Since I’m still pretty new here at CFB, I’ll forgive all you guys for not knowing a little secret about me. And since we’re all pals, I’ll tell you. Lean in real close now.
I’m lazy.
I’m not just a regular amount of lazy either. I’m so lazy I’ve been known to eat meals directly from the pot to avoid dishes later. I once didn’t cut my grass for an entire month, only giving in when a neighbour yelled at me over the fence. I’ve been known to not shave for weeks at a time. I really have no idea how I’m still gainfully employed. I’m clearly just eye candy for the ladies of the office.
My laziness almost knows no bounds. Like all of you though, I want to get ahead financially. What’s a lazy fella to do? Do I sacrifice one for the other? Do I have to make a budget and stick to it, like just about every financial guru tells us to? Hardly. In fact, I’m here to tell you that being lazy can actually be good for your financial picture.
Let’s talk specifically about budgets. Many of you probably have one, in some form or another, in varying degrees of detail. Some people use a cash system, allocating cash for each budget category. Others use spreadsheets or one of the many different finance pieces of software to track their spending. If you use any of those budgets and it’s working for you, then keep using it. Getting ahead financially is the important part, how we get there is but a minor part of the journey.
This is why I don’t have a budget. I’m too lazy to spend time figuring out how much money I want to spend on any of 25 categories. I’m too lazy to rob money from one category when I run short in another. Luckily for everyone, there’s a much easier way. It’s so easy I can explain it in just one sentence.
All you need to do is pay yourself first.
If you want to save 10% of your income, just set up an automatic withdrawal each time a paycheque enters your account. Any bank can set this up for you in a matter of minutes. The 10% magically disappears instantly, off to some other account that’s earmarked for investment. Then, feel free to spend the rest. I don’t care what you spend it on either. Have a fancy for Starbucks? Drink away. Just make sure you don’t touch those savings.
Once you set up the automatic transfer, all the work is done. Paying yourself first is the easiest way to get yourself to start saving money. The simplicity of paying yourself first is the real appeal to the plan. A lot of people start a budget, do great for a month or two, and then fall off the wagon. Either some unexpected expense comes and busts a budget category, or the person making the budget gets tired of the work. For whatever reason, the budget fails and the person making the budget is back into financial difficulty.
Unless you’re some sort of budgeting master, you have 10% worth of wiggle room in your budget. If someone has $500 to last them until next payday, people are generally pretty good at making it stretch the amount they need. When faced with scarcity, people find cutting out extras easy. So why not artificially create yourself some scarcity?
People are typically bad at determining the difference between wants and needs. I’ve seen budgets that have an allocation to things like manicures or golf. I understand we all have our vices, but these vices directly cut into savings. If you have to make the choice between golf and food, usually food wins out.
I spend zero time every month figuring out what I can spend on categories. I know approximately how much money I can spend every month, and then do it. In the meanwhile, my savings are slowly accumulating in a different account, ready to be put to work in whatever investment I decide. It leaves me all sorts of time to play video games, hang out with my friends, or to sit around and do nothing, an activity I’m particularly fond of. If you’re so detail oriented you feel the need to know where each dollar goes, then maybe budgeting is the ticket. If you’re like the rest of us, people who want to get ahead using a minimal effort, then I’d recommend paying yourself first.
Remember folks, simplicity is best.
Related Posts:
Nelson Smith writes about personal finance, investing and all sorts of other stuff at 
I think budgeting is a good exercise for almost everyone to go through at least for a few months but after that paying yourself First and being frugal are much more efficient.
I look at budgeting as more of a short term learning tool. I’m also a bit inherently lazy.
I wish it were always so simple. However, access to credit can screw up even your approach Nelson. You obviously have an inherent discipline you did not mention. I met someone yesterday who routinely saves 10% of her paycheck, and routinely spends $2000 more than she makes every month !
I should have mentioned avoiding credit in the post, but I kinda felt it went without saying. I tend to write towards someone who is financially savvy enough to not have credit card debt.
I agree. Pay yourself first and then live within what is left over. It is important to be lazy in the right ways. If you’re too lazy to make something to eat at home and always eat out then that’s not good!
