Since I’m still pretty new here at CFB, I’ll forgive all you guys for not knowing a little secret about me. And since we’re all pals, I’ll tell you. Lean in real close now.
I’m not just a regular amount of lazy either. I’m so lazy I’ve been known to eat meals directly from the pot to avoid dishes later. I once didn’t cut my grass for an entire month, only giving in when a neighbour yelled at me over the fence. I’ve been known to not shave for weeks at a time. I really have no idea how I’m still gainfully employed. I’m clearly just eye candy for the ladies of the office.
My laziness almost knows no bounds. Like all of you though, I want to get ahead financially. What’s a lazy fella to do? Do I sacrifice one for the other? Do I have to make a budget and stick to it, like just about every financial guru tells us to? Hardly. In fact, I’m here to tell you that being lazy can actually be good for your financial picture.
Let’s talk specifically about budgets. Many of you probably have one, in some form or another, in varying degrees of detail. Some people use a cash system, allocating cash for each budget category. Others use spreadsheets or one of the many different finance pieces of software to track their spending. If you use any of those budgets and it’s working for you, then keep using it. Getting ahead financially is the important part, how we get there is but a minor part of the journey.
This is why I don’t have a budget. I’m too lazy to spend time figuring out how much money I want to spend on any of 25 categories. I’m too lazy to rob money from one category when I run short in another. Luckily for everyone, there’s a much easier way. It’s so easy I can explain it in just one sentence.
All you need to do is pay yourself first.
If you want to save 10% of your income, just set up an automatic withdrawal each time a paycheque enters your account. Any bank can set this up for you in a matter of minutes. The 10% magically disappears instantly, off to some other account that’s earmarked for investment. Then, feel free to spend the rest. I don’t care what you spend it on either. Have a fancy for Starbucks? Drink away. Just make sure you don’t touch those savings.
Once you set up the automatic transfer, all the work is done. Paying yourself first is the easiest way to get yourself to start saving money. The simplicity of paying yourself first is the real appeal to the plan. A lot of people start a budget, do great for a month or two, and then fall off the wagon. Either some unexpected expense comes and busts a budget category, or the person making the budget gets tired of the work. For whatever reason, the budget fails and the person making the budget is back into financial difficulty.
Unless you’re some sort of budgeting master, you have 10% worth of wiggle room in your budget. If someone has $500 to last them until next payday, people are generally pretty good at making it stretch the amount they need. When faced with scarcity, people find cutting out extras easy. So why not artificially create yourself some scarcity?
People are typically bad at determining the difference between wants and needs. I’ve seen budgets that have an allocation to things like manicures or golf. I understand we all have our vices, but these vices directly cut into savings. If you have to make the choice between golf and food, usually food wins out.
I spend zero time every month figuring out what I can spend on categories. I know approximately how much money I can spend every month, and then do it. In the meanwhile, my savings are slowly accumulating in a different account, ready to be put to work in whatever investment I decide. It leaves me all sorts of time to play video games, hang out with my friends, or to sit around and do nothing, an activity I’m particularly fond of. If you’re so detail oriented you feel the need to know where each dollar goes, then maybe budgeting is the ticket. If you’re like the rest of us, people who want to get ahead using a minimal effort, then I’d recommend paying yourself first.
Remember folks, simplicity is best.