Why Budgets Don’t Work

I’ve worked in the financial world since I was 14. Given that tenure, a lot of people are surprised to find that I don’t like budgets, I don’t recommend budgets, and I don’t think people should budget.

Why is that? Simply, the problem with budgets is that they don’t work. There’s always that surprise expense that pops up or unexpected bill. Emergencies don’t fit neatly into micromanaged boxes. You might think, “Wouldn’t all my financial problems be solved if I just followed a budget?” Not exactly. I’m sure you’ve experienced that as soon as you get your budget set, something comes up, so you have to allocate more in this category so you borrow from this other category. It’s always a moving target. Budgets aren’t the answer because life circumstances are always changing, and our finances have to change with it.

Plus, the word “budget” seems restrictive, kind of like the word “diet.” It’s not fun to talk about. This leads us to another reason diets and budgets never work—because they operate off a weak thing called willpower. Few people can sustain the micromanaging nature of budgeting. Over time, even the toughest, most disciplined people will break because the monotony of the following something that isn’t natural will drive us to self-sabotage. It’s like counting calories. Why doesn’t it work? Because it’s not sustainable.

Budgeting is just not a long-term solution for financial success because it’s not doable over the long haul. To truly lose weight, what you need are lifestyle changes, new healthy habits, new behavior patterns. It’s the same with your finances. So here’s my advice: Stop with the madness. Stop with the budget. There are two things that you can do to get on track with your spending.

Step 1: Create a Spending Plan

What’s the difference between a spending plan and a budget? No one likes to budget, but everyone likes to spend. Even the term “spending plan” is so much more positive! So what is a spending plan? Think of a budget as looking toward the future, whereas a spending plan looks at the past. It allows you to write down where your money is currently going on a monthly basis. You’re basically driving looking through the rear-view mirror.

Proverbs 27.23 says, “Know well the condition of your flocks, and give attention to your herds.” In an agricultural society, each animal was money. It was prudent to take an assessment of what you owned to see what adjustments you needed to make. The same goes for today. You’d be surprised how many people just coast through life financially without ever knowing where their money is going. They are like the farmer who ignores his flocks and herds. They don’t stop to take inventory of their spending or create a financial plan until it’s too late.

I encourage my clients to write down the last three months’ worth of expenses and go from there. Categorize, eliminate the unnecessary, and make adjustments. There’s nothing like putting the numbers right in front of you in black and white because they don’t lie. The number of unnecessary monthly subscriptions and Amazon purchases alone usually pop out as a surprise, so fair warning!

Step 2: Practice the Cashflow Continuum

Next, as soon as you get your paycheck, start with your priorities. I call this creating an artificial environment of scarcity. What’s artificial scarcity? It’s a term created by the book The Millionaire Mind—the proven way millionaires have created wealth over the last century. By creating artificial limitations, I’m suppressing spending by starting off with your priorities, then spending what’s left over.

But what do most people do? They spend what they want to, and then they try to save what’s left. Artificial scarcity is flipping the script on what the crowd does. The beautiful thing about it is that it works no matter how much you make. Anyone can do it.

So here’s how you flip the script: It’s a method I developed called the Cashflow Continuum.

  • First, begin with what you give.
    Start with giving 10% off the top to your church. It belongs to the Lord. Proverbs 3:9 says, “Honor the Lord with your wealth and with the firstfruits of all your produce.” Your tithe is a great place to start because giving is a habit-building exercise. As Darren Hardy says, “Your why power is stronger than your will power.” Trying to change your finances through sheer willpower doesn’t work. But if you give toward something you believe in, you have a better chance of following through with this whole approach.
  • Next, plan on saving 20%.
    That’s right—20% not including your 401k match because that’s from your work, not from your wallet. Proverbs 21.20 says, “Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.” So the wise store up resources for the future, but the fool spends everything he makes.
  • Last, spend the remaining 70%.
    That 70% is yours, completely yours! Take it and spend it however you want. Meet your needs, provide for your family, enjoy it to the fullest. Live responsibly, just don’t exceed that 70%. Don’t go into debt. I’m a huge advocate that you should enjoy the money God has given you. We don’t talk about this enough in the church.
    That’s what the 70% is for—don’t worry if it fits in this category or that category. If you have money for it, go for it. This is what you have to live on. A lot of people who have adopted this say it’s so freeing. No crunching numbers or pouring over spreadsheets here!


To recap, I don’t believe in budgets because they aren’t sustainable. Having good financial habits means living within or below your means for the glory of God. The first step is to have a spending plan. The second step is to practice the Cashflow Continuum. Start with, “How much will I give?” then “How much will I save?” then “How much will I spend?”

If you have your priorities right, it doesn’t really matter where your money goes.

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