I agree with Ross, there is more to it than just whisking away 10% of your pay cheque and spending the rest.
See, my forgetfulness trumps my laziness here. Without my budget (which is actually a forecast of income and expenses) I would routinely forget about those non-recurring expenses that pop-up every few months.
And since I pay for everything on my credit card, the tracking is as simple as downloading the statement each month.
I’ll admit that I am getting lazier on tracking actual expenses, but I still like to use the big picture forecast.
I don’t keep track of those expenses that come up every few months either, but I manage.
I think that people are good at making ends meet when presented with scarcity. I don’t think they’re very good at budgeting. Most budgets fail, yet all the gurus keep suggesting them.
I approach my personal finances like a business. I used to spend hours putting together budgets and forecasts for my employer so that their business could make the most out of their revenues and reduce expenses. The way I see it, why wouldn’t I apply the same principles to my own finances?
Within my budget I allow for personal spending money that my wife and I can just spend on whatever we like without having to track every purchase.
Maybe most budgets do fail, but most people are also terrible managers of cash flow and would be better served to have some sort of tracking system to keep on top of their finances and to make and track savings goals.
You are right! I set up a payroll deduction to take care of my 403B, IRA and Roth IRA. I live on what is left and it reduces the need for a budget. My approach adds reducing expenses to an ideal amount and monitor by exception. It works for me!
Hey Nelson. Where can I get a job like that – where I can be just eye candy for the ladies at the office?
You have to be as good looking as me. Not likely.
10% wouldn’t cut it for me because when quarterly taxes rolled around, I wouldn’t have enough and if I spent all the money I have every month, the taxes would still go unpaid. I’m lazy enough, I’m not going to create a spreadsheet or any of the other elaborate ideas. I just keep a simple note saying how much goes into each account. I get paid and transfer it accordingly. It helps nowadays with banks that will allow you to have several savings accounts because these accounts will do your budgeting for you.
Good point about the quarterly taxes. For someone like you, I’d recommend 40% automatic savings, 30% for taxes and 10% for savings.
Online bank accounts make the transferring so easy. You don’t even have to talk to anyone.
Online banking really has made it easy to save automatically. For example, it’s really not that hard to save 2-3% of your cheque every couple of weeks for unforeseen expenses like a broken washer or something.
Sounds promising…at least for those with the right cast of mind.
I tried this. It didn’t work. I soon was spending way more than I had available after paying nondiscretionary bills and setting aside savings and self-escrows for the annual car insurance, homeowner’s insurance, and property tax.
After four or five months, I had to go back to the old system. Turns out that unless I know how much is left to spend on groceries, gasoline, clothing, and the like, I’ll just buy whatever I please whenever I please.
The monthly set-aside needed to cover taxes, insurance, and emergency savings is WAY over 10%, BTW. Mine is right at 25%.
Saving 10% is the base IMO. Save more if you can. Once the TFSA and/or RRSP is maxed out you can use the over and above the 10% to pay down debt in lump sums.
I have been doing this for over 20 years and it works great for me. Just like the comments above, people will criticize this type of money management. But, as long as you Pay Yourself First and then don’t spend more than you earn, you don’t need a budget. Who cares which category your money is spent, if you are getting ahead on every paycheck?
If you spend more than you earn, acumulate debt or don’t know where your money goes, you defeinitely need a budget.
The no-budget-pay-yourself-first idea is exactly what got me tens of thousands of dollars into credit card and consumer debt in my early twenties.
Today I probably could do a much better job of it (since I don’t use debt anymore), but I still think a budget is a good idea. I always recommend people get started with a budget for several months. If they eventually switch to your system, at least they have the skill to fall back on.
I guess the overall theme to the comments is that you’ve gotta do what works for you.
Hi,
I represent AutoSpace.co.za, a free cars classifieds website.
We ask that you kindly add a link to our website where you have linked to similar sites.
We are a valuable, free resource that your users will appreciate.
Our website info:
URL:
Title: Used Cars
Description: Free used cars classifieds website in South Africa, featuring used car search, cars by make, model, advanced search features and much more.
We would love to hear from you.
Kind regards,
Justin
Auto Space