How to Thrive Without a Budget

Episode four forty one, how to Thrive Without a Budget.

Welcome to the Frugal Friends podcast, where you'll learn to save money, embrace simplicity, and liver your life. Here your hosts Jen and Jill.

Hey friends. Jill here with a quick apology that the audio for this episode will not be to the highest standards we're all used to. We were testing our video setup and the audio files were corrupted in the process. We thought it wasn't worth recording, and hopefully the lower quality doesn't detract from all the frugal stuff we're about

Welcome to the Frugal Friends podcast. My name is Jen, my name is Jill, and I got an email recently from a listener asking how I live without a budget because I am notoriously not anti budget, but so I love budgets. I love thinking of the more spending plans, and we talk about this in our book.

But I don't make a budget, and so how does that work for me?

What do I do instead, YadA YadA, And so this is our episode on that.

And Jill is pro budget. I do.

I love to have a plan, although I can understand all of it too. Like what you've described as far as where you've come to with money is you still do have a plan. You're just very aware of your spending and your parameters that you don't have to be deeply in the weeds with it.

We'll get to that.

And I'm not the only personal finance expert out here telling people to make a budget who does not themselves keep a budget. And we'll talk about like the alternatives in this episode that other people do. But some people will be honest about it like I am, and some people will not.

I'm just put I'm gonna throw that out there.

We did ask in the friend letter, so if you get the friend letter from friend podcast dot com.

We put a lightning round in every.

Newsletter that we send out and a lot of times they coincide with an episode that we're doing. So ask do you make a spending plan monthly? And the majority of you, fifty percent of you did say yes, I am tracking and planning every dollar. Then the second place was sorta depends on the month, and a decent amount of you are saying nope, yeah, no final budget. So this is really I think this is for all of us, but especially you know first.

Yeah, I mean it's really honestly, if we're gonna be honest about it, a lot of the sortas are nos, but they just feel guilty about saying no, it's a half and half right, and that's a big that's true.

Yeah, that's big.

Right.

And so half of our audience does not keep a consistent budget and is it?

Is it wrong? Can it work?

Yeah?

That's what we're going to talk about today. But first, this episode is brought to you by the Friend Letter. Yes, it's our three times weekly newsletter where we are giving you additional things outside of what you get on the podcast. On Mondays we're telling you all about the food freebies and other freebies that companies, cities, websites are giving away.

It work for you instead of work against you.

And then the last Friday of every month, we have our our budget planning Guide, So if you do make a budget, the last Friday of the month is for you because it's a reminder of all the things to budget for.

We've got a big.

Money move that you should make every month just to keep on track with your finances. So Frugal Friends podcast dot com and sign up for the friend letter.

It's free.

If that's the best part of it, absolutely, you just get more from us. So to get into this article, we're only going to look at once so that this comes from Healthy Rich. It's titled you Don't Need a Budget, How to manage your money with ease and joy.

Buy a friend ours Dana Miranda, which is exciting.

Dana was one of my editors at The Penny Order, which is a personal finance website I used to write for, and she has recently written a book that will publish in December called you don't.

Need a budget?

Go figure right, and I yes, And she asked me to endorse it, and I did because I think what Dana is doing the voice she has in personal finance. She's been a personal finance writer for a while, and she brings a she fills a gap. Yeah, that's been that personal finance has had so healthy Rich is Healthyrich dot Co is her website where this article is found.

And it's great.

Neither you, nor her, nor others in this space who are saying you don't need a budget are saying you don't need to be aware of your money or learn to manage your money. Well, it's kind of we're getting into a little bit of the show with what all of that means. Some of it is just vernacular and kind of approaches, but I think the overall message here is that there is flexibility in the way that this looks.

But I do like how the article.

Starts off with talking about what money management is and the top five things that matter when it comes to managing our money. And this is really helpful for me too, just to kind of get that foundational piece again of this is really what we need to be.

Concerned about when it comes to management.

When it comes to our money, whether or not we kind of get into the weeds on a budget the way that you might be perceived.

That's the way that you budget.

