On a recent episode of the highly respected, laudable, and deserving-of-awards Bitches Get Riches podcast, Kitty and I came out with a controversial take: You don’t necessarily need a budget.
Next to “You can buy a latte sometimes,” it’s just about the closest we’ve come to outright heresy in the halls of money writers. We expect to be shunned and excommunicated any moment now.
Yet I firmly believe that budgeting doesn’t work for everyone!
Yes, for some people it’s an incredibly useful, indispensable tool. I know people who flailed around with money like a noodly-armed fan man on a used car lot before they made a budget, and afterward approached their finances with the serenity and enlightenment of a monk.
I also know people who make budgets, fail at them, and enter a cycle of constant self-loathing and financial stress that ultimately harms them more than it helps. Some of us chafe against the rigidity of a budget, others thrive within its strict boundaries.
So budgeting ain’t for everyone. But that doesn’t mean you’re excused from managing your money altogether. Even without a budget, it’s still useful to have a system for keeping an eye on your money.
Here’s what I do instead
Instead of budgeting, I track my spending.
I know that sounds a fuckova lot like budgeting, but I swear it’s different. Stay with me here.
Tracking my spending is a sexy form of data visualization that helps me to frequently take stock of my income, my spending, and make minute adjustments along the way.
It’s sort of a live audit of your income and spending. It appeals to the gamer in me: I can see how my stats in different skill categories affect my game performance and change them accordingly to improve my chances of winning.
Winning at life, that is.
Tracking your spending is important for the very reason that knowing where your money is coming from and where it’s going are essential to controlling both. And seeing all that data laid out in a tidy spreadsheet, updated with every purchase and paycheck, gives you the information you need to make concrete financial improvements.
How to track your spending
I’ve got a spreadsheet that lists my income and expenses every month. I use Microsoft Excel because I am an Olde Millennial and that’s what I’m used to, but you can use any system you want. Kitty uses a Bullet Journal because physically writing things down helps her commit to them—plus, they’re pretty. You can use a ledger book and fountain pen and pretend you’re Bob goddamn Cratchit if you want! But I like Excel because the formula function means I don’t actually have to do my own math.
At the beginning of every month it looks a bit like this:
Each column represents a category of spending. You can change these up and add more to suit your own needs, but mine definitely break down into these very specific and definitely not made-up categories every month.
When I get paid, I fill in my income in the far left column, like so:
I’m a salaried employee, so my income is predictably the same every paycheck and I get two paychecks per month. But if you have multiple jobs, or if your paycheck varies based on your hours, your income column might be a lot more detailed.
And as I spend money, I fill in my expenses in the rest of the category columns. Each column then adds up at the bottom using an automatic formula, so I can see how much I’m spending in each category every month.
Then, all the categories add up in the far right corner to show my total expenditure for the month.
Now here’s the part that makes it all magical: again using the formula function, I subtract my total expenses from my total income. That’s the money I didn’t spend that month. And that leftover money gets to stay mine. I deposit it into savings or I invest it. When I had student loans, I used it to pay off my debt. Whatever. The leftovers are yours to do with as you wish.
At the end of the month I can look back and see that while I managed to save $800 in leftover money, I clearly overspent on toy dinosaurs for the garden. So I should definitely plan to cut back on those next month.
I can also see that it was an unusually expensive month for lightsabers. It looks like the kyber crystal in my Darksaber malfunctioned twice, necessitating multiple repairs. I’m not going to sweat this, as the repairs were successful and I shouldn’t expect to spend this money on lightsaber repair again next month.
But I’m going to call only $300 spent on cheese crackers in a single month a major financial win.
“Pay yourself first”
Once you track your spending, you can figure out some averages: how much you spend on groceries on average, how much you spend on transportation on average, etc. And most importantly: how much, on average, is left over.
Dear readers, you know how hot the term “leftovers” gets me. And it’s not just because my entire life is ruled by my stomach and I am but a slave to delicious food. For once you figure out your average leftover money every month, you then know how much you have to save every month.
Save your average leftovers. Do it first thing, as soon as you get paid. After that, who the hell cares what else you spend your fucking money on? You’ve saved your leftovers before paying any bills or making any discretionary spending. This concept is known among much wiser financial experts as “pay yourself first.” And once that’s done, a budget doesn’t really matter.
I can tell some of you are cringing at words like “average.” Yes, I see the flaw in my logic. Without a strict budget using exact numbers, how can you be sure you can save your average leftovers every month? What if you need that money for increased dog happiness but it’s already been saved or invested or—gasp!—spent on debt???
It’s a valid point! And its why you should a) first save up an emergency fund, and b) keep a comfortable buffer of money in your checking account at all times. And if that still fills you with anxiety and a desire for exact, concrete numbers… then maybe a budget is for you.
Why bother tracking expenses
For the datasexual among you, spreadsheets are their own reward. For everyone else wondering why you should bother tracking your expenses, I’ve got your reasons right here!
A spending tracker is more flexible than a budget. You can audit your spending as you go along, making minute adjustments accordingly. Notice that you spent way too much money on craft beer last month? Eliminate that from next month’s spending and watch the money move directly into the leftover money field.
A spending tracker will also allow you to see your largest categories of spending. This way you can home in on the most significant wastes of money to strategize how to lower them. And this will literally give you the biggest bang for your buck.
You’ll never ask “Where the fuck did all my money go?” ever again, because you’ll have the answer, right there in front of you. Your sins of overindulging at the bar will stare back at you accusingly as you wonder, in vain, why you saved so much less this month.
Those who don’t quibble over technicalities are like “How is this even different from budgeting?” To which I say: BECAUSE IT IS, DON’T QUESTION ME. But also, a budget is a way of planning your spending before you do it. A spending tracker is a way of making note of your spending after you’ve done it.
tl;dr: You should track your fucking spending through a spreadsheet and use it to inform your money decisions on a day-to-day and month-to-month basis. All the cool kids (read: the Bitches) are doing it!
Do you prefer to track your spending or make a budget? Tell us all about it in a comment below!