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Why I Burned My Budget

and why you should too...

A week ago I was sitting in a board room explaining next year's budget to a group of people staring back at me on a television screen. I explained the difficulty in annualizing 2020 numbers with the ongoing pandemic, let alone setting targets for 2021.

The budget is a total crapshoot. They know it, I know it. They passed it anyway because a budget must be passed.

I don't have any control over the procedures of a $50M+ company, but I do have control over my own processes at home. Listening to the Audible version of Rework by Jason Fried solidified it for me: We don't need a budget.

If you don't have a plan for the money in your bank account today, or for the next pay day, what good is a budget going to do you?

Burn Your Budget pinterest pin

Instead of a budget, I'm focusing on how to spend my next paycheck. I'll do that in 4 ways:

  • Plan how much to spend in 5 buckets. (more on this below)
  • Track our actual spending using a simple ledger.
  • Compare the results to our plan.
  • Identify 1 to 3 areas to improve on for the next pay day.

A ledger is simply a record of what you spend.

Think about it.

You could have a detailed budget for the next 12 months, but if you don't pay attention to what you're doing with the money in your account - right now - you will continue to struggle.

Focus on a plan for pay day, and then track your spending on a simple ledger. You can use a notebook, the back of an envelope, a spreadsheet, or an app.

Give each purchase a bucket or category to make comparing to your plan easy. Simple categories are best:

  • Bills - recurring bills you pay each month like mortgage, utilities, student loan payments, car loan, etc. (don't include credit card payments).
  • Household Spending - necessary items like groceries, supplies, repairs, and fuel. The bare minimum to get by.
  • Discretionary - includes travel, entertainment, eating out, extra clothes, hair appointments, nails, and other things you could choose not to spend money on.
  • Credit Card Payments - this has its own category because its the first item on the list to eliminate. How much extra cash will you have every pay day once your balances are paid off?
Household Ledger with Coffee and Calculator

The Final Category:


This is the amount you will transfer to your savings or brokerage account on pay day.

At the end of the pay period, add up your spending in each category and compare it to the plan you made on pay day.

Then ask yourself

  • Did I save enough?
  • Did I spend too much in any category?
  • What can I improve on next payday?

For next payday...

  • How will I spend the next paycheck?
  • How much do I want to save?
  • In what areas can I challenge myself to spend less? Pick one or two.

Keep it simple & focus on today.

The more simple a process, the more likely you are to continue doing it. By focusing on today, we don't kick the savings can down the road. We buckle down and do it now.



A simple plan of how to spend the next paycheck is best. Which bills need to be paid? How much do I need to spend on groceries and other household goods? How much do I want to spend on clothing, entertainment, and treating myself? How much do I want to save?


Track Spending

By keeping a simple ledger of your bill payments and purchases during each pay period, you can stay focused on what you're spending, and easily compare it to your initial plan.



Compare your spending in each category to your plan. Did you save as much as you wanted to? What is one or two purchases that blew your budget for the pay period? What will you do better next pay day?


Rinse & Repeat

By following the same pattern every payday, you will train yourself to spend better, save more, and succeed in growing your net worth.


How are they different?

Ledger vs Budget Chart
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