Can’t Stick to a Budget? Consider an Anti-Budget
Whether you’re trying to achieve a short-term or long-term financial goal, you want to manage your money carefully. Most of the advice that you hear recommends that you create a budget.
So, suppose you write a list of your expenses, line-itemizing everything from dry cleaning to lawn care to pet-sitter fees. You tally up those expenses, and then look for specific areas in which you can cut back. Once you’re finished with this exercise, you decide that this is your budget, and each month you compare your actual spending to your intended spending. But no matter how hard you try, reality may not always fit the parameters of your budget.
There are some months, for example, when you might overspend the amount that you set aside for restaurants and clothes, but this doesn’t mean you’ve blown your entire monthly budget. The extra that you spent on restaurants might be partially offset by the fact that you happened to spend less in some other area, like babysitters, gas or groceries. There are other months when might spend too much, in multiple categories, and then there are months when you simply don’t have time to track your spending on a spreadsheet.
After a few months, you might conclude that budgeting is time consuming and difficult. If this resonates with you, you may want to try the anti-budget. It’s a simple, stripped-down version of a budget that cuts straight to the heart of the matter: how much are you spending and how much are you saving?
What’s an Anti-Budget?
The anti-budget features only two categories: spending and saving. Here’s how it works.
At the top of the budget, list your biweekly or monthly income, after taxes and payroll deductions.
Next, decide how much you want to save. In this context, “save” is a broad term that includes paying off your debts (beyond the minimum balance requirement), making retirement contributions, building your emergency fund or stashing cash into a money market account. Under the anti-budget, your “savings” are defined as any improvement to your financial life.
Once you decide your target savings goals, transfer this money as soon as you receive it. For example, let’s say you bring home $5,000 per month and you’d like to save $1,000 per month, divided equally between your retirement account and building your rainy day fund. Consider setting up automatic transfers for this money, which take place as soon as you receive a paycheck.
The money that’s remaining in your account after you’ve transferred your savings is yours to spend.
How to Manage an Anti-Budget
In order to manage your spending money, your first step is to pay all of your fixed bills, such as your rent or mortgage, utilities, student loans, car payment, cellphone and Internet service. Once your fixed bills are paid, the remainder is yours to spend as you’d like on food, clothes, health and beauty products, entertainment and anything else.
As you’re transitioning to the anti-budget, monitor your expenses closely to make sure you don’t spend more than you have for nonessential purchases. It might be helpful to stick to an all-cash lifestyle for fluctuating or discretionary purchases (like groceries, gas, toiletries and restaurants), rather than using credit cards, in the beginning while you’re adjusting to the anti-budget. You’ll still pay for recurring fixed expenses, like your rent or mortgage, student loan payments and insurance premiums, through a check or online transfer.
The appeal of the anti-budget is its simplicity. If you’re feeling overwhelmed by detailed and complex budgets, you may want to consider trying the anti-budget approach.