[Editor’s Note: This post by WCI Network partner Physician on FIRE is a play on a popular blog's name, Budgets are $exy. In this piece, PoF explores the fact that while budgets may not be much fun, they are excellent tools to help you build wealth. The original post ran at Physician on FIRE. Budgets are Sexy?
You may or may not be aware of a little website called Budgets are $exy. It started in 2008 when an anonymous twenty-something started budgeting and began his march to financial independence. Ten years and three boys later, this thirty-something’s website is still going strong.
By strong, I mean much, much stronger than this fledgling site. Like Magnús Ver Magnússon versus Jack McBrayer stronger. He also had this other page called Rockstar Finance. I’m going to go out on a limb and say that Rockstar Finance is also much stronger than Physician on FIRE. [Incidentally, Rockstar Finance is no longer owned by the creator of Budgets are $exy, and I'd rather own PoF than RSF if I were given the choice!-ed]
In fact, when my site was quite new, the three busiest days on this site were not coincidentally the three days a post of mine was featured by J. Money and his partner in crime, Cait Flanders @ Rockstar Finance.
The right thing to do would be to give a heartfelt thank you and affirm the good man’s message. You know, that budgets are sexy. That’s just not how I roll. Much like I wrote Why I didn’t Retire by 40 for Joe @ Retireby40, I would like to take this opportunity to pay homage to Budgets are Sexy by refuting the entire premise of his site.
So… Budgets are Sexy?
Budgets are sexy like Huggies Pull-Ups are sexy.
Budgets are sexy like training wheels and tassels on the handlebars are sexy.
Budgets are sexy like last call is sexy.
Budgets are sexy like a half beard is sexy.
No. Budgets are not sexy.
Don’t get me wrong. A budget is a perfectly good, useful, and not sexy thing. A budget serves as a great reminder not to spend unnecessarily. A budget can help you set aside an adequate aliquot of money each month. A budget can force a silly spender to become a savvy saver. All of this is good; none of this is sexy.
What is sexy?
Confidence is sexy. Be confident in your ability to handle your own money. Knowing that you have mastered money without reliance on the artificial barriers created by a budget is sexy.
Intelligence is sexy. A smart person is aware of every dollar spent. Knowing what sort of spending will truly boost your happiness or improve your life is sexy.
Power is sexy. Learning the Power of No and exercising it to your own betterment is sexy.
Mohawks are sexy. I believe this has been scientifically proven.
Understand that I’m not opposed to anyone using a budget. If you need to hit the brakes and get a handle on your finances, by all means, create a budget. If you want to pay down debt, start saving for a big purchase, or pave your own path to financial independence, budget away. And welcome to junior varsity!
Some of us will never move beyond JV, and that’s OK. If you’re meeting your goals, and the budget makes it possible, more power to you.
However, many of us will be promoted to the varsity level. Lettermen no longer need a budget. Months, years, or possibly decades of living on a budget will teach us all we need to know about spending money. Spending purposefully. Spending mindfully.
At this next level, there are no categories. There are no soft or hard stops. Green numbers don’t become red when you consciously choose to use money as a tool to improve your life.
Having moved beyond budget reliance, we know when we are spending money. We choose to spend, or we choose to pass. There is no mindless credit card swiping. We don’t need envelopes of cash or pretend buckets. A purchase is a purchase, and we see it as such.
You are confident in your future. You’ve intelligently studied evidence-based articles on happiness and spending. You are relatively frugal. You have the power to control your spending without fancy apps and visual aids. You have pointy, spiky hair running down the center of your scalp.
You are budget free.
You are sexy.
Can budgets be harmful?
Actually, yes. In addition to being about as sexy as granny panties, budgets can lead us to spend unnecessarily. “Look dear, we’ve got $80 left in the monthly entertainment budget. Let’s pound some real ale at Churchkey!”
When you’re a born spender, seeing a gap between your allowed spending and actual spending could be an incentive to spend. While it may be justified by the budget, if you’re spending money simply because the budget’s got room, you’re not doing yourself any favors.
A budget shouldn’t influence you to spend money unnecessarily, just as a budget shouldn’t prevent you from making an appropriate expenditure when you may have run over on a particular category for the month.
What’s better than a budget?
Spending mindfully.
A mindful spender doesn’t see that budget gap as an opportunity to spend, it’s an opportunity to achieve her goals more quickly. A mindful spender has a long-term vision of the future and doesn’t let short-term gratification disrupt her progress.
A mindful spender knows when and how his money is spent. He spends money when he dines out, knowing he can spend less by preparing his own meals. He realizes he is spending money when he turns on the air conditioning, turns up the thermostat, or keeps a low deductible on his home or auto insurance.
He knows how much he is spending whether he uses, cash, credit, debit, or check. The method of payment has no bearing on his spending decisions. He knows that a dollar is a dollar is a dollar.
When you’ve adopted this mindset, you just might be ready to kick the budget. Because you don’t need a budget. Because budgets are not sexy.
What do you think? Do you budget? Why or why not? How do you keep your spending under control if you do not budget? Comment below!
