The No-Budget Budget Method

By Jackie Beck   Updated 06/25/2022 at 7:21 am

Are you someone who hates budgeting? Do you find that you still need to manage your money in some way? (You know, to keep from overdrafting and to pay your bills?) If you answered yes to those questions, then the no-budget budget method may be for you!

With the no-budget budget, you don’t have to stress about making a budget each month. Instead, the no-budget budget allows you to focus on other parts of your finances. (Like getting out of debt or saving up for a specific goal.)

If you’re interested in learning more about the no-budget budget, keep reading. We’ll cover everything you need to know about this budgeting method, including how it works and whether or not it may be right for you.

Why Suggest a No-Budget Budget?

As a personal finance writer, I’m conflicted. I really believe in the power of budgeting — especially a zero-based budget.

It can do amazing things for you. In fact it’s awesome, especially if you’re in debt or working toward some other financial goal.

But I know that many people hate budgeting with the fire of a burning sun. Sadly, singing the praises of one isn’t going to change their mind.

So if you don’t want to give regular budgeting a solid try (meaning for at least 6 months), or if you find yourself with extra money available every single month, consider using the no-budget budget instead.

What is the No-Budget Budget?

The no-budget budget is a type of budget that doesn’t require you to create a traditional budget each month.

With this budgeting method, you don’t track your income and expenses in the same way that you would with a traditional budget.

Instead, the no-budget budget focuses on keeping track of just two key areas:

  1. how much you bring home
  2. what you must pay

You’ll also need to automate sending money to savings & retirement.

The no-budget budget is a great option for people who hate budgeting, since it doesn’t require you to constantly track your spending.

It’s also a good choice for people who are struggling to stick to a traditional budget, so long as you do truly make enough to cover all your bills, savings, and investments.

How the No-Budget Budget Works

The no-budget budget works like this. You’ve only got to know two things: how much money you bring home in your paycheck, and what you must pay each month.

Check your latest pay stub to figure out how much you bring home monthly, and look at your latest bank statement (or check online if you toss those) to see what you’ve paid in the last month.

That’ll be stuff like your house payment or rent, electricity, water, gas, car payment, childcare, and whatever else you’ve committed to pay. Don’t forget about things like car and homeowner’s insurance, if you don’t pay those monthly.

Now add what you make and your bills up.

If what you make in a month is plenty more than what your regular expenses are, you’re a good candidate for a no-budget budget and you can move on to setting it up.

If you’re in the hole, you’ll have to either make some cuts first or start bringing in more money.

Setting It Up

Once you’ve determined that a no-budget budget will work for you, it’s time to set it up. Here’s how to set up a no-budget budget:

  • Arrange to have at least 10% of your take-home pay automatically sent to a long term savings account each payday. (You can also send additional money to multiple named savings accounts so you know what you’re saving for. I recommend Capital One.)
  • Automatically contribute to retirement, ideally at least 15%.
  • Arrange to have all of your fixed expenses auto-paid every month.

Whatever’s left each month after that is yours to spend or save as you please. And when it’s gone, it’s gone. That’s it.

Tip: If you have a hard time remembering what will be coming out of your account, you can have your paycheck direct deposited into two accounts: one that all of your bills and savings are automatically paid from, and one that you use for everything else.

Why Use the No-Budget Budget?

Not budgeting at all is easy, but it’s also often disastrous. Bills come in, and you freak out because you don’t know how you’re going to pay them.

Or you really want to do something, but don’t have the money. So you do it anyway and put it on a credit card and go into debt. Or you miss out on something you could have easily afforded if only you hadn’t spent all your money on something else.

Sure, you don’t have to “constrain” yourself by following a budget, but you do have to deal with all of those consequences. They are not fun! Using the no-budget budget can help you avoid those.

It cuts down on stress, time, and late fees.

With the no-budget budget, you do still make choices about what to do with your money. You still control your spending. You’re just not as rigid about it as you may be with a traditional budget.

For example, let’s say you want to go out to eat. With a traditional budget, you would look at your eating out category, see how much money you have allotted for the month, and decide whether or not you can afford it.

With the no-budget budget, you would simply ask yourself if you can afford it. (Because you know savings & bills are already taken care of.) If the answer is yes, then you go ahead and do it. If the answer is no, then you don’t.

Advantages

If you’re someone who struggles to stick to a budget, the no-budget budget may be for you because it feels a lot more flexible.

With the no-budget budget, you don’t have to plan out every single dollar. You simply need to know your monthly income and automate your regular expenses, savings, and retirement.

You’ll automatically be setting aside money for emergencies and other things that are important to you. And you’ll automatically be paying yourself first by sending money to fund retirement.

And of course you’ll have your regular bills auto-paid. (It’s still critical to know exactly how much those ARE, and to leave wiggle room for bills that vary a lot from month to month.)

Once you’ve done that, it leaves the rest of your money free for you to do with as you wish. (I do still highly suggest tracking your spending though. That way you can be sure your money is going to things that matter to you.)

It benefits people who don’t have a budget at all right now and refuse to even try, or people who have plenty of extra money each month that you would otherwise blow without funding retirement and savings.

Disadvantages

The biggest down side to this method is that it will only work if you truly do make enough money to cover everything. So it’s not good if you’re constantly in the hole or struggling with debt, but any budget is better than just hoping things will work out.

You do also need to know what your bills actually are to use this, including all the irregular expenses that people forget. So if you miss something, don’t chalk it up to being unusual. Instead, add it in and take it into account going forward.

The other main disadvantage to this method is that — unless you pair it with tracking your spending — you won’t have a good handle on where your money is going. That matters since otherwise money may just slip through your fingers like water. You don’t want to waste it on buying things you don’t really care about. (There’s no need to waste money that could have been better used elsewhere on something more important to you!)

But chances are if you’re looking into using a no-budget budget, you already don’t have a good handle on where your money is going.

And maybe getting a little taste of success will encourage a more focused spending plan.

Final Thoughts

If you’re bringing in more money than you have to spend each month, the no-budget budget can work for you. It can help you take control of your finances and start saving money. (Because you’ll automatically pay yourself first.)

Because it IS still a budget — it’s just not a very detailed one. It’s basically: 10% long term savings, 15% retirement, 75% everything else (bills, random spending, and extra savings allocated to specific things.)

With this system, you don’t have to plan out every single dollar. You don’t need a detailed plan of where every dollar will go once savings and investments are taken care of.

Once you know your monthly income and regular expenses, and have automated payments and savings, the rest of your money is yours to spend or save as you please.

Keep track of what you make and what you must pay, and let the rest flow where it will.

How to use the no-budget budget method

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