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Latest posts by Cody (see all)
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Sorry to break it to you, but the traditional budget is old news…
I’ll admit, a budget is a great tool for controlling your finances if your spending is wildly out of control. However, the traditional budget pales in comparison to the all-powerful “Un-Budget”. Are you ready to unlock a savings superpower?
Problems with the Traditional Budget
Most traditional budgets are broken into several categories with monthly spending caps for each. See the example below.
So… what’s wrong with this framework?
Well, the best way I can explain this is with a real-life example. Unfortunately, I have many examples because I know both family and friends who are deceived by the traditional budget!
John budgets $100 for entertainment spending every month. On July 28th, John has only spent $10 on entertainment. Awesome! Well, the weekend is approaching and John still has $90 left in his budget. What do you think happens next?
He finds a way to spend his remaining $90 because he’s already “spent” it in his mind!!!
This is the problem with the traditional budget. Once a certain dollar amount is allocated toward a specific category, it’s left for dead by the ruthless budgeter.
This financial framework is not actually helping your psychological spending problem. It’s only setting up speedbumps to slow down your spendy habits.
Food for Thought: Setting Goals
I feel completely justified bashing the traditional budget because I used to be John. As long as my pre-set “spending buckets” were reasonable, I could spend at will (as long as I didn’t spill over in any category, of course)!
If I only spent $90 of my $100 entertainment budget, I was a hero!!! Unfortunately, this was before I understood the Savings Paradox.
The traditional budget is just a crutch to evade the bigger question: How important are your financial goals?
The key is to align your values with a financial goal. If your mission is financial independence, every dollar leaving your wallet will sting tremendously. Setting a goal and shifting your mindset is paramount to graduating from the traditional budget.
Have you ever tried to count and limit your calorie intake? Usually, it lasts for several months before the aspiring dieter gives up. But why?
This form of dieting is to fitness as the traditional budget is to personal finance. It’s unsustainable because it lacks a shift in mindset!
What is an Un-Budget?
An Un-Budget flips the traditional budget on its head. Instead of allocating spending limits to certain categories or buckets, you set your spending limit to ZERO! Yes, you read that correctly… $0.
With this mentality, every expenditure you make must provide tremendous value. If it’s not a necessity or something that won’t bring you immense happiness … don’t buy it!
I have used this un-budgeting strategy for a few years now and my savings rate has gone through the roof! The reason why it’s so powerful is that this framework requires a complete financial mindset shift. You must align your core monetary mission with your spending habits.
Now, I know what you’re all thinking. You think I’m some frugal freak who eats ramen noodles every meal and lives in a cave. WRONG! I enjoy good food, partying, going to events, and so much more. I just do these things with intentionality. That is the key behind this value-driven strategy.
Yes… I understand that the un-budget is not for everyone. If you know that you can’t trust yourself, stick with the traditional budget. But for those who want to unlock a savings superpower, try out the Un-Budget!
I’d love to hear your feedback and your own money saving strategies. Please share with the community in the comments below!
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