I just learned about what a budget is and how to make one, however, I simply do not see myself doing one or even like doing it.. I feel it is simply not exciting.
You sure can, under 2 conditions:
One: You generally live a frugal live and naturally do not spend more than you can. I have seen people like that - any decent job means significant surplus.
Two: You earn REALLY good money and simply have no need for a budget. Unless you go really crazy, i.e. a monthly income of 20,000 USD (preferably with good raises every couple of month) will handle all your needs with plenty left over. Many star athletes are in this area while they work, except many go crazy on the spending side over time.
Normal people? Yeah, you better watch your expenses. This is like exercising - you need to do it, and whether you like it or not - the world does not care. "I can not see myself" is nothing more than showing a lack of discipline, and the result of those are never funny, but sadly all around to watch.
It is easy to imagine how growing a successful career will allow you to be 'financially free' (whatever that means for you), without worrying about 'tiny details' like budgeting. Especially for someone just coming out of college, used to sleeping on a futon with a couple of roommates, living cheaply and happy as can be. "Why, I could live exactly like this and still be happy, so if I start making an extra $x per month when my career gets going, I can just keep putting away the extra, and I could probably retire in 5 or 10 years!"
Why this doesn't often work out, is 'lifestyle creep'. As you get a little more income, bit by bit, you will have the opportunity to spend more money as well, and as you take those opportunities, that becomes your 'new baseline' of 'living simply'. Before you drove a 15 year old rust bucket car, but when it breaks down and you have a stable job, chances are pretty good that you get something 5 years old, or perhaps even brand new. And as soon as you do that, you're never going to shop at Bob's Better Buckets Used Car Shop again. Likewise getting used to buying expensive ingredients, or forming a daily Starbucks habit, buying nicer clothes, buying gifts for a girlfriend, buying your new wife some jewellery, expensive honeymoon, then comes diapers, daycare, karate, books, toddler clothes, babysitting, a nice night out at a very expensive restaurant 'because we hardly ever go out anymore', bigger house in a nicer neighborhood with the good schools and 3 car garage for your car, your wife's, your son's, your twin daughters, etc. etc. etc.
Keeping a budget is a way for you to insert a recurring reality check to your spending, to make sure that you are on a path towards the long term financial goals that are important to you. You don't necessarily need to do a line by line accounting to get some amount of value from it, but it seems from your question that you would prefer to quietly close your credit card statement and just pay the balance without peaking inside. That truly is a recipe for disaster, even if you land NFL-levels of success. Even millionaires can go bankrupt, when they spend like billionaires for a few months.
Sort of. If you spend less money than you bring in, and you save and invest the rest, then you will have an increasing net worth and an increasing amount of potential passive income from investments. At some point, this will increase to the point where it can cover your expenses for the rest of your life.
Without a budget, though, it will be impossible to know when this is, how far away it is, and whether you have achieved it already.
Depending on your risk tolerance and your willingness to be flexible with your spending when needed, you can safely spend approximately between 3%-5% of your wealth each year, and it should last you at least through a typical 30-year retirement, or potentially forever. No budget means not knowing whether a safe withdrawal rate (whether you are very risk-averse and will only live on 2%, or are OK spending 5% or more) will be sufficient to live on.
You also can't estimate how much you need in total. If you need $40,000 per year, you should be OK with a total in the range or $800,000 to $1,333,333. Let's say you have $1,000,000, and suddenly you lose your job. Is it time to panic? If you live off of $25,000 per year, then no, you could never work again and you're fine. If you spend $70,000 per year, though, then you need new income or you will eventually run out of money (sooner rather than later if you lost your job due to a recession/depression and your investments are also losing money just as you come to depend on them for income).
I would say it is impossible to be financially independent without budgeting. This is because financial independence has two components. How much are you projected to spend over your current life, and how much income will your assets produce.
Without a budget it is impossible to know how much income you will need for either the short or long term. Depending upon the nature of your assets, it may be difficult to predict their income without a budget.
History is filled with people who made extraordinary income and wound up broke (e.g. MC Hammer, many sports stars). ESPN has a documentary outlining sports stars who made a lot of money and ended up with nothing.
Now I heard it say that a budget has to be to the exact penny. Perhaps this is true when you are in a tough spot financially, but you don't have to do this for the rest of your life. About so much for groceries, entertainment, auto insurance, etc...
My wife and I, as part of our monthly budget meeting, also do a review of our net worth. This is pretty fun as your assets grow. We track it and reviewing the history is fun as well.
