Monday, November 2, 2015

Why I don't Budget (and what I do instead)

FTC disclaimer:  This post contains affiliate links.

I've been known as a frugal guru among my friends for, oh, about 20 years or more.  But there's one piece of money advice that I hear everywhere that just doesn't work for me.  Having a budget.

Since I graduated college, I have been selling on eBay.  I've been blogging for years.   I recently joined a  direct sales company As anyone who works at home knows, there can be some months you may make thousands, and other months you might make under $20.  (I've had both!)  The financial experts say to budget with your smallest month in mind, but that does NOT work for me.  How can I budget paying $600 of utilities on a $20 budget?  It just can't happen.

There are months my husband gets overtime.  In winter his job slows down and he's counting hours to make sure he gets enough to be considered full time so he doesn't lose benefits.  Fortunately, my highest months are often his lowest months, but because he is an hourly employee, his paycheck varies as well.  There's no way I want to try and figure out a budget when my income varies so much and his does in a lesser degree.

So what I do is TRACK SPENDING.   I just take a page in my notebook and write down everything we spend in the month and how much it was.
 At the end of the month, even if we had money to put in savings (like last month), we can see if there were any areas we could try and cut back our spending on.

At the end of the month, I add up the amounts we spent in different categories.  Utilities/Insurance, gasoline, groceries, eating out, food bought at work (he gets an employee discount and it's sometimes cheaper to eat there than bring food from home.), business expenses, home repairs, etc.

One reason I do this is because I am a frugal shopper.  I might go to the grocery store and find a sale on something we use regularly.  Even better if I have coupons.  What if I only have $5 left in my grocery budget for the week but butter chicken sauce is on sale for $2 a jar?  It stores for quite some time, and we eat butter chicken at least twice a month.  Should I still stick to my budget?  I say no!  Here's why:   If you are spend tracking and know you can afford it now and it will save you money in the long run, buy what you can use.  It makes no sense to buy only two jars when you could buy a dozen of something you will use within six months time.  Considering the cheapest butter chicken sauce we ever buy is $3.29 a jar, that's quite a savings.  Plus, if I buy chicken on sale and freeze it, that's less groceries for a less financially prosperous month!

So I know how much money I have and I know approximately what my expenses are and know how to best use the money I have to the maximum effectiveness for my family.

This might not work for everyone, but it works for me, and if you're like me, don't feel bad you don't budget.  However you keep track of your money is the best system for you as long as you have money to put in savings at the end of the month.  (Or at least make up for that on other months if you have a variable income.)

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