YDNAB: You Don’t Need a Budget.

Let’s press the mute button, just for a moment, on the endless noise about how to budget correctly, what a good budget looks like, what’s going wrong with your budget, and so on. Instead let’s talk about why you don’t need to budget at all.

To be clear, a budget is like a diet – whether or not you’re on one, each of us still has one. 

Every single one of us has a budget – that is, the money we make, save, and spend. But none of us ever really needs to be on a budget. Y’know, that old fashioned method of sitting down at the kitchen table with a pencil, a bunch of bills, and an adding machine, and deciding what you’re allowed to spend on everything for the month.

The motivation behind budgeting (improving your spending so you can save and grow your wealth) is great. The problem is, the old method doesn’t work. It may even make things worse. Here’s why.

Why Budgeting Doesn’t Work – Problems and Disadvantages of Budgeting

budgeting quote in front of coin jar

It Adds More When We Need Less

Often, instead of breaking a problem down to fix it, we add solutions on top. This creates more noise, and usually leads to more problems than we started with. We add more before we even consider less.

This is exactly the case with budgeting.

It starts with an initial problem of spending. We’re either overspending, or in some other way not satisfied with where our money has been going.

A strict monthly budget is a solution that we slap on top of this problem. Rather than looking directly at our misaligned spending to see what’s causing it and how we can fix it, we add more to the equation:

  • Rules to follow about how we can spend
  • Ongoing chores to set, track, and review these rules
  • Emotional burdens and guilt every time you spend money

And just like that, now we have two problems: spending and budgeting.

It Creates a Negative Association with Managing Money

Arguably the biggest challenge most people face in managing their money is the emotional overload of it all. Budgeting tends to add to this overload, rather than ease it.

The idea of budgeting usually comes with:

  • Fears about whether you’ll be able to make the next payment, move out on your own, or retire this century
  • Overwhelm from keeping track of the numbers, accounts, terminology, ratios and rules
  • Shame that you’re not doing more for the people you love, not doing more than the people you hate, or just generally not “doing better by now”

One of the most important and under-appreciated keys to thriving with money is to enjoy the journey. Why make it harder on yourself when you could be making it fun and exciting?

When you celebrate the wins, big or small, and minimize the stressful junk, dealing with your money can be a great experience. Fun, even. A positive association with your finances will find you more invested in the process. And you’ll soon be stacking up wealth as a direct result.

On the other hand, if you want to shoot this process in both feet, the fastest way to do it is to give yourself a bunch of extra homework. Homework that mostly consists of shaming yourself.

The Looming Relapse

People are quite strong. Though this may not always feel true, human beings are remarkable in their ability to dig deep and push forward.

Willpower, or self control, is one of our most crucial tools for this. It’s instrumental in completing important projects or surviving through dire circumstances. But when it comes to lifelong endeavors that take ongoing effort, relying entirely on self control is not enough.

A budget is an attempt to force a long term change (better spending habits) with a short term tool (willpower). We can use willpower to overcome our impulses for a time, but it always runs out of stamina when misused. And when it does, the behaviors we’ve tried to suppress are primed for a backlash:

  • A super-strict diet makes us more likely to overeat
  • Forcing oneself to stop drug abuse without committing to recovery leads to relapse
  • Keeping a tight, restrictive budget makes us want to spend even more

Improving our spending, in a lasting way, takes an ongoing effort to change our behaviors and their underlying causes. We can force this for a time, but it will always bounce back if we do.

What Happens if You Don’t Budget?

If you compare the results of doing nothing with your budget at all, vs. holding yourself to a tightly constrained budget, you’ll see it doesn’t actually make that much difference. In both cases you’re likely to find yourself stressed out, not improving your spending habits, and not making much of a lasting difference in your finances. 

The budget might help a little for a time, but sooner or later the habit will break. And either way, it will add stress, guilt, and shame on top of everything else.

