Most of us understand that following a budget is important. A major aspect of financial health is living within (or below) our means. This means having a budget and sticking to it. But still many of us don’t know how to budget or don’t consistently follow it. Even with the best of intentions and the fanciest of budgeting spreadsheets, many of us still fail to follow through with proper budgeting.

If this speaks to you―read on to learn how to budget without a budget.

How to Budget  Without a Budget, A Practical Strategy

If you’ve struggled with budgeting this simplified and practical strategy may be for you!

Even this practical strategy is not without legwork up front. It is absolutely critical that you know what your income is and are clear on the reality of your spending.

Simplified Financial Benchmarks

Instead of breaking down your budget into categories like housing, savings, food, entertainment, this simplified budgeting methods deals only with simplified financial benchmarks.

Monthly Minimum

Your monthly minimum is the actual cost of living your life, counting only necessities. You can think of your monthly minimum as your make or break number. This is the figure you must earn in income just to cover your bare-bones living expenses.

  • Calculate your monthly minimum by adding up the costs of your necessities, including housing, insurance, and food. Remember to include expenses that occur annually instead of monthly. To calculate the monthly costs you can divide necessary annual expenses by twelve.
  • Once you have your minimum monthly of your actual expenses, then add in a buffer of at least 10 percent. Life necessities are expensive and prices often increase.
  • Next, add in the amount you want to save or use to pay down debt. Adding this figure to your monthly minimum prioritizes your financial goals.
  • The monthly minimum figure is also an excellent financial benchmark for people with inconsistent income to use, like business owners or freelancers.

If your income falls below your monthly minimum then you are living beyond your means. If your income is above your monthly minimum, the extra is discretionary funds that can be spent on things beyond necessities, like an evening out with friends.

Discretionary Spending Priority Point

Your discretionary spending priority point is your monthly minimum plus the monthly costs of discretionary, non-necessity expenses that are a priority to you.

To properly calculate this financial benchmark you will have to be honest with yourself about what expenses are a priority to you and what expenses you can forego. For example, paying for ice skating classes or dinners out with friends may be important to you. But when you really think about what matters to you, you may find that your gym membership or $5 daily lattes are not priority expenses.

Just as your minimum monthly accounts for annual expenses, your discretionary spending priority point should as well. Don’t forget to include the expense of giving holiday gifts or attending a friends destination wedding.

If your discretionary spending priority point is higher than your monthly income, then you are living above your means and you need to re-evaluate what you’ve included in your priority expenses.

The Kitchen Sink Point

Your kitchen sink point is what your monthly cost of living would be if you spent money just as you wanted to― if you included everything and the kitchen sink. This number includes your minimum monthly, your discretionary spending priority point, and everything else you would spend money on. It is likely that your kitchen sink point will be higher than your monthly income.

Spend Within Your Benchmark Numbers

Now that you’ve defined these three benchmark numbers, keep your expenses within these numbers. Most often keep your expenses between your monthly minimum and your discretionary spending priority point. This is how we budget without a budget.

This approach ensures that your necessities are covered, you are saving or able to pay down debt, and you still have flexibility in how your money is spent.

You will still have to track your income and the number of your expenses to ensure you are earning enough money and not over-spending. Each month you simply compare your totals with your defined financial benchmarks. You do not have to use complex budgeting systems or adhere to spending within defined categories.

Are you are struggling with massive debt?

If you’re deep in debt, have fallen behind on payments, and your credit card debt is mounting, it is time to take back control of your finances.  Take an honest look at your situation. It may be time to explore all of your debt relief options, including bankruptcy.

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Meet with us for a free, no-obligation consultation. Call us at right now at (912) 351-9000, or email We are here to help you evaluate if bankruptcy is the right choice for you.

Find out more about being debt free in our guide: All About Debt Relief

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