The Anti Budget

If I had a penny for every time I've heard that the traditional budget does not work, I'd be a very wealthy man!

But, let's be honest, traditional budgeting can be difficult and time consuming to manage; and discipline is required too.

Indeed, for many people, for all sorts of reasons, traditional budgeting has not and will not work.

So, what do you do?

Well, you can stop flogging a dead horse and try something different!

Allow me to introduce you to the anti budget. Here's how it works:

The anti budget has only two categories; spending and saving.

At the top of the budget, list your monthly income, after tax.

Next, decide how much you want to save. In this context, “save” is a broad term that includes paying off your debts (beyond the minimum balance requirement), making extra pension contributions or building up your emergency fund. Under the anti-budget, your “savings” are defined as anything that improves your net worth. Once you decide your target savings goals, transfer this money to the appropriate savings and/or investment accounts as soon as you receive it.

For example, let’s say you bring home £7,400 per month and you would like to pay an extra £1,000 per month off your mortgage. Set up an automatic transfer for this money, that takes place as soon as you receive your income.

The money that is remaining after your savings is how you will fund your lifestyle.

Creating a separate account for all your fixed bills, such as rent or mortgage payments, utilities, vehicle payments, mobile and internet services, can help you control your spending. Every time you get paid, move the money into your 'bills' account so that those expenses are automatically deducted when they become due.

When your savings goals and fixed bills are covered, you can spend the rest of your pay on food, clothing, health and beauty goods, and entertainment as you like.

So, your monthly cash flow will look like this:

INCOME minus SAVINGS minus FIXED EXPENSES = SPEND WHAT IS LEFT

In the end, the amount you spend on pints or pasta is inconsequential if you achieve your savings targets and cover your fixed expenses.

As you are transitioning to the anti budget, monitor your expenses closely to make sure you do not spend more than you have for non-essential purchases.

It might be helpful to stick to a debit card for fluctuating or discretionary purchases (like groceries, petrol, toiletries, and entertainment), and avoid using credit cards at all costs.

The appeal of the anti-budget is its sheer simplicity. Once you are set-up, it is like being on auto pilot.

Instead of working through traditional budgets or examining bank statements monthly, you may want to try the anti-budget.

Amyr Rocha Lima, CFP® is a financial planner who specialises in working with successful professionals age 50+ to help them reduce taxes, invest smarter and retire on their terms.

”Amyr is patient, level headed and an expert financial planner. He has helped us work through our many questions to find sensible answers and to build a financial plan that is realistic, balanced and achievable. I would recommend him to anyone seeking advice on planning their financial future.”

David Claridge
(CEO - Dragonfly)

*****

”Amyr has helped my husband and I hugely as we began our journey of financial planning for our future. He has fantastic knowledge of the big tech corporate landscape and was able to help us uncover some great opportunities for investment, as well as helping us plan for our family's future and for early retirement.”

Emma Lancelotte
(Engagement Manager - Google)

*****

”Amyr did a great job helping us figure out our financial goals and the route to getting there. He was always very clear, available for follow ups or clarifications where needed and left us feeling in control of our finances.”

Ben Freeman
(Product Manager - Facebook)

*****