Live Without A Budget
 

This may seem contradictory to what I suggested previously. But it isn’t. One result of having positive cashflow is that you end up saving regularly. The way to ensure that you save regularly is to make it as easy as possible. Budgets are hard to live with. So get rid of all those little categories that make it a chore. If you need a computer program to categorize your expenses, well, maybe you’re not focused on the basics.

Here is a very simple technique that doesn't require much thought. Don't focus on budgeting by categories of expenditures. Just decide on a percentage of your net income you'd like to keep, and put that away every time you get paid. Then live on the remaining amount.

You don't need much to start saving. The important thing is to start now. Every time you get a paycheck set aside a percentage of it in your savings account. It can be any amount. I recommend at least 5%. Maybe 10%, 20%, or 30%, whatever you are comfortable with. Even 1% is a start. The amount of money does not matter so long as you develop the habit of saving. Gradually you can increase the percentage.

The more you set aside, the more you are putting in your pocket as opposed to those of others. Do this every time you get paid. If you save 10% of your income, every 10 pay periods you'll be putting away one full pay check in the bank. If you save 20%, you're keeping one check for yourself every 5 pay periods. Doesn't sound like all that much, but remember the power of compound interest (I’ll explain later) will be working for you instead of against you. Over time it's a huge difference.

Yet you’ll hardly notice the change in your lifestyle. If for every dollar you used to bring home you still spend 90 or 95 cents, is that going to affect much? Not likely. Of all the money that you earn, the amount that you keep is the most important when it comes to building wealth. Everything else is lost. So learn to save. If you’d like to automate the process a number of financial institutions will gladly do this for you including:

Your current bank (ask for information)
ING Direct (http://www.ingdirect.com)
Emigrant Direct (http://www.emigrantdirect.com)
Fidelity Investments (http://www.fidelity.com)

If you have problems living on the remaining amount because of your spending habits do not use a credit card. Pay cash for everything you can, and only carry small amounts with you. Then it’s inconvenient and that’s why you’ll save – it’ll be more of a chore to spend. Make it inconvenient for you to spend your money. In later sections I’ll show you more ways of cutting out expenses you don’t need.

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