No, Not Everyone Needs a Budget (guest blogger – Dan)

This week, MikedUp Blog is attempting to answer the question, “What are personal finance bloggers collectively wrong about?” My contribution posted Tuesday, while Dan from Pennies and Dollars has provided his take below. Here’s a link to the intro post (from Monday) if you’re looking for more details. And as always, thanks for reading!




The personal finance community is obsessed with budgets. And for good reason.


Budgets are the roadmap for our finances, and most people tend to go astray without a budget in place.


However, there’s a tendency in the personal finance community to deliver budget ultimatums. To be clear, not everyone is guilty. Some personal finance writers take a balanced and measured tone to budgeting. But I’m certainly guilty of budgeting ultimatums! I’ve stated in no uncertain terms that everyone needs a budget. And I know I’m not alone. The kind host of this blog has delivered a similar ultimatum. And according to my very unscientific twitter poll, this sentiment is very common.


A majority of the 28 people who chose to participate in my poll said that There’s even an entire budgeting program named ‘You Need a Budget!’ Yes, perhaps some of this is intentional hyperbole intended to underscore the importance of budgeting for the majority that does need to budget. But when repeated enough, hyperbole morphs into doctrine. The thing is, such ultimatums don’t recognize people who actually can be financially successful without a budget.


The bloggers at Urban 20-Something, Money Manifesto, and Make Smarter Decisions are all examples of people that don’t budget. On a side note, since these are personal finance bloggers, there are clearly outliers in the personal finance community who don’t deliver budgeting ultimatums. Back to my point, each of these individuals has decided to forgo the budget.


The reasons for not needing a budget vary. Perhaps the individual doesn’t feel the urge to go on shopping sprees. Perhaps they recognize the limits of their spending power and always make sure they have enough to cover their expenses. And they likely have developed strong self-control (Money Manifesto) and good habits (Make Smarter Decisions). Almost certainly these people place a high priority on saving, likely saving right off the top of their paycheck.


Either way, as they say, the proof is in the pudding. Each one of these individuals has success stories to back themselves up, such as paying off an $80,000 debt mountain in 3 years or retiring several years early. So if someone with no budget is covering their expenses and meeting their goals, telling them that they need a budget is like telling a software developer that he needs a user manual to do basic computer functions.


But Wouldn’t Budgeting Just Supercharge Their Finances?


You might be tempted to think that it’s all fine and good that these people are living without a budget, but they might do even better with a budget! Perhaps. Maybe a budget would help them eke a few more dollars into savings or investments. But to what end? If they’re already meeting their goals, trying to squeeze more money into savings starts bordering on wealth hoarding. Saving is good if it is done in the context of planning for the future, but not if it is done for the sake of dying with the most money. Life is not a game of monopoly.


Budgeting also costs time. True, not a lot of time, but time nonetheless. For many people (myself included), spending this time to budget is well worth it to ensure that we save enough to cover emergencies, retirement and any other goals that we might have, while still covering all our expenses. However, for someone who is already on top of this, budgeting is simply wasted time.


Err on The Side of Caution


I don’t want anyone carelessly abandoning their budget because of this post. When in doubt, budget. However, if you are convinced that you don’t need a budget anymore, that you have formed good spending and saving habits, and you are convinced that budgeting has become more of a burden than a tool, go ahead and cautiously try living without a budget. But keep an eye on your goals. The moment you notice that you’re falling behind on savings or your emergency fund, or if money starts getting tight at the end of the month, get that budget out again! When someone else mentions that they don’t have a budget, however, don’t jump to conclusions. Don’t automatically assume that they too must be falling short on savings goals or running out of money at the end of the month. Remember that personal finance is personal. Everybody has their own sets of strengths and weaknesses.




Thanks for reading!


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I’m glad you’re here. Thanks again and talk soon!


– Mike


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