Why Budgets Don’t Work

 

 

 

 

 

 

 

 

Here’s some advice you don’t hear every day, don’t make a budget!  That’s right.  Ken Robinson, CFP® and author of “Don’t Make a Budget” describes why budgets work against us, not for us.

While the rest of the world will tell you to make a budget, Ken believes budgets deprive us and leave us without the things we want as opposed to giving us the things we do want.  Where’s the fun in that?

The key to successful saving is to pay yourself first each month rather than paying your expenses and putting what’s left over, if anything, toward your savings.  This tiny change in behavior has huge impacts if you simply flip the budgeting process on its head.

Learning how to save your money is the #1 ticket to wealth.  It’s been a proven behavior of millionaires and if it worked for them it can work for you, but traditional budgets simply don’t work.

So, starting right now; decide how much you’re going to save for yourself first and then divvy up the rest of your income to your monthly expenses.

To learn more about keys to successful saving, check out Ken’s book.

Have other tips on how you save each month? Share them with your fellow FiGuide readers.

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2 Comments

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  • Joe, but this is exactly the point. Once you figure out how much you need to save, then you can figure out how much you can afford for those “financial obligations”. Perhaps you can do with $200 less for your home/apartment, or $50 less on your cable.

    Too many people give themselves the easy excuse of saying they have no more money left over at the end of each month (after expenses) to save anything for retirement, but if you switch your mindset and put savings first, you’ll force yourself to spend less on monthly expenditures and have more saved for retirement.

    Sometimes it’s the simplistic things that have the biggest effect, but it’s not easy to switch mindsets and change your behavior.

  • Seems overly simplistic. I can tell myself all day long that I plan to save 10% (or whatever amount) of my income, but the simple fact is that there are financial obligations that must be met. You need to know where your money is going first to determine if your goal is realistic. Otherwise you end up frustrated.

    Maybe once you’ve done an initial budget you can throw it away, but it seems like you HAVE to at some point figure out your spending before you can create any savings habit.

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