So the five things that you want to be taken into consideration when managing money is your debt, so that includes student loans, mortgages, credit cards, just kind of any any type of debt that you may have that's going to need to come into the equation.

Commitments is the second thing.

So that includes the things that you have committed your money to, like your bills.

That you're paying regularly.

The third thing is saving, so this is building up a nest egg for either future big spending, unexpected costs, retirement, you name it. Saving is a third category that we need to be paying attention to. The fourth is spending. So this is all of the other kind of peripheral things that we might be spending our money on beyond just your regular commitments of bills. This would be discretionary spending.

Yeah, and so once you have these five categories kind of under control, not under control, but like once you are satisfied with these five categories, then I don't think you need to have a strict budget anymore unless you enjoy it. The thing is is on your way to getting to these to managing these five categories well, that is where a budget is useful.

That is where a spending plan is useful. We talk a lot about having singularity in your goals.

When you are focusing on a lot of different goals at one time, like getting control of your spending, increasing your income, paying off debt, YadA, YadA, then you don't make a lot of headway in any of them. But when you can take a season to focus on one goal at a time, and it doesn't have to be I focus on this goal only until it's done, and then I move on to the next one. That's not

So for debt, we know that.

It helps you allocate more money to debt intentionally. So I think the problem where we're going to go. Her next part of the article is why budgets don't work. A big problem is that budget culture says that we have to be perfect with our budget, that we have to do all the things right at the same time, but we don't, and that is a big reason why budgets don't work. So budget culture definitely, it rewards restriction and deprivation, which are unsustainable, and this is unhealthy budget culture.

There can be such a rigidity and astaticness to budgets. I still think that there's personally so much room to make it what you want it to be. But for how budgets are typically understood to be, absolutely this is so true. One of the other things that they point out is that oftentimes budget it plays into this myth of wants versus needs. They describe this so well that and we talk about this too in our book, that it can be really hard to distinguish between.

What is an actual want or need.

Many times within budget culture, one of the first things that an expert is going to tell you to do is well, figure out what your needs are and prioritize those to be spending on food, shelter, clothing, you know, transportation, whatever it is that your needs are. But then it gets so into the weeds, because how do we then define well, yeah, so my need is food, but just the food is the food allowed to be tasty?

How much am I allowed to be able to spend on the food? Should I? Am I allowed to have variety?

Right?

Like, we can spend so much more.

Than we actually need to on food, even though food is a need. Sometimes it's our category of biggest spending, beyond our housing and transportation because of all the things, all the extras that we might add.

On to it.

And so I think I agree with kind of what they're highlighting here that it's not so simple, it's not so black and white to just say, well, what are your wants and what are your needs and cut out some of your wants and only go for your needs. It's like, well, but to what degree am I able.

To meet my needs?

Which is why again, values based spending is just so much better because it's that blend of wants and needs. It's the recognition of of our hierarchy of needs. We have many different types of needs, not just our safety needs. We have this needs, needs for belonging, needs for self esteem, self actualization, and being able to allocate some money towards all of those various types of needs, maybe to different degrees, is important.

And so we need a whole.

Lot more flexibility than some of the again rigidity that the typical budgeting offers.

Yeah, I love the conversations of wants versus needs because when we think of needs, we think of great depression level like bare bones needs, when really, when we look at that hierarchy of needs, yes, food shelter, they're at the base, they're the biggest, But we do need self actualization,

Do I want one?

Yes?

Yes, I want a new laptok that looks pretty, functions a little bit better, maybe you know, has a few more features that this one doesn't, and I want it, And that's okay. But so often we will say, like I need something because of this, and we'll try to justify it to ourselves when really it's a want, and we don't want to say it's a want because we don't want to feel like the type of person that just like we're places things willy neely, like we're irresponsible

Person, and you can spend on both. Yeah, this is what we're saying here. You can acknowledge it as a want and still be able to spend on it if doing this intentionally, not impulsively, and aware of kind of all of those money management pieces and strategies. So let's get into the second part of the article where she kind of gives us specific tips on ways to be able to manage our money without budgeting. So again we are still we are still managing money, just not with a strict budget.

