Some tough love about budgeting

Let’s rap about budgeting, shall we?

It’s Valentine’s Day, and the best way I know how to show you how much I love you is to tell you you’re a fool if you don’t have a budget.

OK, but seriously, you need a budget, but probably not the types of budgets promoted by financial gooruse. THose budgets don’t really work all that well, are more complicated than they need to be, and need constant attention and babysitting… and it’s by design.

Here’s what I mean:

Many moons ago I worked for a major glass manufacturer. I was young and impressionable and really had no clue what I was doing, financially.

I lived high on the hog, going into debt for things I probably didn’t need (but definitely wanted at the time).

A few years after being hired, I was laid off.


It was a severe kick in the wallet.

I had to figure out how to pay for a new car, $15,000 in credit card debt, and somehow manage to feed myself.

Well, I didn’t die. I somehow managed to find a new job, but I went through a period of being flat broke.

Not proud of it, but I learned a lot.

One of the things I struggled with at that time was how to properly budget and manage my own finances.

As a 20 year old, I spent money like… well, like a 20 year old spends money.

But, I wanted to do a better job of saving and spending, so I searched the then toddler version of the Internet for bugdeting apps and systems.

Came up mostly empty-handed.

There were some OK budgeting solutions, but none of them did what I wanted them to do.

Still, it was better than nothing so I started out using the Envelope Method.

This is basically where you assign a spending category (e.g. rent) to an envelope. Then, you put money in that envelope and only spend that money on whatever that envelope was reserved for. When the money in the envelope is gone, you can’t spend any more money on that thing. It naturally (and obviously) limits your ability to spend too much money on one thing.

Today, there are electronic versions of the same idea, which all rely on the same idea of spending categories.

But, that approach wasn’t very satisfying to me. There were some logistical problems that cropped up and also some ideological problems that didn’t sit well with me.

So, over the years, I developed my own little budgeting system and kept it to myself. It started out as just pen and paper, and eventually I hacked something together in LibreOffice spreadsheets (back then, I couldn’t even afford MS Excel or Microsoft Money).

Occasionally, I would go hunting for a better system.

But… I never found it.

Every budget system I ran into relied on the premise that people need to deprive themselves of things they wanted in order to save money.


Budgets also tend to place a heavy focus on restricting spending instead of explicitly building savings and valuing what a person *does* choose to spend money on.

Even more:

Budgets also hinge on the idea of budget categories and expense types and nails spending on these categories to specific days of the week or month. Meanwhile, income almost never correlates perfectly with spending days. This sometimes results in overdrawn bank accounts or “near misses”.

Also, the “every dollar has a job” idea sets people up to make bad financial decisions, and yet is the foundation of nearly every budgeting system in existence.

This never made much sense to me because that $1 in your bank account doesn’t care whether it gets spent on your mortgage or car payment or a banana.

Yet, every budget is set up to make that dollar special by putting it into its own category.

What happens when you run out of banana money but still need bananas? You take it from the gasoline money, which you might not need because you still have half a tank of gas in your car… but then… you just broke your budget by moving money around outside of those categories.

Or… suppose a person wants to take a family trip across the country. The plane tickets are on sale right now but there’s no money in the travel budget until next week (when the sale will be over). Yet, there’s plenty of money in the insurance budget (which isn’t needed for another 6 months). The person waits, handcuffed to their budget categories, and misses out on the deal… spends more than they needed to on the plane ticket… how exactly is this good money management?

Of course, you could move money around from one category to another if the theory of budget categorization hits the wall of reality… which people frequently do in order to make it “work in practice.” Promoters of category-based budgeting rationalize this way as “flexible budgeting.”

Phooey. The reality is much simpler than that: the budget failed.

If it worked, the categories (and the money in them), would have held together.

My solution was to ditch the categories and instead organize my money by purpose, goals, and personal values.

I tell-all in my eBook Cash Flow Kickstart. The book teaches anyone how they can immediately reorganize their own finances according to purpose, place focus on their own personal values, and start saving money without making personal sacrifices.

If you want to read what I have to say about it, I’ll tell you. But, first, you gotta join my email list.

David Lewis

This post brought to you by //The Rogue Agent//. David has been a life insurance agent, and worked with some of the oldest and most respected mutual life insurance companies in the U.S., since 2004. Learn more about him and his business, here.