Still to this day I don’t understand budgets.
I have hated them back when I was young an idiot with my finances. But I still don’t like budgets.
I think they are boring, and a waste of time.
“But Loui? How can you save money if you don’t do budgets?”
There is a law called Parkinson’s law.
It states that:
“Work expands so as to fill the time available for its completion”
Putted in other words. If you give a project two weeks, you are likely to come up with tasks that takes about two weeks to complete. And the same goes for our finances.
If we earn 3000 $/month and we would like to save the largest amount of those money. The traditional way of figuring out how much money we can save would go something like this:
- Do a budget in the start of the month
- Figure out how much you can save
- Save and invest that amount
What is wrong about that is that we focus on the budget first. Just like Parkinson’s law affects deadlines on projects. It effects the same way on our finances.
If we budget 400 $/month for groceries, that is likely the amount we are going to spend on our groceries.
If we however look at how much we want to save, and make that the first thing we put aside. Parkinson’s law is going to work its magic for us.
Lets say the we make 3000 $/month, and we would like to save 50 % of that (1500 $). That would be the first thing we do when a paycheck arrives.
From there, our job is just to live on whats left.
I have even done periods where after what I have saved and invested, my account balance would be zero. So I knew whenever I wanted to buy something, my account would go in debt. That of course was just an experiment to see if I could spend even less by doing that. And I did. But it was tough.
I would recommend people try out such an experiment. Start a month with nothing on your account.
There is two reasons why it is has some benefits:
- You are going to love just to have SOME money on your account the next month.
- You are likely going to save and invest more than you normal would.
Do you want to read some life changing books?
I have been asked a lot what I could recommend people to read. And because of that. I have made a “Shit I Love” site,where you can find all sort of things that I use myself, and what I think can benefit you.
As I’m writing this there is only a couple of books that I recommend. These books have been life changing for me, and that’s why I think you should read them to.
All of the links are affiliate links, so if you use on those links. You will support this site without it’s costing you a dime.
Check the books out here: