You Don’t Have to Budget to Save Money. Here’s How This Woman Does It

How to make a budget
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I hate budgeting.

Yeah, I’m the CEO of a FinTech company, and I said it. And I meant it. And there isn’t a gas leak in my office.

Here’s the thing: Budgeting isn’t bad, per se. In fact, budgeting works great for some people. Maybe you’re extremely organized, have great discipline or just love pie charts.

But for me, the conventional wisdom of “create a budget!” falls flat — so I threw mine out the window

Why I Hate Budgeting

How to make a budget
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For one thing, I’m busy, and I’m sure you are, too.

Keeping track of several streams of expenses is time consuming, and the output versus reward can be hard to spot. That’s because a lot of people (myself included) begin our budgets as aspirational rather than realistic.

We say, “OK, here’s what I want to happen,” with no system in place to ensure it’ll actually happen. When I told myself, “I’m going to spend $50 on groceries, not go to restaurants at all, and while I’m at it try to get the utilities bill down to $20,” there was nothing motivating me to stick with the harsh financial picture I’d drawn for myself.

Call me crazy, but I think finance should be… well, fun. Or at least rewarding.

The other problem I had with maintaining a strict budget was how often I had to check it. While I’m good at math, a strict budget required me to balance more numbers in my head than was possible. I had to check my budget daily — often multiple times to make sure I was sticking to it.

Let’s say you budget $50 for coffee shops, and you have to consult your budget every time you hit up a café. Will you do that?

Maybe, but there’s a good chance that in the moment, you’ll be thinking more about your coffee and less about your budget. And your budget probably won’t stop you from spending $5 or $10 more than you planned on coffee.

I work hard, and I bet you do too. So I didn’t find it surprising when I realized deep down, I didn’t want to work hard at my budget. If you don’t either, there’s no shame in it. Because creating a budget shouldn’t be hard — at least, it wasn’t after I shifted my approach.

How to Make a “Budget” That’s Realistic

How to make a budget
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Instead of creating a strict budget where I allocated cash amounts for every type of feasible transaction, I aimed to get myself into a different financial mindset.

Here’s how you can, too.

Eat Your Vegetables

I think of dealing with money like maintaining my health: I can have a nice serving of dessert if I eat my vegetables and run a few laps around the track first.

Likewise, when it comes to being financially fit, get the unavoidable stuff out of the way first: your fixed costs. Think of a fixed cost as anything you’re going to feel bad about not paying. We’re talking rent, utilities, any debt you may have, a rainy day fund/emergency stash, and retirement savings.

Some people don’t see a rainy day fund or retirement as a fixed cost, but I don’t think that makes any sense. A rainy day fund is necessary. Retirement is necessary. Just like you’d panic if you skipped a rent payment, you’ll eventually panic when you don’t have enough money in your emergency fund or won’t be able to retire comfortably.

Pay these costs at the beginning of the month, and put them on auto-pay. Have the money automatically deducted from your paycheck or your checking account. The money left over is your flexible, fun money.

That way, you don’t have to grapple with the question of “Can I buy this?” You already know the answer: yes. You know you can because you’ve taken care of your necessary costs.

Now, ”Should I buy this?” is another question altogether. When it comes to fun money, spend it on what you want. Seriously. Just make sure you know what you want.

Create a Vague Budget List

How to make a budget
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After I’ve automated my necessary finances, I create a vague budget list. Write down what you actively enjoy spending money on. Try it. You might create a list with things like:

Delicious Thai food

Amazing sneakers

Going to concerts

Various ridesharing services

Warning: There are going to be some things on this list other people think are a waste of money. Why spend $100 on “amazing sneakers” when you can put the money toward something more “useful”?

Uh, maybe because you love amazing sneakers?

Only you can decide what’s important to you.

How to make a budget
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Some of us see travel as the holy grail of spirituality, while others prefer spending money on Netflix. I personally enjoy great restaurants. As long as you’ve already allocated money toward your other financial goals, it’s perfectly fine to spend the cash that remains.

However, try to limit your spending to the stuff on your vague budget list, the things you care about. If you find you’re spending money on items that don’t make you happy — or at least give you substantial convenience — consider sliding that cash to your retirement account or your other investments.

Next to each item, you can put a ballpark number range. This should be around what you’d like to spend each month on said item. Don’t spend more money than you have, but don’t freak out if one month you spend a little more in one category than the other. Remember, this is a vague budget list.

On a monthly basis, you have to pay your bills and should contribute to your investments. But you don’t have to consult your vague budget list every day or even every month — it’s more of a priority reference.

If you can handle the flexibility, feel free to consider your vague budget list on an annual basis. I personally analyze my spending priorities every month, but do what works for you.

Think About the Big Picture

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Sometimes, we want things we can’t afford, so we spend money on things we don’t really want in the meantime.

Hey, it’s natural. Sometimes you want a burrito and all you have is a protein bar. The thing is, it’s endlessly more rewarding to hold out for the stuff you really want.

Delayed gratification is hard, so instead of focusing on I can’t have this I can’t have this I can’t have this, figure out how much time it’ll take you to reach your goal, and how much you need to save (and invest) in the meantime.

Investing isn’t just for a long-term goal like retirement; it can also help you buy a new wardrobe or Coachella tickets.

For example, right now I’m working Retirement, bolstering my Rainy Day Fund, plus I have a cushion account called Financial Health and a short-term Christmas Fam Vacay fund.

At The End Of The Day

While you still have the option of creating a budget, you don’t need to get it down to a complicated science to stay financially fit.

Contribute to your necessary expenses, prioritize what’s important to you and resist spending money on things you don’t want when a little patience will give you a bigger reward.

Your Turn: Have you ever had trouble sticking to a strict budget?

Vicki Zhou is the Co-Founder and Co-CEO of WiseBanyan, the world’s first free financial advisor. An engineer turned entrepreneur, she enjoys helping people get their money on track, cheering for women in finance and tech, and exploring the best nearby culinary delights.