So the first one is to map your money.

So for you, if budgeting is creating a ceiling for how you can use your money, money mapping is opening a door to the outside and discovering the guy's limit how you can use your money instead. So money mapping focuses on the big stuff, the things that really matter, not necessarily on your tiny little spending that happens occasionally, your coffee, your little treats.

That kind of a thing.

Mapping your money gives you that financial snapshot so you can see how it fits into life in a bigger way. So a money map will help you to know what's coming in, where's it going, what are you working towards, and what's free to spend. Personally, this does feel like just a little bit of vernacular, right like instead of calling something a budget, we call it a spending plan.

Instead of calling it a budget, she's calling it money mapping.

Like there is no world where, at least in the beginning, we're not going to sit down be aware of our money, aware of our transactions, and potentially have some sort of document or piece of paper in front of us where we are figuring out how is this all going to work for my income to my expenses and what comes in and what goes out. We have to be aware of it if we're going to manage money. Well, you

Where's it going? Why are we working towards what's free to spend?

Yeah, I mean it's when you are thinking about those five categories of money management and you are focusing on one at a time.

This is a tool.

A money map, a spending plan, whatever, is just a tool to help you reach that goal faster. So reaching that goal, you can reach it at any speed, right, and so a budget will just.

Help you reach it faster.

So if you're trying to reach a goal faster, you want to incorporate a budget. If it's just something you're kind of breezing with, just like if you feel good with all five categories and you're just breezing, then maybe it's not a tool that you need to utilize right now.

So look at it that that way. It's only a tool to help you get more of what you want.

So the second one is use a yes fund, And so Dana says her yes fund strategy for money management is basically a metaphorical bucket for your spending money that has no limit. So this is kind of using the psychology that restrictive limits are impractical, because as soon as you say you can't have something your brain automatically wants it. So let's work with our brain instead of against it

Is this right here?

So for data, she just kind of goes over the metaphorical bucket, and I think our book kind of takes this a step beyond that and says, Okay, the way that we don't, you know, the way that we can operate within this without deprivation is by identifying our values. So let's identify what values are. Let's identify how important they are based on a hierarchy of needs.

Let's figure out how we.

Want to spend within them, how we want to get creative without spending, and what we want to.

Say no to.

And so that's what buy what you love without going broke is all about, is how do we figure out which metaphorical buckets to pick so that you can have no limit on it, but you're also equipped with the tools to acquire.

Those values without spending.

And then you're also equipped with the tools to say no to all the things that lie outside of the metaphorical bucket.

The next one is to automate everything, which I could not agree with more.

We love automation.

So whether that's your your credit card payment, now you can automate your credit card to be the balance, not just the minimum payment.

Your bills, your rent, mortgage, you name it.

If it can be automated, we recommend that it takes a lot of the decision fatigue out. It takes a lot of the needing to be in the weeds with your money regularly. And they make this caveat, and I think it's a great caveat to have. This is only going to work if you do keep a relatively hefty amount of money in your checking account.

This is going to play into your.

Own knowledge of how much money do you bring in every month, how much money goes out every month and keeping about that monthly amount within that checking account so that you can set it and forget it and you don't have to worry about, oh no, is there going to be an overdraft fee? Is there enough money happening?

M hm.

I'm going to skip down to number five and that's keep a diary temporarily. So coming back to the money management part, where a spending plan will help you achieve your one goal faster. I think before you keep a budget. A budget is not step one, and that's what a lot of people get wrong when they're saying, how do I start managing my money? You start with a budget, No, you don't start with a budget. First, you start with a ninety day transaction inventory, which we talk about in

This mood, or I'm feeling this way.

This is what I spend money on, and you're learning more about yourself without judgment.

First we do that.

Then we keep a spending diary temporarily. It's because it's a lot of work to keep a spending diary, because we spend a lot of money, you know, like every day and some and it's good to be aware of how often you're pulling out your card. That's one of the points of the spending diary is to make you aware in real time what you are doing and how much you're doing it. So it'll take you a day or two to do your transaction inventory. And so Dana doesn't really give a time period.

