Do you need a budget? What is the purpose of a budget? Can you get by without one?

Why have a budget

The main reason for a budget is to decide in advance where your money is going to go. It is a way of being proactive with your money rather than reactive.

One of the biggest barriers to financial security is just spending as you see fit without a plan. It’s basically means you are just drifting through life financially. We’ve all been there at some point or another because we’ve been too busy, too lazy, or the lack of knowledge or caring.

With a budget you can then compare actual vs budget to see how you are doing. You can learn from it and then make changes to improve. That is what business do to control expenses and identify opportunities. It’s also used to set targets to improve.

For a business the end result of making improvements is to lower expenses to increase profits. From a personal standpoint the less you spend the more you save.

There are plenty of tools out there to maintain a budget. You can use a basic excel or google sheet or you can try a popular software package such as You Need a Budget (YNAB).

Can you get by without a budget?

Yes you can! But it stills requires you to take action and be intentional. That means you are still being proactive but just tacking the problem a different way.

Instead of tracking your spending, force the saving! That’s the end goal anyway so why not just focus on that?

Follow the old adage of paying yourself first and then live on the rest. If you are saving 10%, 20% or more of your gross income and living on the rest you can achieve financial security and independence over time without a budget.

Put the savings on auto pilot

Paying yourself first means you will always save because it is first in line. If it is not first in line it will get buried in all of your other monthly expenses and often won’t happen.

Here are some ways to save by paying yourself first:

  1. Payroll deduction direct investment to your savings or investment account. This ensures it always happens first.
  2. Automatic investment plan that deducts the funds from your bank account. This requires a little more maintenance as it’s possible you could make an error and not have enough funds to cover the investment.
  3. You list “investing” first in your bill pay log and make sure that you pay yourself before paying any bills. You deposit the money in your savings or investment account before paying any bills.

An automatic investment such as in #1 is the best because it should always happen without fail. The others work too but require more work on your part. #2 works well but you just need to make sure the money is in the account to fund the savings. #3 also works but requires the most discipline and diligence to ensure success.

Save & Squeeze

The initial goal would be to save first every time you have income. Then increase that savings percentage over time.

For example if you increased your savings rate just 1% every three months you could go from a 0% savings rate to 20% in just 5 years. Another strategy is to take your pay increases and put to your savings rate.

The Save and Squeeze plan is to force savings on the front end and then squeeze expenses on the back end. This website has lots of articles and tools to help you with that.

For example, buying generic vs premium brands for some of the products you buy where there is no real difference other than the price allows you to squeeze expenses with very little impact. Also cutting out useless subscriptions and ongoing charges for services you don’t need or want are other areas to quickly squeeze expenses.

If you increase your savings by 1% then you just need to squeeze that amount from your expenses. It’s simple but requires effort and execution.


Budgets are a fantastic tool and are highly recommended. However, they are just one way to solve the problem.

Bottom line is you don’t need a budget if you force the savings to occur first before you pay for expenses and then live on the rest.

Use the “Save and Squeeze” strategy to achieve your goal of savings more which is the reason for having a budget in the first place.

Take action know. Your future self will thank you!

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