Budgeting: Don't Overcomplicate It

You are making good money, but for some reason it doesn't feel like your money is growing. The money in your savings account doesn't seem to grow, and every month you wonder where the heck your money went. Sound familiar?

This blog post is probably going to surprise you a bit, but I don't think traditional budgeting is sustainable. You may have tried it, been on a roll for a few months then gave up or maybe you love budgeting. Regardless, I'm going to share a better way to control how your money comes in and out as well as how to spend guilt free.

The Traditional Way

You go through every expense each month tracking every dollar spent down to the cent, then begin crossing items off the list that you can make an effort to not spend money on. In my opinion, this is similar to starting a diet and quite frankly it's not sustainable. At some point you end up spending money on something you enjoy but then you feel guilty for doing it. Not ideal. The traditional way usually leads to people making money, spending it, then trying to save what's left over, which ends up being nothing.

The Better Way

Reverse budgeting is the secret. Now this still starts with understanding where you spend money and what your habits are. Simply download a free app like RocketMoney or EveryDollar so that your expenses and income are tracked automatically. The purpose of a budget is not to restrict your lifestyle, it's simply to understand if your spending aligns with your values. At the end of the day, you work in order to enjoy a certain life.

With reverse budgeting we simply rearrange the order of operations when money comes in. For example, let's say you make $15,000/mo here's how it could look.

• $15,000 take home

  • $3,000 is immediately allocated towards savings/investments (20% savings rate)

    • $8,000 goes towards fixed expenses

      • $4,000 gets used for lifestyle spent guilt free

This is also known as paying yourself first, it does a few things.

1. Your goals are priority number one

2. Fixed spending is automated

3. It's adaptable for variable income

4. It lets you spend money guilt free

By prioritizing your savings and investments first, you'll never feel guilty about spending money on things you enjoy, whatever that may be. Most people think about budgeting as this big chore and a bigger headache. It doesn't need to be, try out reverse budgeting and see how it feels!