A budget is a financial document used to project future income and expenses. The budgeting process may be carried out by individuals or by companies to estimate whether the person/company can continue to operate with its projected income and expenses.
I used to be a big proponent of budgeting, but after converting to a minimalist lifestyle, I no longer feel there is a need to do so. Let me explain why. The general philosophy I’ve adopted is that before I purchase anything, I determine whether or not it is a want or need. If it is clearly a need, then I don’t hesitate to purchase an item. If it is a want, then I determine if the utility I will derive from the purchase will improve my quality of life…and I’m getting pretty ruthless in really determining if the “want” is really going to be beneficial or if it is just some illusion being subjected on me by advertisers or marketers. What I have found is that my wants have diminished to a point where I hardly buy anything anymore because I just don’t like accumulating stuff. My aversion to having more stuff is so embedded in me, that I even don’t want free stuff.
So having sedated much of my wants and being content with what I already possess, that pretty much only leaves my needs that I need to fund – food, utilities, transportation, housing, etc. Since my expenses for these items are a fraction of my overall income, there is a substantial surplus remaining for saving and investing. I do set aside a specific amount of money every pay period for investing, but that is pretty much the extent of my budget. Could I possibly save additional money or better use the money I do spend by budgeting? Possibly, but doing so won’t materially change my life at all. By not having to maintain a detailed budget, the benefits is I save lots of time to put toward pursuits I enjoy and it greatly simplifies my life.
I am by no means swimming in money – I’m a civil service employee – but by adopting a lifestyle where acquiring possessions is a conscious decision, I have built plenty of space between my income and expenses allowing me the luxury of not having to maintain a budget. Even though I haven’t budgeted in years, my net worth has continued to grow to a point where financial independence is a real possibility for me – at age 40.
The point of this blog post is not to say you shouldn’t budget – it is a great tool and is beneficial to many, especially when the margins are thin between income and expenses. What I’m trying to say is that reducing and eliminating needless expenses and not buying crap you don’t really need, may someday put you in a financial position where budgeting may not be necessary.