Huh? But almost all the personal finance guys I have read about talk about maintaining a budget as the first step. How can you say that it will not work?
Well, my friend, it has never worked for me and most probably it will not work for you either. Why? Because sticking to a budget requires willpower – and willpower is a very scarce commodity. How many of us have stuck to our new year resolutions? Not very many. Willpower is like a muscle – and just like you get fatigued when you exercise, your mind gets fatigued when you exercise and that is why most of us give up after some time.
Another reason why budgeting almost never works is that it tries to impose scarcity mentality – by trying to limit spending, budgets make you believe that you do not have enough. That weighs on your mind. After some time, your mind craves to say enough is enough!! I want to live!! Let’s go have that ice cream !!
Now, what do we do? If budgeting does not work, what works? How can we be on the path to financial independence (FI)? Will a Spending Plan work instead of a budget? Probably, but not likely.
What we require is a plan that allows us to forget about limiting ourselves to a budget and that allows us to save enough for a bright future. Is there a plan like that? Yes, there is. More about in my next post.