I would say four weeks, like four.

Weeks one month is a good amount of time to keep a spending diary, and she gives a few recommendations for how to do that. You can at the end of each day look at your bank account credit current transactions.

You can do it in real time. You can do it once a week.

If that's something I would say, if you're going to do it those first four weeks, try to do it either in real time or at.

The end of each day.

I'm not saying unless you're doing this like longer term, to do it every like five to seven days.

But write it down pencil or pen and paper in a notebook you already have.

Don't buy a new notebook for this on scrap paper.

That you already have or your notes. Yeah, for four weeks. Then once we do this, then we start a budget.

That's when you can make a realistic budget, a realistic spending plan, a realistic money map, whatever. That's when you can start to make one that's realistic, that's going to work for you, is not going to create more shame and guilt.

Yeah, I'm going to combine six and seven, because I think that they go in tandem, and it is get to know your money mindset and name what matters to you. So first, when we talk about money mindset, you know us we love this. We love to start with our thoughts and our emotions before we move to our behaviors. And so we wholeheartedly agree with Dana on this one of understanding where we've come from and where we want

You've heard us talk about getting curious with ourselves.

That curiosity can absolutely be blended into that money diary. That's how opening the ninety day transaction inventory can really help us understand how are we viewing money, how are we approaching it? What do our behaviors say about our money mindset? To understand ourselves with a very neutral lens, that none of us is right or wrong, good or bad, It just is. There could be some shifts that we might want to make.

But we don't have to be.

So concerned about that just yet, but just to understand what's our money mindset and then what matters to us. As we're understanding what we're spending on, what our money mindset is, what are we then seeing is most important to us, so that we can then be engaging in some of that conscious spending, that values based spending on the things that truly matter when we need to spend on those things. Again, many times we can meet our needs, various levels of needs, not just our safety needs without

The next one for me is pay yourself first. And this is what most of your favorite personal finance experts are doing. It's the it's the method, your favorite, it's the favorite method of your favorite personal finance expert.

There we go. It's spending on all of.

Your commitments, paying all your debts, so your mortgage, car whatever, paying all your bills, doing all your retirement savings and your sinking funds. All that done and automated, sat on the same day as your payday if you can. We don't do it all on payday. We just like have it figured out that it gets done. But getting all of that out of there first and knowing how much you have left over, and then you can spend it any way you want.

You can spend it.

Any way you want throughout the month. Once you've paid yourself first and you have you have invested in all of those categories to manage your money, well, then you get to spend whatever's left however you want, down to zero and whatever. And so this was really great for me to discover and practice because I was the type of person that always had to spend down to zero. If there was money in my account, I had to

Well, that ties in with ten. I'm going to skip over to ten. I might make a comment online, but avoid restriction and deprivation. We are not about that, and that's pretty much what we're pushing back on entirely with the typical idea of budgeting is how restrictive and depriving it can feel. We've talked a bit in the past about how some of the decisions that we need to make around our money based on what's coming in and what's going out.

There might be times where.

There is sacrifice, or maybe we would have wanted to do something, but because of all these other goals and values that we've chosen to prioritize, we're going to have to say no to that.

But it shouldn't feel like deprivation.

It might be a sacrifice, and hopefully only for a time when we can kind of morph and shift, because as we've said, we can value anything, we can love anything, but most of us are not going to be able to love all of it all at once, value all of it all at once. There is going to need

So it's going to be easier for me to say no.

It'll feel like a sacrifice, but it won't be ultimate restriction because because I am still getting some of these other things that are both wants and needs in these other categories. Then I can recognize I don't need it all, I don't need to collect it all. I'm able to say no to this because I know that I'm getting this higher priority, higher need met over here with my money.

Yeah, yeah, you know what, I just really want to talk about this like much higher need that's even more than a budget, and it's going to help us get to all of our financial goals faster. The bill.

