have the discipline of owning one, it is much better to pay in cash than rack up interest on your cards.
The easiest way to help yourself avoid budgeting is to automate everything, meaning you don't even have to think about it. Try signing up for Mint. Direct deposit into your savings every month from your chequing account, even if it's only $20. If your job has an automatic cut from your pay check to your RRSP (or 401k) option, do it. You are much less likely to save it after it's in your bank account already. Automating your finances is one of the easiest things you can do, and you'll be worrying less about things like paying your electricity bill.
Spend money on things you like and spend less on things you don't like
I've never been a believer in coupon clipping. Why? Because most people who clip coupons fail to see the bigger picture. What do people usually do with the money they save from coupons at the grocery store? They spend it at Starbucks. Even though you saved $20 on your groceries, you really aren't getting ahead in the long-term. I'd rather buy my groceries at full price, save hours and hours of my time and invest that $20 for my retirement, where it will grow much faster.
I'm not the type of person that can go to work from 9-5, hit the gym and whip up an amazing dinner when I get home. It's just not going to happen. For me, spending a couple extra bucks on pre-chopped vegetables and fruit saves me a lot of time and I feel it's worth the money. In return, I comprise. I'll avoid going out to the bar or I'll cut back on online shopping for the month because I don't really need those things and I don't value them as much.
Many people will make surface judgments: "How come you're living in such an expensive apartment?!", "Why do you buy designer jeans?!!" I live in an "above-average-rent" apartment because I can comfortably afford it with my salary. That's just what I value. Just make sure you have some comprises and understand how your money aligns to your priorities.
I like having a plan over having a budget.