The Golden Rule of Budgeting

This post may contain affiliate links. For more details, please view our full disclosure.

The Golden Rule of Budgeting

I am a super dork and find some kind of sick peace in running my budget, allocating all of my dollars and cents, and getting my end number to come to zero.

I love excel sheets.  I love the old-fashioned paper and pen.  I’ve experimented with apps and messed with slush funds.  As circumstances have changed through my life, I’ve used different types of budgets that fit my paycheck lifestyle.

One thing never changes, though.  It’s the singular rule that keeps me money zen instead of money stressed.  It’s the golden rule of budgeting.

It is:

Budget Liberally.  Spend Conservatively.

Budgeting Liberally

Budgeting liberally means when you think you’ll spend $75 on gas this month, you budget $100.  It means that however much you think you’ll need, you schedule in more.  It means not fudging the numbers to an unrealistic low in order to fit your income.

When you get your numbers, you can see if you need to hustle to bring in more.  This is far better than getting to the end of the month and realizing you should’ve hustled to earn more, because now you don’t have enough food to put on the table.

Spend Conservatively

Be frugal.  Cut coupons.  Don’t make impulse purchases.  Use whatever tricks you have up your sleeve to come in under that liberal budget you drew up at the beginning of the month.  Way under is preferable.

If something comes up during the month where you have to spend a little more than you were expecting, you’re prepared.  Instead of being low on cash, you’ll have more leftover than you were expecting.  Any extraneous checking account funds at the end of your pay period can go into savings.  You won’t have to pull out the credit card, and you can watch your net worth, instead of debt, grow and grow and grow.

This is the underlying philosophy I have used to write all of my budgets.  What are your budgeting philosophies?

 

Related Posts Plugin for WordPress, Blogger...
Thanks for sharing! Want future articles delivered to you? Subscribe here.

40 thoughts on “The Golden Rule of Budgeting

  1. Ali @ Anything You Want

    That is a great budgeting philosophy, and I can see how it could apply to so many areas of life even beyond budgeting. I haven’t really formalized a budgeting philosophy, but I suppose it is the same as my overall money philosophy: you can have anything you want, but you can’t have everything you want. The trick is figuring out what you want (harder than it sounds!) and then spending your money in alignment with that.

    Reply
  2. Pingback: ★ The Golden Rule of Budgeting | My Money & Health

  3. Prudence Debtfree

    Oooh – this hits home. I’m guilty of budgeting low – and then not meeting the budget. My husband and I have never really mastered the discipline of evaluating how well we’ve stuck to our budget for any given month. We make a budget, track our expenses, and then move on to the next month’s budget – turning a blind eye to how we’ve done. Just uncovered a bit of denial here. Open eyes are always a good thing. Thanks : )

    Reply
  4. moneycounselor

    Sounds like a great combination–budget liberally, spend conservatively. They complement each other well! I think one reason people abandon budgets is that they feel deprived and they get tired of feeling ‘naughty’ when the spend more than they’ve budgeted. Your approach would help keep those feelings away.

    Reply
  5. Cee

    I agree. I practice this rule and have a “buffer” budget for unexpected expenses, like the 3 birthday gifts (son’s school friends) we have to buy this month.

    Reply
  6. Femme @ femmefrugality

    Absolutely. Initially, it’s way easier to write a budget where you don’t spend much at all… It brings some artificial peace. Once surrendering comes into the equation, though… Initially artificially inflating your projected spending is far more rewarding. And leads to greater safety when those unexpected expenses crop up.

    Reply
    1. femmefrugality Post author

      Exactly. It is possible to be too much of an idealist when it comes to budgeting… If you can’t back it up with corresponding spending habits of a recipe for disaster.

      Reply
  7. Jessica

    I completely agree with these rules and I also understand the joy that going through a budget can bring…fellow dork, here. I think that a lot of budgets fail because people don’t overestimate their spending a little. If you leave yourself too thin it become too grueling and disappointing!

    Reply
  8. Rebecca martin

    So agree with budgeting liberally. I love it at the end of the month when we are under in all of our budget categories and we can assign more money to our savings account. Its also great that if an unexpected expense comes up we are not so tight in our budget that we can’t manage it.

    Reply
    1. femmefrugality Post author

      It’s definitely a good feeling! Stressing in the front end is so much better than stressing at the end of the month.

      Reply
  9. Pingback: Could you survive a recession in Canada? : The Saturday Weekend Review #137 - Canadian Budget Binder

  10. Pingback: Six for Saturday (#3) | Miss Personal Finance

  11. Mel

    I think this is the best budget philosophy there is! I’m starting to think a little about home ownership and since my dad is in construction, I’ve been asking him a lot about how to budget for renovations/repairs and I’ve definitely learned to take add at least 10% to any repair estimate and take 10% off the top of whatever I say the top of my budget is.

    Reply
    1. femmefrugality Post author

      Those are awesome tips! And it definitely translates beyond just the typical monthly budget. Thanks for bringing it to the next level!

      Reply
  12. Liz

    This is the only way I can make my budget work! I always overbudget for food and utilities. Whatever is left moves on to next month’s. Great philosophy!

    Reply
    1. femmefrugality Post author

      Those are the two biggies IMHO. If you mess up with your cell bill, you’ll survive, but without food or running water? Not so much.

      Reply
    1. femmefrugality Post author

      To err is human… I think we’ve all been there! Getting back on track really does make the day to day so much more peaceful, though.

      Reply
  13. Gary @ Super Saving Tips

    Great philosophy…it’s simple and it works. I tend to overbudget, but only slightly. But I make sure that I have all the possible categories covered, like home repairs, car repairs, seasonal gifts, taxes, and things like that. When I compare my actual spending against budget, I do it not only for the past month, but for a rolling 12-month average over the previous year so I can really see if my budget numbers are accurate. When it’s time to adjust my budget, I use those averages to help me see what a realistic month looks like.

    Reply
  14. Elle @ New Graduate Finance

    This is great! I love following specific rules, so I like having this to think of as the Golden Rule :). I need to work more on the “Budget Liberally” side, but I am a huge fan of the “Spend Conservatively” side. I think it is amazing that we have so much control over how much we spend, and I want to make sure that I am utilizing this control to maximize my financial well-being!

    Reply
  15. RAnn

    One of these days I’m going to have to try seriously budgeting just to see how much it saves us. We’ve always lived way below our means as far as house and car, and then not worried about the day to day expenses. Now we are at a point in life where I think we should save a little more but every month there is something that takes our extra money (we have some savings taken out before we see it).

    Reply
    1. femmefrugality Post author

      Oh, it helps so much! I bet you’ll be amazed how quickly you reach your savings goals once you get started.

      Reply
  16. Pingback: Carrick best reads: Tips for single female home buyers | topfinancialnew

  17. Pingback: Overestimate Your Spending To Build A Better Budget | Lifehacker Australia

Leave a Reply

Your email address will not be published. Required fields are marked *