Personal Finance Basics: How to Budget
Budgeting Is Easy. Sticking to a Budget Is Hard.
I will borrow and twist a Mark Twain joke, “Budgeting is easy. I’ve created hundreds of budgets for myself.”
Although a joke, there’s some truth in that, especially for me.
When I started my personal finance journey at 19, I created a few budgets. A few months later, I stopped following them. Then I’d make a new one… only to scrap it a week later. This cycle continued until I stumbled on something that finally worked: top-down budgeting, also known as anti-budgeting.
What Is Anti-Budgeting?
Anti-budgeting is beautifully simple. Instead of trying to track every dollar spent on groceries, restaurants, gas, subscriptions, and pet treats, you just:
- Decide how much you want to save or invest.
- Save that amount.
- Spend the rest however you want.
That’s it.
No categories. No spreadsheets full of colour-coded line items. Just a focus on hitting your savings goals and giving yourself the freedom to live with what’s left.
Why It Worked for Me
I didn’t know it had a name at the time, but this method fit my life perfectly.
Back in school, I had a clear rhythm: four months of classes, then four months of paid co-op placements. I knew:
- How much I needed to pay for school in 4 months
- How much I needed to live on while studying
- How much time I had left to save
- How much I was earning
It was a straightforward equation. I tried anti-budgeting for one semester and I’ve been doing it ever since. Nineteen years and counting!
My Simple Anti-Budgeting System
Here’s the framework I still use today:
1. Start With a Goal
What are you working toward? Retirement? A car? A house down payment? A vacation? Define your “why” clearly.
2. Know How Much You Need
Quantify your goal. How much do you need for that vacation or retirement fund? Set a real number.
3. Identify Fixed Expenses
List the non-negotiables: rent or mortgage, daycare, car payments, insurance, etc.
4. Add in a Fun Budget
Saving is important but if it feels like punishment, it won’t last. Give yourself a monthly “fun” stipend. Mine was $100/month for years. In 2021, I bumped it to $150. This covers hobbies and the occasional indulgence (hello, overpriced coffee).
5. Set a Realistic Savings Target
Now subtract your fixed expenses and fun money from your monthly income. Whatever’s left can go toward your goal. That becomes your savings target. To figure out what your target should be, take your goal amount and divide it by the number of months you want to get there. But make it realistic!
6. Save First
Notice how I haven’t mentioned groceries or gas? That’s intentional. I always save first and then figure out how to live on the rest.
7. Spend What’s Left
One of my earliest memories of this approach -I bought a 10-lb bag of onions for $0.79 and a tube of anchovy paste for $0.50. I made onion soup and lived off it for days. It wasn’t glamorous, but I hit my savings goal that month.
8. Calibrate Over Time
Okay, maybe onion soup week wasn’t the healthiest or tastiest strategy. Eventually, I realized that it’s okay to enjoy life a little. Maybe you delay retirement by a few months but gain 20 years of enjoyable lunches. Find the balance that works for you. This is where the “personal” in personal finance comes into play.
9. Repeat
Keep saving first. Keep adjusting. Keep going until you hit your goal. And then? Celebrate.
One Final Tip: Track Your Spending
This isn’t the same as budgeting, it’s just about awareness. I like to track my spending to identify patterns and catch lifestyle creep early. You don’t need to obsess over categories, but a bit of tracking can go a long way. Pattern recognition allows me to calibrate sooner rather than later. Often this means increasing my savings target. Although once it went the other way…you know when you finally decide that you can’t keep two kids and work in a 600 sq. ft downtown condo and your fixed costs increase.
Final Thoughts
Traditional budgets are like New Year’s resolutions - full of good intentions, but hard to maintain. If detailed category tracking has never worked for you, give anti-budgeting a shot. It’s flexible, simple, and surprisingly effective.
Save first. Spend with intention. And don’t forget to enjoy the journey.
