Here’s a secret that would probably shock most of my friends: I hate budgeting. Even though I’m a CPA and have an odd obsession with spreadsheets, I can’t track where things go. I’m not detail oriented. That is why I use this system to budget without a budget.
But, I obviously like the results of budgeting. So what’s a financially responsible, budget allergic person to do?
To budget without a budget deposit your paycheck(s) into one checking account. Then by setting up automatic transfers, your money flows out to your savings accounts and bill payments during the first week of the month. You will never have to think about your bills or if you’re saving enough. The remainder can be spent as you please.
Setting up your automatic transfers may take 2 to 3 hours, but after that you can cruise on auto-pilot. The end goal is you have your money organized, you don’t have to think about it, and you can spend on what brings you joy. This system works if you are single, married, have a complicated way of combining finances, or whatever your relationship and money status is.
Below you will find how to use our monthly automated budget tracking template that will get you organized to tackle steps 2, 3, and 4.
4 Steps to Budget Without a Budget
These 4 steps are an easy way for us to budget without a budget, without having to think about it
How do you budget without feeling deprived?
Once I abandoned budgets forever (after a particularly soul-crushing freak out that I was “over” my food allowance for the month), I decided to set up a completely automated system. Luckily Jordan is just as much of a non-budgeter as I am and he was all about an automated budget system.
Studies on spending tell us that we get more meaning when we spend our money on certain things: things that save time, gifts for others, and experiences.
But it really goes beyond that. Certain daily, weekly, or monthly expenditures can add way more happiness to my life. And when I spend money on those things, I am happier. I’ve written about this many, many times before, but this is what makes our no-budget work. We spend on the things that truly make us happy.
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Eat out too much, buy an expensive something, or take too many Ubers for the month? No problem. We’ll be eating Ramen for the remainder of the month if we run out of cash on the 23rd.
This budget doesn’t make us feel deprived because we can spend our remaining balance anyway we want. We aren’t trying to fit our spending into categories like groceries, utilities, going out to eat, or Uber rides.
If we don’t spend everything (and that actually happens, occasionally), we can roll that over to the next month or toss it into a savings account. It usually goes to a vacation savings account or our “freedom” account. Which feels ah-mazing.
Quick Reference Guide on How to Budget Without a Budget
1. Deposit your paycheck(s) into one checking account
My paycheck, Jordan’s paycheck, anything we earn on the side, it all goes into one checking account.
This checking account is the inbox for our money. From here, we can link our other bank accounts, retirement, and investment accounts. We keep a little buffer in this account to ensure we don’t overdraft from irregular bills or other unexpected expenses.
One, and only one, checking account for our income helps us keep control of our system.
I get paid once a month and Jordan gets paid twice a month. For simplicity, we keep our budget without a budget system on a monthly basis.
Therefore, we treat the first of the month as our big payday. Once the money comes in at the start of the month, we transfer our savings, investments, and bills out by the 7th of the month.
2. Automate withdrawals to your savings accounts
Automate withdrawals at the beginning of the month to designated savings accounts. And we do have many. Here’s a quick overview of where that cash goes for us:
- Investment/retirement account: while Jordan does have a 401K that comes out pre-tax, we also fund a separate retirement account as well.
- Vacation savings: because travel is something we do on the regular.
- Emergency savings: We keep 6 months of expenses on hand just to be sure we can cover the random bills that pop up.
- Home savings: we own a home and someday we’d like to own another one. So we put a little bit in savings each month for that future big purchase.
- Tax savings: I work for myself and we also have a semi-annual property tax bill to pay. We save monthly to make sure the IRS doesn’t hate us.
- Freedom account: We’ve got goals. Big ones. That includes being able to take some risks in our lives without having to worry about our financial well-being. This is where we fund those dreams. This is my favorite account.
The main idea here is to automate your withdrawals to your savings and investment accounts.
Your paycheck comes into your checking account and then the money gets dished out to your savings accounts two or three days later. You can’t spend what you don’t have in your checking account!