That's right, it's time for the best minute of your entire week. Maybe a baby was born and his name is William. Maybe you paid off your mortgage. Maybe your car died and you're happy to not have to pay that bill anymore. That's bills, Buffalo bills, bill clon. This is the bill of the week.

I can in jail. This is Penny from Beautiful Victoria, BC on Vancouver Island. My bill of the week is that shopping malls are for more than shopping. I recently made a spring wreath at my shopping mall that looks beautiful in my kitchen. All supplies and instruction were free, and I had a wonderful time being creative. I suggest your listeners sign up to their local shopping mall newsletter to find out more about free events happening at the mall.

Okay, Penny, that Canada kind of doing it up with the shopping mall.

So I do wonder if Canada is just may better.

Yeah, but I mean still, we always say, like sign up for your city's email, or your neighborhood's email or wherever some kind of local email because they'll have free events like advertised. Yeah, if you're nervous about signing up for a shopping mall email, then figure out where would that shopping mall advertise its events, Like which newsletter would.

It advertise in? And subscribe to that?

So yeah, yeah, free love free events while you're finding them on Facebook local events section. I also know libraries. We love we leve a library. They will often do events like this, whether it's a crafting event. Sometimes they'll even bring in speakers to talk on various topics. They'll do something themed around insects that there's an insect of the month, fell like a learning time.

I love the insect of and is.

It home depot the first Saturday of every month will do a craft for kids that's very fu yes, like.

They give your kid a real hammer.

Like it's it's dangerous, dangerous and they love it. But a free activity, yes, we love free activities. Thank you so much Penny for sharing that. If you all have a free activity to share with us, whether it's unusual or just fun or creative, or you're just out here being Bill.

And you want to tell us about your life. Maybe times did an activity and your name is Bill.

Just any activity through overspodcast dot com, Slashville.

We can't wait for it, and now it's time for ye all right.

So in the last five years, what has changed about the way you manage money? And I'm not even in the last what We've been hosting this for almost six and a half years. Maybe what's changed about the way you manage money? You go first, So in the last six and a half years, I have had two children, right, and so I think I have become more aware of using money now versus hoarding it away for later.

Yes, the saving.

I am glad that we decided to focus on our retirement savings very strongly before we had kaien Atlas, because now I get to have all that money sit in our ira and our iras and build compound interest and I can feel more permission to spend money now that my kids are with me and they are at this age, and so that's why I that's one of the reasons that I think focusing on individual financial goals in individual seasons one at a time is so so so valuable,

Yes, that's so great. Would you say that there ever was a.

Time that you were more budgeting and like the typical way of a budget in like six years ago, Was that the case when you were paying off debt and stuff.

Before we had kids.

Yeah, up until when we were paying off debt, it took us twenty three months to pay off seventy eight thousand dollars of debt. We could not have done that in that amount of time, for better or for worse, without a budget.

Like that budget.

Making that budget every month, keeping up with it every week was what allowed us to pay off our debts so fast.

Ye, Like we weren't.

Making super high incomes. We never broke six figures combined when we were paying that off. But it was that laser focus on that one goal and then also using the tool of a budget to just help with our laser focusness, focusedness, yeah focus, yeah right, no word so so.

Yeah, no, we needed it.

And then after we did that, we went straight to investing and putting as much as we could into four to one K and two iras to the point one year. Like we only did this for maybe two years. Yeah, we only did this for two years. But at one point one of those years we maxed out both a four one K and two raw irates and that's a lot. I actually went my the HR at my work came to me and was like you put a hundred, like one hundred percent like of out like of max of the.

Four one k max, Like are you sure? Did you mean to do that.

Did you mean to do like ten or twenty percent of them? No, I want to do all nineteen thousand for the year. And so, yeah, we were able to do that because that's what we were focused on, and we knew that doing this now for just a couple of years and focusing on it for a couple of years would have greater benefit in the future than anything else we could.

I know, it's so great.

And we knew we weren't like Fire, you know, weren't Fire fanatics that wanted to retire in our thirties. Yeah, but we did, you know, embed ourselves in that community for a few years to get to the place where.

