Money Crashers: 4 Budgeting Alternatives to Meet Your Financial Goals

I'm about to confess something that's probably pretty shocking for a personal finance writer: I don't have a household budget. In fact, I've never had one.

Now, this is not to say that I don't keep track of my household spending. I do, and pretty rigorously at that. This started way back when Brian and I were courting, when we began keeping track of the amount each of us spent traveling to visit the other and splitting the cost; later, when we set up housekeeping together, we started tracking how much each of us spent on joint household expenses and balancing out the difference at the the end of each month. By the time we got married and combined finances, I had decided that having this record of how we spent our money was useful, so I just kept doing it, only with a single column for our expenses instead of two. And eventually, I decided to start recording all these expenses in a spreadsheet, so that I could keep track of how much we spent in each category and tamp it down if it started getting too high. So I am very much aware of where our money goes.

What I've never done is to set any strict, specific limits on how we could spend it. That is, my spreadsheet tells us that last month we spent $202 on food, but it doesn't say that we're only allowed to spend $202 (or $250, or $300) on food this month. I just keep track of the numbers and note when they move up or down by any significant amount, in which case I (a) look for ways to cut back if necessary, and (b) usually, write a post here about the reason.

Now, according to the mainstream finance community, this failure to maintain a personal budget should mean that all our attempts to save money and meet financial goals are doomed from the start. The vast majority of articles on how to save (including one I wrote myself two years ago) lead off with, "Make a budget," and many of them (though not mine) warn that without one, it's basically impossible to control your spending. The clear assumption is that if you don't set firm limits on your spending in specific areas, you'll automatically run through all your money, leaving nothing for savings, and never get any nearer to your financial goals.

However, I happen to think that our own experience shows this isn't true, at least not for everyone. After all, in all the years Brian and I have lived together without a budget, we've managed to not only buy a house but pay it off, and are now aiming for financial independence and possible early retirement some time in the next five years. So clearly, the lack of a budget has not, in itself, been enough to derail our efforts to save.

Nor are we alone in this. Several other successful individuals—including an investment guru who achieved financial independence at age 37, a finance blogger who accumulated $256,000 in retirement savings by the age of 28, and Amy Dacyczyn of "Tightwad Gazette" fame (all hail the Frugal Zealot!)—all say they have never had formal budgets, and some of them go so far as to say budgets don't work.

Personally, I think that's a bit of an overstatement. Budgets clearly do work for some people, but that doesn't mean that they're an absolute necessity for everyone. In my latest Money Crashers article, I've outlined some of the reasons budgets don't work for everybody and described four alternatives—including our own tracking method—that can work without all the restrictions, or all the paperwork, of a formal budget.

Now, if you already have a budget and you're happy with it, great—you don't need to read this article. But if you don't have a budget, or if you keep trying to make one and can never stick to it, this piece could be just what you need to get your finances on track. And if your finances, like ours, are already on track despite the lack of a budget, yet you still feel obscurely guilty for not having one, this article can help you put those concerns to rest.

 4 Budgeting Alternatives to Meet Your Financial Goals