Following a budgeting rule never worked for me

If there’s one thing I’ve learned after helping others and even my own clients to stay on track with their finance is that…

The key to following a budget is to not follow a budget.

Yes, you should do the complete opposite. And yes, I encourage my clients to spend their money lol...

Hear me out.

You see... the choice of words we use links to our feelings.

How we feel, affects how we think.

The way we think leads to our actions.

And actions leads to habits.

Ergoooo, habits determines our behaviour.

When people hear the word budget, the first thing comes to mind is cutting back on doing the things they like.

Which means you get to spend less. (Retail therapy no more huhu 😭)

By doing so, you are fighting against human nature.

No bueno.

What we want is to do more of the things we like, when we like, without the consequences of our decision.

So how do we do that?

Now.. I didn't randomly pull this out of thin air. I’m not David Blaine..

It's a principle and frame of mind. One that Bill Gates lived by since he first started Microsoft.

There are 3 things you need to do first:

1) Changing the word you use.

Instead of using the word ‘budgeting plan’ (ewww)...

...You’re changing it to ‘conscious spending plan’.

Budgeting = cutting back on spending = increases cortisol = sadness

Spending = double down on spending = increases dopamine = happy

Think about it. Without a doubt, we are going to spend our money regardless.

Its only a matter of when and what.

2) Setting up an automatic money system

For this system to work, you must have 6 months of savings minimum, and an investment account in place.

(This allows you to build your money pot faster and spend more now)

Pull out a pen and paper. Write this down:

Take home salary - Expenses - Debt = Free Cashflow (For simplicity sake)

Assuming you have those two in place (emergency savings and investment accounts), how you plan to spend your free cashflow is up to you.

Going on a holiday? Put it in a holiday spending account.

Planning to Retire? Put it in your retirement spending account.

Sending you kids to Ivy League Universities? Education Spending Account.

Aaaaand so on. You get the point.

3) Feast like a king baybehhh

Seriously. Do those two things right and you get to spend until the kingdom comes. Because what's the point of having money and not enjoy it?

We living on borrowed time my friend. And time waits for no one.

Of course if you want to invest more and build bigger passive income streams you’re more than welcome to do that.

The catch?

This might not work for you if you're living paycheck to paycheck and left with $0 after all your expenses.

There's only so much you can cut down. The flip side, there's no limit to how much you can earn outside of your job (if you use the right money model).

If all this sounds confusing to you and you need to make sense of what this is all about, don't worry.

I created a free 78 page ebook with an action plan and free resources that does exactly that.

Its called...

"The Little Black Book of Personal Finance: The Foundational Guide To Understanding The Pillars Of Building Wealth"

You can read all 11 chapters here.

That's it for now. Talk soon.

-RK 🥷 

Disclaimer: The contents found on these pages have not been reviewed by the Monetary Authority of Singapore. The purpose of this page is for educational purposes only. It does not constitute as financial advice. All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone. You are recommended to seek advice from a professional financial advisor if you have any doubts or do your own research.