The Unbudget: Giving Up Limits, Getting Back Your Life

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In my ongoing effort to disrupt the overly-frugal and joyless personal finance community, I’ve come up with a new financial practice: unbudgeting.

Unbudgeting is exactly what it sounds like: undoing your budget. Instead of imposing restrictions and limits on your spending, you remove them.

What does it mean to unbudget?

Unbudgeting is the practice of removing limits on your spending in different categories of your budget. Instead of restriction how much money you have allocated to something, you don’t set any limits at all.

Now if you’re first thought is, “I can’t have unlimited budget categories because I don’t have unlimited money!”, stop and take a breath. Not having a limit on spending for one area of your life doesn’t mean you actually have to spend an unlimited amount.

In fact, you’ll likely find you spend within the confines of the budget you previously set up. The difference is now you will do so without stress or guilt!

Why would I want to unbudget spending categories?

Unbudgeting is a mental health exercise as well as a financial exercise. It’s designed to relieve stress and increase happiness by loosening the reigns on your spending so you can enjoy your money more. You may or may not find you spend more money, but you should find that you enjoy your money much more.

Benefits of unbudgeting:

  • remove the labor of tracking spending
  • free yourself from the stress, anxiety, and worry
  • cultivate a mindset of financial abundance by removing a false sense of scarcity
  • help you to enjoy your money

Unbudgeting one of more categories of spending may result in a small uptick in the amount that leaves your bank account every month. But it will likely result in a huge uptick of your happiness.

How do I practice unbudgeting?

When you’re looking for a category of your budget to unbudget, try to identify the following:

Variable expenses. Ignore your fixed expenses, because they’re fixed. You can’t unbudget them! You can only unbudget variable expenses where how much you spend in a certain category tends to change month to month.

Small expenses where even large increases in spending translate to small dollar increases. One of the first areas of my budget I ever unbudgeted was coffee. The main reason was because I hate the latte factor, but the second reason is because I knew there was a limit to how much coffee I could physically consume and that limit was far below any cost that would throw my finances into disarray. I spend about $50 per month on coffee. Even if I were to increase my consumption by 50%, it would only cost an additional $25 – a completely insignificant sum.

Spending where small increases produce big results in quality and convenience. Sometimes a dollar really delivers, and that is especially true on small expenses that generate a huge emotional ROI. This could be paying for a taxi or Uber instead of walking, or upgrading your flight or hotel room on a trip. The actual dollar amount is likely small, but the results are big.

The best spending categories to unbudget based on my own experience are as follows

  • Coffee
  • Groceries
  • Books
  • Dining out

All of the above are relatively stable variable spending categories where a small increase is unlikely to radically throw my budget off course. Furthermore, the feeling of not being restricted makes me feel rich, even if all I’m allowing myself is unlimited lattes and not unlimited private jets.

As I’ve gotten into the groove of unbudgeting and also increased my income, I loosened the reigns in other spending categories. For example, I unbudgeted my spending at Aritizia.

Aritzia is one of my favorite stores, but I rarely spend more than $300 in a single shopping trip there. Furthermore, I rarely buy any single item that’s over $150. So I told myself from now on, I’m allowed to buy whatever I want at Aritzia without agonizing over the balance at checkout.

If you thought this would lead to overspending, I did too – and we were both wrong. Unbudgeting my favorite clothing store didn’t change my spending habits there at all. In fact, knowing I could have anything I wanted was satisfying enough on its own that I didn’t feel I *needed* to get anything. Also they are out of my size in their cashmere loungewear.

What if I fall into a spending spree?

If you’re worried unbudgeting will lead you into credit card debt, be calm. You probably cannot drink enough lattes to put you thousands of dollars in debt, or read books fast enough to be buried in the credit card statements.

After carefully managing your finances for years, it can feel scary to throw caution to the wind. But the truth is, you probably have enough good financial habits that you’re unlikely to get yourself into a bind.

If you’ve been burned by your bad behavior in the past, you’re unlikely to repeat it – even if you give yourself a permission slip. For most people, spending a lot of money on groceries or books is probably not what got them into financial distress.

Money woes are usually born out of high student loan balances, medical debt, or mortgages. Or they are the product of catastrophe like death and divorce. We preach financial literacy like its the be-all, end-all, but most financial distress is circumstantial not personal failure.

If you’re worried you won’t be able to control yourself, then unbudgeting is not for you. But if you are looking for a solution to relieve yourself from agonizing over pennies, I encourage you to unbudget your work lunch or premium podcast subscriptions. Once you see that everything remains well, you can move on to another category.

It’s important to understand that you cannot unbudget your entire budget (unless you are very wealthy with modest tastes). But you can unbudget the categories that will help you live a richer life with less financial stress!

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3 Comments. Leave new

  • *** Slow Clap ***

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  • I would unbudget but you can’t undo what you’ve never done. We never had any limits on spending and still always had plenty to max out retirement accounts and to put a lot into taxable brokerage accounts and to pay off the house early. We just didn’t have expensive tastes and I made good money. But like J$, one of the smartest guys I know, I think this is very good stuff. If you aren’t having fun in life, you are doing it wrong!

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  • I just love your articles!

    Reply

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