If you intend upon being in a long term relationship with someone I feel that budgeting is even more important. Budgeting priorities express your values as a couple. Do you spend an larger amount on cars or travel? Will you spend a lot of the full TV package or more on live events? How important is a large clothing budget?
These are the kind of things that my wife and I discuss during our budget meetings.
It's an age-old issue: being rich is probably a lot more fun and exciting than becoming rich. Certainly for most people.
It's definitely possible to reach financial goals without intensive budgeting, but I think that a better question is "how likely is it that I can become financially free without budgeting?". That question has a less promising answer. It's usually easier to spend money than to obtain it. I think that your question is similar to asking "can I get an A in my multivariable calculus class without ever studying?". For some people the answer will be yes, but not very many. For many, perhaps most people, their chances of success are very bad without doing the work.
I feel that, for most people (including fairly highly-paid professionals) budgeting is helpful in two main areas: it helps you think about finances over the long term, and it helps you track whether or not you are moving towards your goals. There are other benefits as well, but those are the core two for me. It is very, very easy to undervalue the future, and for many it seems to be unintuitive how much money there is to work with over a period of 10 or 20 years.
I will also suggest looking into different kinds of budgeting. My original budgeting system when I was just starting my career was very easy and practical, though not as efficient as it could have been.
- I had three bank accounts (two checking accounts and one savings account), and on payday my pay was deposited into a checking account.
- I would immediately transfer enough to cover my fixed expenses (rent, utilities, etc.) into the second checking account, an account which I used only for paying those bills.
- I then allowed myself $100-$200 per pay period (depending on how much I was earning, how much I had in unplanned expenses, etc.) in spending money and put whatever remained into the savings account.
It's a very easy system and doesn't require much attention or effort after determining how much you need to cover fixed expenses. I only had to look at my accounts twice each month (to make the transfers between accounts after being paid), and I could be confident in spending my "disposable" income. There are better (read: more efficient) budgeting systems, and there are more things you could add on to this one to make it better (which I eventually did, before moving to a more involved budgeting approach), but the results of this small amount of effort worked very well for me.
You can totally strive for financial independence without spreadsheets and a concrete sense of what your cash flow is. What you would do it set up automatic payments into a savings account (or debt). Hopefully that account it is some kind of financial product that you could buy ETFs or whatever kind of investment you prefer.
It would take some trial and error but since you don't want to do the arithmetic, just have a sense of what could get you by month by month and force yourself to save.
Something that makes budgeting more exciting for me it's that it offers the opportunity to check in with my financial goals. To me it is not a negative thing, it's exciting to see your debts disappear and your savings increase. If you do it well it feels like you gave yourself a raise :)
No matter how much or how little money you have, you can end up in trouble if you don't monitor your cash flow in some manner (see, for example, the typical fate of lottery winners). But there's no reason that you need to have a budget per se.
A budget is a forward-looking plan for how to spend your money. It can, indeed, feel quite constraining, and thus I've never been willing to live that way myself.
The alternative is to track your spending habits instead and make sure that your lifestyle choices leave you spending less than you take in on average. To do this, you need to have more money available to you than you do if you're living on a budget. In particular:
- You need at least a few months of expenses in liquid form.
- You need to earn significantly more than your "normal" expenses.
Together, these two give you a "cushion" that gives you space to correct for problems without accumulating debt, even when you may not see an emerging problem for several months in your accounting.
If you are able to live this way, then you can have the financial freedom to simply not think about your choices most of the time, as long as you stay within the general rhythm of your chosen lifestyle and adjust your lifestyle if you find your savings creeping downward.
This question is a wind-up but it is a commonplace that people with high incomes, end up in the doghouse.
It is so common that there are literally whole categories of reality TV shows "Sports starts who made 100 million and now have nothing", "lottery winners on the Dole" etc.
It's not what you make, it's what you save.
The honest and accurate answer to the sense of the question is, you must budget.
End of story.
Yes, you can become financially free without budgeting, and without having unlikely amounts of financial "good luck."
The trick is simply to avoid situations where other people are spending your money and you can't realistically stop them from spending it.
For most people, the most expensive things you can "own" are not executive jets, superyachts, or even luxury houses. They are other people. Specifically, your partner, and even more expensive, your children. And divorcing a partner is likely to be even more expensive than continuing the relationship. But that doesn't stop people making the same bad choices twice, or even more times, in their lives.
Keep those items outside of your "budget", and you will never have to bother with micro-managing your finances from day to day, or from decade to decade.
Of course there is only one "small" problem here - and that is that most people don't consider that "personal relationships" have much to do with "finance". Not until the situation has got out of control, anyway. Just don't go there!