When I started out, I used a budget. As I got a handle on my money actions, I graduated to tracking my expenses. Now I just look back on the month and see how I did.
When I retired from medicine, I started the process again. Because I had a big change in my income, I spent some time paying closer attention. I settled into a new normal. Then I went back to tracking my income again.
Dr. Cory S. Fawcett
Prescription for Financial Success
I did the whole budgeting thing using the Dave Ramsey method with the everydollar app. We paid off 440k in 17 months. We only paid off the debt 3 months ago but still use the app to figure out how much we have at the end of the month for savings/investments and for taking our spending. I guess I’m still JV 😉 but I like the control that budgeting gives us for planning expenses.
Congratulations on paying off that sum. Strong work!
In training we budgeted every dollar. Having that baseline I now use those as benchmarks for monitoring/controlling current spending. Grocery costs are up? Ok, thats expected, we have 4 kids now not 2, this is new normal. Car insurance is way up? Better take a look at that… What do you mean we spent $1,000 on haircuts last year…etc. I definitely agree though that a lot of the utility is in changing mindset to being aware of spending and not letting it happen unless you want it to.
I am going to go out on a limb and say that Ihave never used a budget.
Not having a budget definitely hurt me in the beginning as I think I would have had a financial awakening sooner if I tracked all my expenses and seen what debt was doing to me.
Now I am doing what Cory mentioned above and just keep track of how my net worth does monthly. Because my inflow is so much greater than the outflow, having a budget would just be a blip on the radar in terms of potentially improving my finances.
I naturally have a lower cost lifestyle and can raise it several orders higher and still be considered a big saver so I know I have a lot of wiggle room.
I’m with you… Budgets are boring and often wrong. My Mint budgets look a lot like yours, and the only one I even bother to care about is the one at the top that aggregates all spending.
Personally, I prefer the Anti-Budget that Paula Pant talks about. Save your intended percentage off the top, and spend the rest however you want, guilt free! I typically still have some money left over at the end of the month, and it gets saved or invested, too!
Also known as the “pay yourself first” method. Works like a charm. You can’t spend money you don’t see.
Cheers!
-PoF
Was a hardcore YNABer since the founder Jesse lived by my in BYU and it was just a spreadsheet.
I still use it, but it doesn’t really influence my purchases like it did when I was a broke dental student using student loan money to buy diapers. Back in the day we used to run out of money and then – too bad, no more groceries, eat out of the freezer and pantry or “borrow” Now I just monitor for how much we spend on bigger stuff like vacations (and Amazon….geez). I make sure we are hitting our savings goals and make sure spending isn’t going “off the rails” We try to spend mindfully on things that make us happy. I still watch the transactions because almost yearly our credit card info has been stolen and fraudulent purchases made.
I think it was very valuable when there wasn’t much leeway for unexpected expenses and our hyper focus on expenses and spending translated into a paid off business and house much earlier than my partner doctors. Feels good man.
Don’t you wish you had started a software company instead of pursuing dental school? Kidding, of course… but Jesse is killing it with YNAB.
Cheers!
-PoF
Depending on your financial goals; scrutinise your budget and see where you could cut costs and prioritise your trade-offs, but don’t be silly (do not cut car insurance, etc.)
I have tried but have never been able to keep a budget. Guess we’ve been frugal enough that all we need to do is make sure any big purchases can be paid for without borrowing or cashing in CDs early.
Personally, I never had a budget. Still don’t. Probably never will. I’m not necessarily recommending that method. Actually, I recommend you do have one if you can manage it. But I also mention it to assure those who don’t or can’t for whatever reason that you can still achieve financial freedom without one. How? I’m not sure. I think my wife and I are frugal and enjoy saving and investing and I also enjoy a high income. There is enough slack in the system that with automatic investing our assets and cash flow just keep growing.
I don’t know what this counts as budgeting-wise, but my stuff is just automatic. I put everything on a credit card, pay it off monthly, use the points for travel. Pay comes on the 1st. Mortgage, student loans, cars, CC, and automatic deposit to vanguard go on the 2nd automatically. All retirement counts are maxed automatically. I check my accounts once a month and send anything extra to vanguard or buy something we have been looking at getting. Very low maintenance.
That’s pretty much what we’ve done. Spend with intention and pay attention to the cost of things. It’s not touch to live below your means when your income gives you serious means.
Cheers!
-PoF
Budgets are definitely not sexy. The most useful aspect is figuring out how much money someone is actually spending on things each month.
If you already know that, I don’t find them particularly useful at all. More of another PITA thing than anything else. With expenses in hand, it’s easier to transfer the spendable chunk of each month’s income into a standalone account instead of keeping a budget. If you’re too spendy overall, maybe the transfer happens each week instead of monthly when you have a better handle on expenses. Yes, that means we usually do indeed spend every penny of the “budgeted” funds each month (aka personal allowance) since that’s entirely the point.
Everything else important has already been paid before the allowance: mortgage, savings, retirement, e-fund, whatever.