Jordan Wathen, columnist for Motley Fool, offers a unique perspective on managing personal finances.
Give up budgeting for 2018 and do something else. It is a waste of time.
Budgeting is a great way to know where your money goes and where it ends. Budgeting is time-consuming, distracting, and costly.
A budget is a plan that is idealistic. This is it. This budget is not recommended for saving money for the future, paying down debt, or putting cash in your savings account. Budgeting is basically about putting in writing your intentions to spend money in a specific way with the goal of saving money.
Budgets that address the problem incorrectly are most likely to fail. Saving first is a better option. This will allow you to adjust your spending to meet your savings goals.
Personal finances can be reduced to a simple equation. Financial success is determined by the difference between your earnings and your expenses. Your financial success will be determined by the amount of difference you make between your earnings, and your expenses.
I don’t budget. I keep track of my expenses. But it works because my priorities are clear. It is important that a certain percentage of my earnings automatically transfer to my savings account. This happens without me even having to think about it. Automation allows me to think about how I will spend the money instead of worrying about how to save it.
Do not make a budget. Instead, set a savings goal for 2018 in absolute numbers or percentages and automate it. Make saving a priority. Your expenses should match your savings.
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