The Secret to Making a Budget: Don't

Rebuild Credit with Doug Hoyes
Posted in Debt Help
Posted by J. Douglas Hoyes, CA, CPA, CIRP, CBV - LIT

dont budget approach

It's hard to stick to a budget; so don't!

You need to manage your money, but you don't need to budget.

People get into financial trouble when they lose their job, or get divorced, or get injured and can’t work. If you have savings and good budgeting skills, you can survive a shock like that, but if you don’t have savings, and don’t know how to manage your money, you may end up having no choice but to go bankrupt. Managing your money is very important.

How can I manage my money without budgeting?

The secret to money management is simple: don't budget, just pay your bills as often as you get paid. If you get paid every week, pay your bills every week. If your telephone bill is $100 per month, instead of trying to find $100 one day each month when the bill is due, pay $25 each week, on payday. Your bills get paid, and you don't need to budget.

That's more work than budgeting, isn't it?

No. It's easier. You use telephone or internet banking to program your bill payments. Do it now, for the next six months, and you're done. It's that easy. Figure out what you expect to pay per month for your monthly bills, like phone, hydro, cable, gas, etc. Then divide by the number of paycheques in a month, and program that payment every payday. If your cable bill is $80 per month, and you get paid bi-weekly, pay $40 every two weeks, on payday.

Will it work? What's so great about paying bills every payday?

No worries

You get paid on Friday, and all of your bills automatically get paid on Friday, so when you go to the bank on Saturday you know exactly how much money you’ve got to live on for the week.

No budgeting

You don’t have to set money aside for your hydro bill in two weeks, because it’s already paid!

You are always ahead on your bills, never behind

Here's the really cool part: in an extra pay month, you pay extra. If you get paid weekly, four times a year you get five paycheques in a month. Great! That means you’re making an extra weekly payment to hydro that month, and you won’t even miss it. A year from now, if you don’t miss any payments, you’ll be a month ahead with hydro, and everyone else! So now, if you get laid off, or need to skip a payment, no problem! You’re a month ahead! This sounds good, but what about bills you can't pay weekly, like your rent or car insurance? And what about saving for the future? Isn't that the point of budgeting? You are correct, so for more details please see the next article in this series with more household budgeting secrets to give you more details. For now, try it. Don’t budget, just pay your bills as frequently as you get paid, and you’ll see that your life will be simpler, and a lot less stressful. Want to compare it to a more traditional approach? Try our easy to use budgeting worksheet available as part our our free download resources.

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Rebuild Credit with Doug Hoyes

About J. Douglas Hoyes

Doug is our co-founder and is a Licensed Insolvency Trustee, Consumer Proposal Administrator, certified Insolvency Counsellor and Chartered Professional Accountant. Doug is a passionate advocate for ensuring that people find the right solutions to their debt problems and shares his knowledge and expertise as a regular contributor to our blog and in the media.

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