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5 Simple Budgeting Methods for People Who Hate Budgets

The word "budgeting" alone makes people wrinkle up their nose and think of deprivation. But fact is, a good budget can make spending feel great.

by Neil Gladstone | March 16, 2022
<p>A couple sits at a table at home in front of computer, doing household budget, looking stressed</p>

The Squeeze

Only 45 percent of people create a personal budget to help them manage their finances.

• There are proven psychological reasons why it’s tough to focus on how much you spend.

• Budgeting ideas don’t always require recording every expense. Looking at the big percentages can serve as a solid framework.

It's a hard call to say there are any upsides to the pandemic, but here's one: it has driven more people to create personal or household budgets. Unfortunately, that's true because more people are minding every nickel because they’re fretting about keeping their job, making mortgage payments and putting food on the table. 

In 2013, a Gallup poll found that only one-third of Americans made a budget. In 2021, a different survey found that 45 percent of people are now tallying their income and expenses — and a large percentage of those people started checking their bank accounts more carefully only after the pandemic set in. 

Even those who create well-intentioned budgets may have trouble sticking to them. For most, budgeting is tough, and psychology explains why: budgets tend to focus on what you shouldn’t do rather than what you can buy, in the same way dieting makes your brain focus on what you can't eat. So budgets come off like a monetary diet that isn’t very fulfilling. So, we ignore those spreadsheets and go on binges that rapidly undo all the gains made in prior months of careful cost-cutting. And the biggest impact of that splurge isn't the temporary money strain: that single spending incident may convince you that you just aren’t good at budgeting.

Some situations also make it tough to adhere to a budget. If your family's primary breadwinner is an hourly wage earner it's much tougher to make a budget — when your work hours fluctuate with no warning, it's difficult to make any kind of plan. Illness and unexpected earning gaps translate into difficult financial crunches.

But the point is, regardless of some of the challenges of budgeting and how we feel about budgeting, assessing what you make and what you spend has very real positive impacts on how you control your money — instead of your money controlling you. And if you’re reading this article, it’s probably because you know you need a budget. So if you don’t want to spend every weekend going over your bank statements and pruning your money tree to perfection, here are five simple ways to budget without feeling like you’re living with a tight belt.

The 50/30/20 Budget

With the 50/30/20 plan, you don’t necessarily need to register every cash outlay; instead, keep track of the big expenses and think in buckets. In this framework, 50 percent of your expenses go toward essentials, like rent or mortgage, utilities, groceries and debt payments. (Depending on where you live and your take-home pay you may need to tweak the numbers a bit.) 

Allot 30 percent on personal expenses you want, but don’t need, such as takeout, Hulu, and that new coffee table you've been eyeing. 

The last 20 percent should be financial goals: building an emergency fund, car down payment, debt reduction, etc. With this approach, anything above a minimum monthly credit card payment is considered a step toward a financial goal — which is your pathway to more financial freedom, and why this 20 percent category is so important to carve out room for. You still need to keep track of where the money is going, but this helps you look at the big picture, and the way ahead, rather than agonizing every time you open your wallet.

If watching every line item in your P&L feels like you’re counting calories, flip the script and focus on what you're doing with that money, not that you are spending it.

The 60/40 Solution

Are three numbers too many for you to remember? Then how about two, or even one? A simpler take on budgeting suggests spending 60 percent of money on fixed and essential expenses. The other 40 percent goes to everything else. 

You still have to add up those important bills and make sure you’re covering them with 60 percent of your budget, but for someone who’s never followed a budget, the 60 percent rule can be an uncomplicated way to start. Once you’re comfortable with what 60 percent looks like and all it covers, you can take things to the next level and split that remaining 40 percent into more specific tranches such as 10 percent for entertainment and another 10 percent for credit card debt reduction.

This is just a small way to keep you accountable to yourself and your future goals, but some accountability is always going to be more effective in building you a solid financial future than none.

Paycheck Budget

The paycheck budget is for people who like to focus on the tangible reality of money in/money out rather than percentages. As you might expect from the name, the paycheck budget takes into account what you receive each paycheck rather than looking at finances in monthly or quarterly increments. You simply pay bills that are due during the pay period covered by your most recent compensation — and note what isn't covered that you will have to pay for out of the next pay period, so that when you get that paycheck, you are clear on how much of it is already spent.

The paycheck budget approach requires you to be in tune with what you actually spend so you’re not running out of cash and feeling like a failure. You’ll also need to review every few weeks or month how your forecast compares to reality and adjust the numbers accordingly. But coming up with that simple number of "what's left after the bills" will go far in keeping you connected to your current financial reality. And knowing what you have (and don't have) is more than half the battle when it comes to budgeting.

Adopt a Spending Plan

Still hate the idea of reviewing every line of your bank statement? Instead of focusing on a budget, consider reframing it as a spending plan. If watching every line item in your P&L feels like you’re counting calories, flip the script and focus on what you're doing with that money, not that you are spending it.

So whether that’s saving up for a big trip or indulging in (and loving) your daily lattes, you are making active choices rather than being controlled by a spreadsheet prescription. Do you still need to watch what you spend? Sure, but you’re doing so with a positive goal in mind.

Use Cash

If you absolutely can’t seem to focus on what you’re spending each month, but still need to slow down your spending, stop using credit cards and start using cash. Several studies have shown that consumers spend less when they use cash rather than debit or credit cards. Why? Cash seems real; a plastic card is abstract. Using cash may be tough for automatic payments like the electricity bill, but even buying food and clothes with cash will help rein in expenses.

Or take it one step further and use the envelope method. With this approach you literally withdraw cash after each pay period to cover your monthly expenses that you don't pay online and divide the cash into separate envelopes: groceries, gas, school needs, dinners out and beer/wine. You pull out the envelope and spend until the cash is gone. Go over a little? You have to literally take the cash out of another envelope and know you now have to spend less on that item. It's a great system for making the money we spend concrete and real — which is, after all, the entire point of any budget in the first place.

About the Author

Neil Gladstone is a writer in New York City. He's penned articles about tech, personal finance, health, entertainment, travel and food for publications such as The New York Times, GQ, New York Magazine, Thrillist and Travel & Leisure.

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