If that message could be given to the people in their twenties. I feel like, and now you don't always have the level of income where this is possible, but I feel like more people do need to be aware of this and that it's you're not necessarily locking yourself into doing.

That then forever.

Right, you're able to do it for a couple of years when you're pretty young and you don't have a whole lot of other commitments for your money, it is so good, potentially better than really going hard and paying off your yet when you're super young.

Yeah, and it's hard for people in their early twenties to recognize that if they do, more power to them, more power to you. But I think from twenty five to thirty, what a sweet spot. If those five years can just be spent paying off high interest debt if you've got it, or avoiding it ideally and just investing, Like focusing those five years on investing, you will.

It will be life changing. Life changing. That's cool.

Yeah, Uh. For me, the things that I've changed in my money management, I think there was a time when I was doing cash envelope system, although I think I had been. I had done away with that by by.

Six because having cash makes you want to spend it, you.

Said, personally, Yeah, it didn't really work for me, and it was too cumbersome to manage the change and the dollars and what to do, and like it wasn't as easy to kind of maneuver and strategize the money as it is when when it's just kind of more so tracked digitally. It worked for me for a time and then it didn't end. I moved away from that method. I would say, as far as one of those top five things that correlate with money management, between debt commitments, saving,

I suppose maybe five years ago. I should actually do the math on that.

So not having that debt anymore allowed me to then focus on investing more, being able to allocate in that direction. That's certainly a new thing for me in the last five years, and thanks to.

You, I probably still would not be invested.

I've never worked for this friendship, this podcast, but yet I still you all know this. I still am looking at my money bi weekly, so it's not every day. I'm not in the deep trenches and weeds with it, but for me being able to look at it twice a month and know where's the money going. And more so, I am very aware of my expenses so I don't have to check in with a spreadsheet when I'm out pulling out my credit card. I know how much I

It's kind of fun to be able to see, ooh, what is my money able to do for me? Well, thank you so much for listening.

And I hope that this has been inspiring to you to a keep budgeting because you know you won't have to do it forever and it will get you to your goal faster, or be to not feel guilty because you're at a place where you feel confident in your finances and you don't have to budget every month, like you can do it every other month or whatever feels.

Right to you.

Like as long as you feel confident about your money, the budget is supposed.

To help you feel confident.

You know.

If it doesn't do that, don't do it. We love reading your reviews as well.

We were so appreciate you listening to us, you leaving us and rating a review like this one from Jess Rad the best of the best, five stars.

I have been a listener of We're Girl Friends for a while.

Will out and we'll continue to come back. Jen and Jill are honest, informative, and non judgmental. I have felt fear and shame with the guy that everyone begins this journey with, but here I feel empowered and.

Like I actually am making progress.

And even if that progress is sometimes small, finance effects can be big and scary.

But Jena Jill make it all make so much sense.

Thank you.

Oh my god, I love the quotes that begins this dream. Yep, we appreciate you.

Just so some of us move beyond cash envelopes and into just no budgets.

And we just let our freak flag fly. We just little Harlot. So yeah, speaking of.

Poor gospel. If you enjoyed the show, please take a minute to leave a rating interview. It helps potential new listeners know what our show is all about. And if you're a Harlot then you know you're in the right place because is for you see it's time.

Frugal Friends is produced by Eric Sirianni. I want to say something about money, but what said I do? What a We're at a loss for words on this after show.

I don't have any more like cider stories to share with you. So oh well, we're I guess we're kind of burying the lead. What did we get in the bail this week? We so quickly forget the just goes so high.

And then just if you can't, if you're listening to this, you're wondering what our little lion cub is.

It is the uncorrected proof or galley copy of our book by what you Love without Going Broke.

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Oh?

Yes, it is very fun to have the tangible copies you the words come to life.

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And then it's something our editor had like a problem with because we didn't put enough stories.

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About some back to back like, yeah, some from your some of your favorite creators on the internet, and it's just beautiful. And we didn't get a video of the box opening because Travis was like, oh, you got a package. And he just opens it up because we have no boundaries in our relationship, you know, So he just opens it.

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That's my book. What are you doing.

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