I’m Bad at Budgeting. Here’s Why I’m Fine With That

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Financial experts are always recommending budgeting, but it’s not right for everyone. Check out the methods I use to manage money without following a budget. [[{“value”:”

Budgeting is often treated as the be-all and end-all of financial advice. You’ve probably heard plenty about how following a budget is so important, so essential, and so on. Personally, I think it’s some of the most played-out advice and doesn’t work for a large portion of the population.

Case in point, only about one-third (32%) of Americans prepare a budget, according to a Gallup poll. I’m part of the group that doesn’t. I tried in the past, but I didn’t find it helpful. In fact, I’m doing much better financially now without a budget than I ever was with one.

If budgeting works for you, that’s great. But if not, there are other ways to manage your money. Here are my money rules that have worked better than budgeting for me.

Focus on the biggest, fixed expenses

I don’t track my expenses, but I still keep my monthly spending low — normally under 50% of my income. Instead of worrying about every expense, I focus exclusively on the largest, fixed expenses.

For many people, this is housing and possibly a car payment. I don’t have a car, so my only concern is rent. I’m careful about how much I spend on rent, because I know that if I overspend, it’s not a one-time issue. I’ll be paying more than I should on my largest expense, every month. If I ever need to take on another big expense, like a car payment, I’ll use the same approach.

With everything else, I already know that my spending won’t be an issue, so I don’t see the need to track it. My grocery bill may be $50 higher some months than others. And if I wanted, I’m sure I could buckle down and cut my food spending.

But do I want to give myself a firm spending limit on groceries? And tell myself “no smoked salmon this time, not in the budget?” Definitely not. I’d rather just spend a little more.

Pay credit cards in full every month

I put all my expenses on my credit cards, except when that’s not an option. I’ve been doing this for years, both because it’s convenient and because I like to earn points using travel credit cards. Those points help me save big every year on vacations.

The downside of using credit cards is the possibility of going into debt. Credit card debt is one of the worst kinds of debt, since credit cards have high interest rates.

I have a rule that I pay my credit cards in full every month. To make sure of it, and to guarantee I never miss a payment, I set up autopay on my credit cards. It pays the full statement balance by the due date, so I never get charged any interest.

Save and invest every month

One benefit of budgeting is that it helps you save and invest, but you don’t need a budget to do that. In my case, I’ve set savings and investing goals. I have an amount I save and an amount I invest every month, without fail.

To give you an example, you could save 10% of your income and invest 10% of your income. If you’d like to focus more on investing, you could save 5% and invest 15%. And if that’s more than you can manage, another option would be saving 5% and investing 5%.

You can make this easier by automating it. Once you decide how much you want to save, set up an automatic transfer to your savings account. You can also set up automatic investments with most types of investment accounts, including:

Brokerage accountsIndividual retirement accounts (IRAs)401(k) plans

Maximize income

To be honest, this has had the biggest impact on my finances. I’ve worked very hard to increase my income. I set a new income goal at the beginning of every year, always aiming to improve on what I earned the year before.

When you earn more, it makes life easier. It’s easier to pay your bills, it’s easier to build your emergency fund, and it’s easier to save enough for retirement — as long as you aren’t spending all your additional income.

See how you can make the most of your earning potential. If you’re happy in your current job, you could talk to your employer about how to get a raise or promotion. It never hurts to keep an eye out for higher-paying job opportunities, either. Another option is launching your own business. Freelancing or owning a small business can both be great paths to earning more.

I’d probably spend less with a budget, but it’s not for me. My outlook is that if I’m saving, investing, and paying my credit cards in full every month, I’m doing well financially. If you’re not big on budgeting, there’s nothing wrong with that. Instead of trying to make it work, find money rules that work for you.

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