How You are Budgeting Backwards

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Are you Budgeting Backwards?

Asking the wrong questions

The one mistake you are making when it comes to creating a budget and how to change your budget to something that works for you.


A question I see raised very often on various forums and social media sites (which I spend way to much time on) is some form of the following explains why so many people are budgeting backwards:

“I’m trying to create a budget and…

How much should I spend on… food or eating out or clothing?

How much does everyone spend on these categories?”

This is a question that comes up again and again usually by people who are attempting to get their finances in order and are trying to start living on a budget.

But they are asking the wrong question.

budgeting backwards

They are approaching their budget backwards.

The answer they need is not the answer they are looking for.

This question sometimes comes in the guise of a relationship question as well.

“My husband thinks we spend too much on food. How much is normal?”

“My wife thinks I spend too much on clothes. How much is normal?”

The answer: it doesn’t really matter.


Truly. It doesn’t matter what is normal, it doesn’t matter what other people spend. It also really doesn’t matter if you ARE spending too much on food or clothes or entertainment.

What matters is whether you can afford what you are spending.

As long as you are spending less than you make and as long as you can afford what you are spending than it doesn’t matter if you spend way too much on groceries. This is a common mistake people make when creating a budget. They focus on how much they SHOULD be spending and not on how much they ARE ABLE to spend. A “normal” budget is a budget that works for you and with the numbers that you have. It doesn’t matter if you are spending significantly less than everyone else on entertainment- if its more than you are able to spend than you aren’t working with a balanced budget.

This is why I am not a big fan of tracking spending. Who cares how much you usually spend or how much you “need to spend” if you don’t have the numbers to back it up? Figure out how much you can spend and then spend that amount- your historical spending is really irrelevant unless you want to get extremely technical with your budget and really track and analyze every cent. That can be interesting and informative but it is not the first step to getting your financial life in order with a budget. I prefer using a cash budget for this exact reason. it keeps a tangible reminder of how much you can spend- there is no math or tracking. As soon as the cash is finished then the spending is finished. 



Budgeting doesn’t mean deciding how much you should be spending and then only spending that amount.

Budgeting is figuring out HOW MUCH MONEY YOU HAVE and then SPENDING LESS. Click To Tweet


Use this as your guide:


Adobe Post 20200129 1158170.6621552691553123

You take the amount you make. Subtract everything in blue. Then you can spend the green.

However you decide to spend the green doesn’t matter- as long as not more than that amount.

This is the right way to approach budgeting: head on and forwards. Don’t make the mistake of budgeting backwards.

If you and your spouse are arguing about this then set a money date and discuss all this in detail. It will save your marriage! When you are dealing with hard numbers its much harder to fight. It takes the emotion out of the spending and replaces it with logic.

You're doing it backwards




A Dime Saved

Hi! I am a millennial mom with a passion for personal finance. I have always been “into” personal finance but got inspired to start my blog after a period of extended unemployment. That experience really changed the way I viewed my relationship with money and the importance of accessible personal finance education.

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