Monday, July 9, 2007

How to Get Rid of Your Budget

You hate it. When you've burned up your budgeted allowance for chocolate, and half the month remains, you have to deprive yourself. Or cheat on your budget. But you know you're only cheating yourself because money that should have gone into your retirement account instead has been used to buy fattening food.

And you have hate having to keep track of your spending--inputting data into your PC every day, or making sure the checking account is accurate and balanced, or (if you're really old-fashioned), minding the amount of cash remaining in the envelope for each of the month's expenses.

There's a simple way to avoid the need for a budget. That's to save a significant portion of your earnings every month.

A budget's true purpose is to control your spending so you don't end up buried in debt, and are able to save for long term expenses like retirement and college education for your kids. If you can control your spending enough to save a solid percentage of your income each month, then you can bag the budget.

How much saving is enough? It depends on your goals. At least 10% of your earnings would be advisable for a comfortable retirement. If you want to maintain the same lifestyle in retirement as you have during your working years, save at least 15% of your earnings. More would be necessary if you're planning to help your kids pay for college.

If you save a solid percentage of your income, does that mean that you can spend as much as you want on chocolate? Of course not. You have only a limited amount of money, and rent or mortgage payments, car payments, school debts, groceries, utilities, taxes, etc. all come before chocolate. But if you're sensible enough to save 10%, 15% or more of your earnings, you'll be sensible enough to cover the basics first. And you'll know better than to borrow to support your current lifestyle.

Be a good saver, and liberate yourself from the budget.

For more ideas about personal finance, please go to

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