A Budget Won’t Fix Your Problems



The following is a guest post from Jacob over at Cash Cow Couple.  They live an truly frugal lifestyle and run a truly useful blog.  Check them out.

My wife and I have had a heck of a financial year. We finished our bachelor degrees in May of 2013 with roughly $20,000 in student loans. We moved to Texas shortly thereafter and took jobs for roughly $19/hour each. I only work 20 hours per week because I take a full schedule of PhD courses at a large university as well. Additionally, we have some online income that is a result of hard work and a substantial investment of time.

You are intelligent readers and can do the math on our combined income. 60 hours a week x $19/hour x a significantly less amount earned online = not very much money. We earn enough, but we don’t earn a lot, and we haven’t received any windfalls or fat handouts.

I’m sharing this because what comes next might shock you. Despite the modest income, we have paid off the $20,000 of debt, funded $10,000 in Roth IRAs, saved 5% in a 401k, bought a mobile home with cash, and stuffed another sizeable amount in our online savings account.

And guess what, we did it all without a budget.

We don’t really see the point of a budget, and we don’t require one to control our spending and consumption. Purchases are based on the value added to our lives, when viewed over a long time horizon.

Before we make a purchase or commit to another expense, we ask ourselves if it is best for our financial future. Does it move us closer to financial freedom or further away? Will it bring more happiness to our lives? If further away, we evaluate if the utility derived from that expense outweighs the potential loss of freedom and the added financial burden.

This process is really just a description of being mindful and conscience of money. It’s nothing more. Furthermore, it is habit based. The more we practice this way of living, the stronger the reinforcement, and the more money conscious we become. This makes saving money easy!

A Quick Example… and a fact about me that many people don’t know.

I really like certain motorized vehicles – primarily cars and motorcycles. I’m not a consumer and I don’t find utility in many materialistic items, but these are the exceptions. I’ve owned a number of different cars and bikes in my young life. Some of them extremely fast and entertaining.

Even today I’d love to go get a newer motorcycle (love the latest GSXR 1000), or buy a nice used Corvette or Porsche Boxter to race around town in. But that desire diminishes on a daily basis.

Instead, my wife and I share a 1996 Saturn SL1 with 125,000 miles. I ride the bus to my job/classes for free each day and she takes it to work. It’s boring, it’s slow, and it’s old.

But I love that car. It’s symbolic of our lifestyle and mindset. We value that car because it’s frugal, it’s economical, it’s practical, and it performs just fine. Even though we could easily go pay cash for a very nice car at the drop of a dime, we will not do so.

Tying it all back together with budgeting is simple. It’s all about the mindset. Do you see where I’m going? Budgeting isn’t the place to begin, or end. The problem lies with the mindset behind the budget.

The choice is very simple when it comes to money. You can save it or spend it. If you spend it, you’ll have to keep earning more dollars to spend. If you save it, you can put it to work and have it earn you more dollars. Eventually, your saved dollars earn you enough new dollars to cover your living expenses. Welcome to financial freedom!

Don’t blame your financial problems on a budget. Budgeting isn’t the problem, or the solution. It’s just a tool. It can be a useful tool, but I think it’s overrated, or maybe just misunderstood.

In reality, many people just have the wrong motives from the start. They try to spend as much as possible up to that budgeting line, then they make excuses if they fail and outspend the budget.

Financial success isn’t difficult. All it takes is the right mindset, not the right budget.

What’s your take? Do you budget?

Author Bio: I’m Jacob, Ph.D. student in finance, husband, and one half of the Cash Cow Couple. My wife and I enjoy teaching others how to live an abundant life on a very modest salary through proper saving and investing.

About Mitchell Pauly

Mitchell Pauly is a humorist, financial professional and entrepreneur. Follow him @Snarkfinance, and be sure to check out his website- Snarkfinance.com. You can learn more about him by visiting his Google+ profile.


  1. “In reality, many people just have the wrong motives from the start. They try to spend as much as possible up to that budgeting line, then they make excuses if they fail and outspend the budget.” BOOM. I always enjoy your articles, Jacob. You have such a practical, no-nonsense approach to personal finance and it’s truly inspiring.
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  2. Kudos to you two for all you have going on! I just finished school in May 2013, and now the fiance is back at it….it is real hard sometimes as non-traditional students, especially when you factor in the whole “Oh, we have to work,” factor combined with the time conundrum. I totally agree with committing to a mindset. I do think a budget can be a helpful tool within that mindset for many people, but without the mindset you’ll never stick to that budget. Our income is variable, so our budget is a loose guide. Very loose.
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  3. If you’re a hot mess, then you probably need a budget. That’s sort of my benchmark. If you have your shit together, you may be past *needing* one (though of course plenty of people like to keep budgeting anyway, I’m not one of them)
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  4. After reading this, I guess budget is the wrong word for what I do. I simply track our spending and use that information to make financial decisions. I have “spending limits” for different categories, but I’m not really concerned with over or underspending. For example, I might have budgeted $80 for eating out each month, and if I’ve spent $75 by the 20th, we won’t eat out again until the next month. Keeping track helps me to stay on top of where my money is going. It also helps me determine how much we can comfortably pay on our debts after the bills and other essentials are paid. This to me has always been a “budget.” I hadn’t really thought about the perspective of spending as much as possible up to the budget line before. Interesting article!