This way you can be confident that you are saving for your goals without feeling like you are making sacrifices.
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3. Automate or manually pay your bills
Bills, bills, bills. At the beginning of each month, we pay our bills, with the aim of having them all paid in the first 7 days. We automate what we can, and manually pay what we can’t. These bills include:
- Mortgage
- Rent
- Credit card bill
- Phone bills, utilities, etc
- Student loan payments (nope, not anymore. Paid those bad boys off.)
- Gym membership
4. Spend the rest!
Spend the rest. Seriously, having this on auto-pilot makes life so much easier. We then spend what we need to the rest of the month, knowing that the important things have been paid for. If I want to go to a yoga class, go out for a fancy dinner, or buy all of the flowers at the farmer’s market, I can. Guilt-free.
There have been moments that we’ve run out of money early, which can be a bummer. But running out of money for eating out is no big deal compared with wondering if you can pay your credit card bill, your mortgage, or save enough at the end of the month. It just meant that for a weekend we stuck to a $20 budget (yes, $20 for the entire weekend), and ended up reaching into the back of our pantry for canned things we could try to make meals out of.
I know that all of our needs, including our freedom account (my absolute favorite), have been taken care of. And that peace of mind means that I can spend less time worrying about money and more time worrying about all other things (there’s no rest for the anxiety-prone).
Consequences of not having a budget
This method of budgeting without a budget does carry some risk. Managable risk. But risk none the less. The biggest consequence of not having a budget is spending more than what you have left remaining in your account. As the banks call it, overdrafting.
As mentioned above, by the end of the month the amount in your checking account may look depressing. We have had a few months of having Ramen noodles in front of Netflix as our Friday date night.
This budgeting without a budget system ensures you are saving first and foremost before you start spending your hard earned dollars. So if your checking account runs out before the end of the month you can eat Ramen noodles like Jordan and me or pull money out of your savings account. Those aren’t horrible options for you. Far better than tracking a detailed budget.
We also use the tool below to keep an eye on our automatic transfers and our bank accounts with one click.
Monthly automatic no-budget spreadsheet
The tools we use to manage our many bank and investment accounts are How to Organize Your Finances Spreadsheet and the free online money management tool by Personal Capital.
Here’s the detailed process for how to set up your monthly automatic saving and spending accounts.
Once you have your automatic system set up, don’t accidentally forget the most important part: documenting your bank transfers
There’s nothing worse than needing to make a change to your savings and having no idea what day payments are taken, what account they’re taken out of, and where they’re moved to.
This document doesn’t need to be anything fancy but trust me, you’ll want to have it.
Jordan and I use our How to Organize Your Finances Spreadsheet. Follow the instructions on the Start Here tab to document your finances.
Once you determine your savings acounts, you can add date of transfer, account from, account to, and amount to the budget template.
Any time we make a change, we change this budget spreadsheet.
Track all your accounts in one place
When looking around for an option to make life easier, I stumbled upon Personal Capital. They have a free tool that was designed to make you more knowledgeable about the overall picture of your money.
(note: that is an affiliate link, but it’s a free tool I use and love and really wanted to share. For more information on affiliate links, see how we make money.)
I signed up for an account, connected all of our bank, investment, retirement, and mortgage accounts, as well as our credit cards. It was simple, other than the fact I had to track down all of the passwords I’d forgotten. It’s amazing how quickly you can amass so many accounts.
Now that everything is connected to Personal Capital, either one of us can log in and get an instant snapshot of our accounts and balances, all in one place.
I honestly really like being able to log in and see how much is left on our mortgage and remind myself of what’s in our retirement accounts. It’s kind of like a Mint, but for your overall financial health, not just your monthly budget.
While this is an extremely powerful website with tools to help you analyze your investments, it does something much more basic than that: it helps me stay organized. If you want to a full review and video tutorial for Personal Capital, you can get that here.
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This article was originally published on September 22nd, 2017 and updated on October 7th, 2019.
