5 Signs the Anti-Budget Is the Best Money Plan for You
Starting a budget is the easy part; sticking to it over time is another matter entirely. Most personal finance experts recommend creating a budget to better manage your money and achieve financial independence. However, diligently tracking every penny isn’t for everyone.
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Lacking a plan for your finances is a big mistake, but choosing the wrong kind of budget can set you up for failure before you’ve even started to save. For those who’ve tried traditional budgets and found them difficult to stick to, the anti-budget could be a more manageable option.
Despite its name, the anti-budget is still a budget. However, it’s a loose one, with three simple rules.
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How Does the Anti-Budget Work?
If you want to practice the anti-budget, you first have to determine how much of your income you want to save. Typically, 20-30% of your income should be your goal, but this can vary depending on your personal goals and financial circumstances.
Next, cutting to the chase and putting aside what you’ve decided to save is easier if you set up automatic transfers to savings or investment accounts right after you receive your paycheck. This lets you prioritize savings without even thinking about it.
Lastly, after your savings get moved, the rest of your income is free for whatever you need or want. This frees you from the need to track every purchase in a spreadsheet or app.
The anti-budget approach seems easy enough, but you’ll need to factor in things like paying off debt and creating an emergency fund (your 20%-30% savings should initially go to these things) and make sure you don’t go wild with spending “the rest” (you’ll need that for rent, bills and any unanticipated expenses).
If you’re serious about your financial goals, but are unsure if the anti-budget can work for you, the following five signs might sway your decision to give it a try.
1. You Find Traditional Budgeting Stressful
Financial concerns are big stressors. For those who want to keep things simple, the anti-budget may be a good strategy to use because there’s no need to line-item every dollar or break down spending into numerous categories.
Since you’ve already “lopped off” your savings at the start, you can spend the rest guilt-free without worrying if you’re overspending in one area.
2. You Want To Focus on Saving First
As Smart Money Nation asked, “What if we just cut out all the parts of budgeting that don’t help you focus on the one thing that actually matters, which is savings?”
Instead of analyzing how much you spend and then calculating what’s left over for savings, the anti-budget puts savings first, guaranteeing that you achieve your financial goals. Savings are automated, so you won’t forget or be tempted to skip them. It’s an efficient technique to develop solid financial habits without needing to be too tight with your daily spending.
3. You’re Looking for a Flexible Saving System
The flexibility of the anti-budget makes it ideal for those with varying monthly incomes who need a system that adapts to their earnings. Did you make less money this month? You won’t have to go without by contributing an automatic, set savings amount.
Rather, you’ll still be saving the same prearranged percentage of your income. If your income fluctuates or your financial and life goals shift, you can adjust your automated savings.
4. You Want a ‘Budget for People Who Hate Budgeting’
The above is what The Penny Hoarder calls the anti-budget. There are many types of budgets available to number crunchers out there, but if you’re not a numbers person — and if your goal is to save effectively without micromanaging every purchase — the anti-budget offers an easy way to achieve that.
5. You Don’t Have the Time for a Detailed Budget
The anti-budget is a low-maintenance option for those who want to save consistently, but struggle to devote the time to maintain a traditional budget. Writing about the anti-budget on her Afford Anything website, Paula Pant broke down why she sought an alternative to traditional budgeting.
“Budgeting is tedious and time-consuming,” Pant stated. “I’m a finance enthusiast, and even I think that budgeting is arduous, so I can only imagine how ‘normal’ people must feel.”
If sitting down and tracking all funds coming in and going out, this method may suit your lifestyle.
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This article originally appeared on GOBankingRates.com: 5 Signs the Anti-Budget Is the Best Money Plan for You