Managing your money in a healthy way is not about setting personal targets and hoping you’ll hit them. It’s about changing how you spend and save. And you don’t need a budget to do that.

The goal behind creating a budget is clear: to shift your spending into something you’re more satisfied with, and give yourself more power in building your financial future. 

Now as we’ve seen, this tool doesn’t actually work for that. But that doesn’t mean we should quit on the goal.

Ignoring your budget entirely also won’t lead to financial security, or make you wealthy. But fortunately, a cruel, exacting spreadsheet vs. total money anarchy are not the only options here.

What to Try Instead of Traditional Budgeting

With or without a budget, the problem of overspending remains. The question is not whether or not to keep a monthly budget, but how else we can improve our spending.

Below are two different solutions you can use to build better money habits that last. Both of these focus on understanding and attacking the underlying causes of your spending. They don’t just stick a solution on top that creates more homework and more stress.

Remember, always try to solve with less before more.

The Track and Adjust Method

This first method is basically a stripped-down version of traditional, prescriptive budgeting, but way easier and far more effective.

The first step is to track where your money is going. I like to do this with an automated tool like Mint that can show you a list of all your transactions for the month across all your accounts. The automated part is important; we want to give ourselves as little to do here as possible, and automation is a great way to make things easy and stress-free.

Once a month, sit down and take a look at what you’ve been spending. Don’t worry about which expenses were good, or which were bad or too much or anything else. Act as a researcher, and just seek to understand. Watch for patterns, and ask yourself questions about those patterns, like:

  • Why did my internet bill double this month?
  • Am I still using all 6 of these subscriptions?
  • Is spending $200 on fast food every month in line with my goals?

We’re not here to set benchmarks for what you “should” spend next month. We’re here to understand what you spent last month, or over the last six months, and take small steps to fit that spending more in line with our values. Think habits, not numbers.

Unlike prescriptive budgeting, the track and adjust method helps you examine why you’re having trouble saving, and ease those troubles. And it does so without taking up hours of your time, or making you feel like you’re failing at arbitrary goals.

Just track, and — as needed — adjust a bit.

The Anti-Budgeting Method

For a more radical departure from the traditional idea of a budget, there is a method that some are calling “anti-budgeting,” inspired by ideas from big personal finance bloggers like Paula Pant. It goes something like this:

First: Pay yourself before anything else. Whatever your income for the month, take a preset amount to put towards goals like saving, investing, or reducing debt before you spend on anything else.

Then: Nothing. That’s pretty much it. When the saving part is already taken care of, then the spending side will figure itself out with what’s left and we don’t need to do much else with it.

The idea behind this method is that spending is like a gas – it will expand to fill whatever container we give it. By saving first, you just create a smaller container for your spending to expand into.

Most people don’t even notice the decreased spending. You feel it when you’re trying to restrict it. But when the money we’re spending is just the money we have, we always make it work.

One final note here: start small. Set yourself up for success. If you pay yourself way too much and end up backpedaling into your savings to cover expenses, then you’ll weaken the technique. Start by paying yourself a small amount that you know you won’t miss, and slowly build up that amount over time.

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Hey, I’m Sam. I created this blog to explore big ideas, both old and new, about building a better life. My mission is to evolve the conversation about personal growth and have fun doing it.

3 thoughts on “YDNAB: You Don’t Need a Budget.”

  1. Some months hit harder with multiple “not the usual” expenses. Not necessarily emergencies, so it’s not about hitting the emergency savings. Trying to adjust my regular spending to be more prepared for those “other” months. Wish me luck!

  2. Great post! Being aware of what your spending is important, but it’s easy to get lost in the numbers and become very stressed very quickly. I mostly like to track personal spending, to make sure I’m not spending too much on things I do not necessarily need! Thanks for sharing!

    • yes, I do something pretty similar! that’s one of the weird things about money – for most of us it works better when we REDUCE the numbers and tables and such, not add more.


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