Do I Really Need a Budget to Manage My Money?

UPDATED: September 11, 2023
PUBLISHED: February 6, 2023
younger man making a plan to manage his money

Have you tried to set up a budget to manage your money in the past but just felt frustrated and hopeless? You’re not alone. Budgeting often brings up images of someone diligently entering numbers on a spreadsheet and trying to get the math to come out right. In your mind’s eye, you might already feel the tension that managing your money the ‘right’ way can bring. 

While it’s essential to manage your money, sometimes creating a personal budget is too much to maintain. Perhaps personal finance apps or budgeting software might not be a good fit for your money needs.

Instead of worrying about fitting into a traditional budget, try thinking outside the box with unconventional saving and spending strategies. Finding the right system for you can help keep your finances on track without feeling like you want to pull your hair out. 

Traditional budgeting can do more harm than good

Most personal finance experts recommend that people create a budget to improve their financial lives. After all, how can you know where to make changes if you don’t see what you have coming and going each month?

While that is valid, and tracking your spending for a couple of months can offer insight into places for improvement, for some people, creating a traditional budget might hold them back from making progress on their financial goals.

You might not benefit from traditional budgets to manage your money if you have:

Irregular monthly income

People with irregular incomes often need help getting a traditional budget to work because their paychecks can change drastically from month to month. Without knowing what they’ll bring in, developing a plan for anything but the bare necessities can be difficult.

Experts will tell people with irregular incomes to budget for their lowest earning month. But if you earn more in a particular month, you might need to figure out what to do with the excess and end up spending it before you can develop a plan to make it work for you.

A restrictive money mindset

Traditional budgeting can make those with a restrictive money mindset feel worse about themselves. Often personal budgets require that you identify and limit your spending, which can be helpful to some people trying to save more or cover a considerable expense. 

Budgeting apps and software often send notifications to let you know how you’re doing over the month. They’ll remind you to pull back if you have a high volume of spending in a particular section. 

But if you grew up in a family where money problems were frequent, or spending outside the budget was treated as a moral failing deserving of punishment, focusing too much on a conventional budget might lead to drastic overspending, an inability to spend on anything, even necessities or other issues.

If you notice that you have blocks about money that don’t seem to get better, consider working with a certified financial therapist or other mental health professionals to help you deal with your money-related experiences. 

How to manage your money without budgeting

At its core, a budget is a way to create a plan for your money. Managing your money doesn’t have to be complicated or take up a lot of your time. If traditional budgeting is frustrating for you, consider trying one of these methods instead.

Minimum expenses budget

If you have fluctuating income but stable expenses or generally know what you’ll bring in each month, consider budgeting around your bare necessities and using any surplus as you like. 

Start by calculating your basic needs, like your rent or house payment, food, utilities and minimum debt repayment. Don’t forget to include something, even just a few dollars, to add to your emergency fund and retirement savings

Set aside your minimum amount from your paycheck to pay those bills. If you have money left over, you can spend those funds as you wish. Or consider adding extra to your debt repayment or emergency fund.

Because you have covered your basic needs, you can spend any leftovers without guilt. The minimum expenses budget lets you decide if you’d rather put any extra funds to work for the future, or if that new pair of shoes is calling your name, to spend guilt-free on a moderate treat. 

Set goals and save enough to reach them

Paying yourself first can be another way to ensure you cover your finances without strict budgeting. Instead of concentrating only on reducing your spending, focus on saving for the future. Don’t worry about the rest (within reason). 

After you handle your set monthly expenses, determine how much you want to set aside for your various savings goals, like retirement, emergencies and vacation. When you get paid, move that amount into your savings accounts and use the rest as you’d prefer. 

As long as you’re meeting your monthly savings goal, covering your basic expenses and still have money left over, you don’t need to worry about affording brunch with friends. 

Be careful about saving more money than you can manage. Ambitious savings goals are great. But it defeats the purpose if you have to dip into the savings account to cover your basic needs. You might even have to pay a fee depending on how many withdrawals you make from your savings each month. Experiment until you find the right balance.

Try a spending plan to manage your money

A spending plan is a more flexible and customized version of a budget. With a conventional budget, you anticipate every possible expense within a month and give every dollar a job. If an unexpected expense or a treat isn’t listed in the budget, you can’t spend your money on it, or you have to rob another category to cover it.

Spending plans, on the other hand, help you decide where to spend your money over the month and allow you to make conscious choices based on your circumstances. Instead of being restrictive, a spending plan lets you focus on expenses as they come up and use available funds in a more manageable way. 

To create your spending plan, consider every expense fitting into one of three buckets: 

Bucket #1 holds your required expenses like food, rent, utilities and debt repayment. Your fixed costs are likely dependable, so you know roughly what to set aside each month. 

The popular 50/30/20 budget advocates for your spending in this category to be at most 50% of your take-home pay. That might not be realistic based on your situation, so get as close as possible within reason. 

Bucket #2 is the amount you earmark for your retirement and savings goals. Experts recommend aiming for 10-15% of your pay to this bucket. If you can’t meet that amount, don’t despair. It’s more important to save something for retirement than to get discouraged and not set aside anything.

Bucket #3 is everything else you could spend during the month, sometimes called your wants in budgeting language. This bucket handles everything from an impromptu dinner with friends or an unexpected trip to the hardware store to complete a minor home repair.

If you don’t have enough left over to accommodate spending from bucket #3, you may need to cut back on some of the fun stuff you’ve been doing, look for expenses to cut from the first two buckets, increase your income or possibly all three. 

Bottom line of managing your money

Traditional budgeting can be too restrictive and time-consuming for busy people to maintain consistently. This isn’t an excuse to avoid managing your money. You just don’t need to try to fit yourself into a rigid plan because that’s how it’s always been done.

Experiment to find the best method for you to manage your money. Then refine it to fit your circumstances. There are no wrong answers as long as you have a system that works for you.

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