How to Budget Without a Budget

How to Budget Successfully Without a Budget


For some people, a budget is a transformative tool that empowers them to meet their goals and build a life on their own terms.

For others, dare I say most of us, it’s another one of those things we know we should have and follow, but repeatedly fail to execute once we’ve mustered up the latest round of willpower to start … like my many failed attempts at daily meditation.

Sure, I have every intention of zen-ing out, working in an uninterrupted flow state and knocking out my to-do list before noon each day, but inevitably, I reach over to my phone to check the time and lose total control from there. By the time I get caught up on email and social media, it’s time for lunch and nothing I had planned has been done.


Similarly, budgets can be mapped out and structured with the best of intentions, but the busyness of life takes over – leaving our beautifully designed budgeting spreadsheets empty and abandoned, serving only as a reminder of our failed follow through.

While I haven’t quite figured out a way to hack my failed attempts at productivity, I have successfully implemented a practical strategy to budget without a budget.


Like most budgeting methods, this approach requires a bit of up front work to get started, but unlike your typical budgeting practice, this spending plan is simple to maintain. So here it is, the full rundown on how to budget without a budget….


Know Your Numbers


Rather than driving yourself crazy calculating what you have left over to spend in each expense category throughout the month, keep things simple by defining a few key numbers for yourself.


Your Make or Break Number 


The make or break number is a marker I typically introduce to those with inconsistent income, but it can prove a useful measure for anyone.


Essentially, it’s the monthly minimum, no frills cost of running your life.


Here’s how to calculate it:


  • Calculate your bare bones total – the monthly cost of your necessities. That is, anything you need to live and work normally.
    • Yes – food, housing, insurance, etc.
    • No – entertainment, beauty treatments, social gatherings, etc.
    • Remember to include quarterly and other irregular, essential expenses by dividing the total annual cost of those necessities by 12


  • Add a buffer. Life has a tendency to be more expensive than we anticipate. Add a buffer of at least ten percent to your monthly bare bones total.


  • Add monthly financial goal targets. How much do you want to save, invest and/or use to pay down debt each month? Include these financial targets in your make or break number so that they become as non-negotiable as your other essential expenses.

Grab a free copy of the goal setting and getting workbook to calculate your monthly financial goal target.


[tweetthis]Include financial goals in your monthly spending plan to make them as non-negotiable as your essential expenses [/tweetthis]


Bare Bones + Buffer + Monthly $ Goal Targets = Make or Break Number


The make or break number isn’t a budget, it’s a benchmark for the financial viability of your life.


It takes into account the cost of your essential needs while keeping you committed to your long-term financial goals.

You don’t need to plot out exactly what and where you’re spending each month, but you do need to commit to earning at least as much as your make or break amount.

If your income falls short of this benchmark, you’re living beyond your means and have two choices – reduce your bare bones expenses and/or increase your earnings.

If you surpass your make or break number, simply subtract it from your earnings to calculate how much you have to spend on discretionary expenses, i.e. wants – a new pair of sunglasses or boozy Sunday brunch for example.





Your Priority Point


In addition to the make or break number, I recommend getting grounded in another simplified financial benchmark – your priority point.


Your priority point is your make or break number plus the monthly cost of any discretionary expenses you consider a personal priority – like a gym membership or classes for advancing your career.


Be honest with yourself as to what constitutes a true priority. Sure, certain social gatherings may make the cut, but maybe not every social gathering.


The key is to identify your primary values and add the monthly cost of those few items onto your make or break number so you have a concrete benchmark for the cost of living a life built around your top values.


Again, once you’ve defined this priority point, you can easily subtract it from your earnings each month to get a sense of how much flexibility you have with your remaining discretionary spending.


Note: When calculating your priority point, be sure to consider the cost of any one-time or some-time priorities – a best friends’ wedding for example, or trips home for the holidays. You can either break these inconsistent costs into monthly amounts or readjust your priority point each month depending on what’s at the top of your value agenda.

Final note: Your priority point should only include your priorities, not what others think your priorities should be. While flying home for the holidays may be a priority for someone, it might not be for you, and that’s totally fine. This number is reserved for you and your core values, you can finance the rest with what’s leftover (if you so choose).


Your Perfect Plan


You’ve already calculated a benchmark for funding your core needs and a benchmark for affording your top priorities, but what about the rest?


If you could spend money exactly how you wanted each month, what would your total monthly cost of living be?


Don’t forget to include any irregular or annual expenses divided into a monthly amount.

It’s totally possible, if not likely, that this number will be higher than your monthly income, and that’s okay. It’s good to have an understanding of how your goals manifest in tangible terms.

If you find that your income isn’t alignment with your perfect plan, it might be just the motivation you need to work toward boosting your earnings.

In the meantime, stick to your priority point or make or break number and …


Work the Spread


With these benchmarks defined, you don’t have to worry about the intricacies of a budget, you just have to stay within the spread – that is the discretionary amount between your benchmark and your monthly earnings.

This simplified system of financial accountability supports sustainable financial wellness by grounding your life in tangible numerical benchmarks, while still offering freedom and flexibility in your spending choices.

To implement it however, you need to know the reality of your spending and earnings numbers…


Evaluate Your Spending


You don’t have to subtract each expense from a pre-set expense-specific allowance, but you do need to know your actual expenses and your actual earnings – not some estimation of what you think they are. Fortunately, this is super simple.


You don’t have to get fancy with complicated budgeting formulas, you can literally just write down your spending and earnings and see how your totals compare with your financial benchmarks each month.

Or make it even simpler by using a financial tracking software to get an automated record of all your transactions.


With your benchmarks defined and your actual spending and earnings laid out in front of you, you can spot discrepancies with ease and make necessary adjustments to stay accountable to your financial goals, without painstakingly combing through each expense category. No need to get caught up in the details, or lose yourself in frustrating formulas that make you want to abandon your budgeting efforts altogether.


To enjoy the benefits of budgeting that enable you to build a life on your own terms without the familiar frustration of failed follow through, try this simplified system to budget without a budget.



6 responses to “How to Budget Without a Budget

  1. I love this type of budgeting! I have an inconsistent income working for myself so figuring out our needs, saving goals and then the other extras really helps. Plus I don’t have to drive myself nuts nickel and dime-ing each day.

    1. Same. I just subtract my make or break number from my last months’ income to know how I much I have to leftover to spend on the fun stuff 🙂

  2. This is awesome Stefanie. Kinda similar to what I do but you added some memorable terms!

    I used to use a budgeting software a few years ago and while it was empowering in the beginning, it just got really tedious after a while. And I’m the type of person that needed every dollar accounted for so if things didn’t match up I would spend tons of time looking for the discrepancy. Not very efficient!

    After using the software I found I had a decent amount of money left over each month, so I worked backwards by setting my savings goals and making them automatic every month. Anything left over I could do whatever I wanted with. Much less hassle than using a line item budget.

    1. Agreed. Line item budgets can be so tedious. I think what’s most important is that everyone find the system that works best for them, instead of giving up when one method doesn’t work.

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