Monday, December 9, 2013

How To Save Without a Budget

I have read a number of blogs that swear one cannot save money without a budget. I beg to differ. When we were saving for a down payment for a house, we saved $40,000 in one year while making around $60,000 annually without a budget. (Y was in Iraq so his income was tax-free).

I followed two basic rules to save this much money.

1. We paid ourselves first.
2. We stopped spending when the money was gone.

First of all, when Y's paycheck was deposited, I transferred it all to our savings account. I did it on the day he was paid.

Second of all, I didn't spend any money when it ran out. This required a little bit of planning. If I had to fill up the car weekly and I didn't get paid for two weeks, I had to make sure I had enough money to fill it up next week. I paid the rent and utilities with my pay.

I didn't budget until much later in life and even now I will go months without budgeting. I have budgeted for the last two months more so to track our spending.

It is annoying to me when a blogger insists that you will end up destitute without budgeting. In a way, budgeting is for people with money. It allows us to spend money without any guilt. One will end up destitute if they don't save any money throughout their life but budgeting is not the only way to save money.

What about you? Do you budget? Have you saved money without budgeting?

11 comments:

  1. Yes, I budget or we'd be in deep trouble. lol! In order I budget fixed expenses, then savings, then variable expenses. If I didn't budget, it would be hard to have enough $$ to last from week to week. I think if you have more than enough money to not worry about budgeting your idea would work, however when you have a houseful to feed, clothe, etc... I think a budget is a must if you want to save any kind of money.

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    1. Carla, you are absolutely right in that with more going on, this method would get that much harder. With adding kids to the mix, you have all of their expenses plus other household expenses like garbage and life insurance that all add up.

      My point is that budgeting isn't the only way to save money. Its a personal decision like most things in the PF world.

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  2. I don't budget so much as track what I spend. There's no chance to overspend that way. When the balance reaches zero, no more spending just like you said. And I take the savings off the top like you did. As soon as my pay goes into my account I transfer at least half to my savings and then it just about kills me if I have to move any of it out. It's a very big motivator to NOT spend so I don't need to touch my savings.

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    1. If I didn't take the savings off the top, this would never work. That's the key.

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  3. I think we fall into the "budgeting as permission to spend" category. We know certain spending amounts give us the freedom to feel like all of our needs and wants are taken care of, and the budget is mostly a reminder that when we start to get close to it we need to check in and say, "Is this *really* worth it?" If it is, we get it. If not... well, we don't. Or we wait for a time when there's more budget.

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    1. It's obviously working well for you:)

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  4. Though I entirely agree that it is possible, and more than possible, just common sense to reach a goal without a clear path (it may not be as easy or as structured, low accountability, etc), I have a question... saving $40k net on a $60k gross income? That's about $1.6k left per month (and that is assuming no tax was taken out of the 60k). Am I reading the numbers right? Sorry, the OCD in me took over and I had to crunch some quick numbers. Coffee must be FINALLY wearing off!

    I don't really "budget", to be honest. I have a plan, and a list of expenses. Whatever's left is either used or saved with no huge goal in mind. I do save for specific goals, but I guess that having no "wiggle" room in my list of expenses makes budgeting a bit of a non-issue. I can't spend the money I don't have, so I pay all dues first, then what's left is flexible depending on the situation.

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    1. Yes, it was about $1600 a month for bills and spending money. Our rent, utilities, phone and insurance were around $900 a month. Y usually spent around $1-200 a month. That left me with the remainder for food and gas. I didn't do any shopping that year and I kept my beer drinking to a minimum.

      I didn't have a budget but I did have a plan. My plan was to save every penny of Y's pay. I was not going to be apart from my husband for a year while he was in a war and not have us benefit financially in the long run. I wanted to bank his sacrifice so we could buy a house when he got out of the army.

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  5. So your plan was: Y's check into savings, your check covers everything else. That sounds like....a budget. :)

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    1. I didn't see it that way but I guess you could:)

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  6. Your plan looks like our "budget." A Budget is just a plan for spending money. It can be as detailed or as loose as you like. Even if you didn't track minute categories down to the penny, knowing that you had to save money to cover expenses and stopping your spending when the money was gone is a "budget."

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