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Think of an anti-budget | Allstate Blog



If you are trying to achieve a short-term or long-term financial goal, you want to manage your money carefully. Most of the advice you hear recommends that you create a budget.

So, suppose you write a list of your expenses, ranging from cleaning to lawn to pet. You calculate those costs and look for specific areas where you can cut back. When you finish this exercise, you decide that this is your budget, and each month you compare your actual expenses to your intended expenses. But no matter how difficult you try, reality cannot always fit the parameters of your budget.

There are a few months, for example when you might exceed the amount you set aside for restaurants and clothing, but this means that you have blown your entire monthly budget. The extra that you spent on restaurants can be partly offset by the fact that you happened to spend less in any other area, such as babysitting, gas or food. There are other months when you can spend too much in several categories and then there are months when you simply do not have the time to track your expenses on a spreadsheet.

After a few months you can conclude that budgeting is time consuming and difficult. If this is reasoning with you, you may want to try the anti-budget. It is a simple, discontinued version of a budget that cuts directly to the heart of the question: how much do you spend and how much do you save?

What is an anti-budget?

The functions against the budget only two categories: spending and saving. This is how it works.

On top of the budget, list your two or monthly income, after tax and wage deductions.

Then you decide how much you want to save. In this context, "saving" is a broad concept that includes paying your debts (in addition to the minimum balance requirement), making pension contributions, building your em emergency fund or stashing money into a money market account. Under the anti-budget, your "savings" are defined as any improvements in your financial life.

Once you have determined your target savings goals, transfer that money as soon as you get it. For example, let's say you take home $ 5,000 a month and you want to save $ 1

,000 a month, evenly between your retirement account and build your rainy day fund. Consider setting up automatic transfers for this money, as soon as you receive a paycheck.

The money left in your account after you have transferred your savings is yours to spend.

How to handle an anti-budget

To manage your expenses, your first step is to pay all your fixed bills, such as your rent or mortgage, utilities, student loans, car payments, cell phone and internet service. When your fixed bills have been paid, the rest is to spend what you want on food, clothing, health and beauty products, entertainment and everything else.

When you go to the anti-budget, monitor your expenses closely to make sure you don't spend more than you have for non-essential purchases. It may be helpful to stick to an all-cash lifestyle for fluctuating or discretionary purchases (such as food, gas, toiletries and restaurants), rather than using credit cards, at the beginning while adjusting to the anti-budget. You still pay for recurring fixed costs, such as your rent or mortgage, student loan payments, and insurance premiums, through a check or transfer over the internet.

The appeal for the anti-budget is its simplicity. If you feel overwhelmed by detailed and complex budgets, you may want to consider trying the anti-budget method.


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