Forget budgeting: Here's a better way to meet your savings goals

Author: Maurie Backman

Source: The Motley Fool

When do you need to budget? It can certainly be helpful but it's not the only solution. So if you've tried it and it doesn't work for you, you should know that there may be a better way to work toward your goals.

The problem with budgeting

Budgeting isn't necessarily so time-consuming if you find a great app or system that makes it efficient. But one big problem with budgeting is that it can feel very restrictive.

At its core, budgeting has you allocating a certain amount of money each month to different expenses. And you're not supposed to spend more in any given category. If you do, you're supposed to make up for it by finding money from a different category. That can be frustrating and put you in a position where you're stressing yourself out for no reason.

Why automating savings is a better solution

For many people, the goal of budgeting is to limit spending enough to be able to move money into savings at the end of the month. But what if instead of that, you were to move money into savings at the start of the month -- before you begin paying your bills?

You can set yourself up to do that by automating the savings process. Figure out how much you want to contribute to your savings each month, and then arrange for that sum to leave your checking account before you get a chance to spend it -- such as right after your paycheck hits.

That way, you know you're meeting your monthly savings goal, which takes the pressure off. And from there, you're free to spend the rest of your paycheck as you want.

So let's say you get a monthly paycheck of $3,000, $300 of which you want to save. If that $300 leaves your account off the bat, you'll be left with $2,700.

From there, it doesn't matter if instead of spending $250 on leisure, you spend $260. As long as you're able to cover all of your bills that month without racking up debt, you're in good shape -- you've funded your savings and tackled all of your financial obligations without having to worry about the finer details.

It's worth giving budgeting a try if you've never done it before -- especially if you're living paycheck to paycheck and are having trouble managing your bills. But if budgeting just doesn't work for you, don't force it. You may find that automating your savings not only takes the pressure off, but makes it easier for you to meet your financial goals.

This article was written by Maurie Backman from The Motley Fool and was legally licensed through the DiveMarketplace by Industry Dive. Please direct all licensing questions to legal@industrydive.com.