Budgeting is an incredibly popular topic amongst the financially savvy. And yet… We don’t budget. Not in the traditional sense, anyway.
Rather, we practice what I like to call “reverse budgeting.”
Instead of setting up a detailed budget, complete with projections of how much we’re going to spend in particular categories, we have predetermined (and rather aggressive) savings goals. Beyond that, we mostly let the chips fall where they may. Of course, we also have a few other targets (like giving a prescribed percentage to charity). But, for the most part, as long as we’re hitting our savings targets, we don’t really worry about the details of where the rest of our money is going.
Admittedly, it’s a lot easier to make this system work now that we’re making decent money. But even back in the day, this is how we managed things and it worked great. I think that one key has been that we’ve never carried consumer debt. And of course, our savings goals were correspondingly lower when we were just getting started, so it was easier to hit our targets.
Could we do better if we were better about tracking where our money is going? Perhaps. But as many of you know, we have a big, busy family and we’re spread pretty thin time-wise. When you combine our approach with a generally frugal outlook on life, this system works quite well for us. Thus, the additional effort associated with budgeting per se just isn’t worth it to us.
What about you? Are you a budgeter?
This article is part of the MBN Group Writing Project on budgets.