Cash Basis Creates A Realistic Budget

Budgeting seems like a lot of extra planning and detailed work.  My simple solution to budgeting was to live on a cash basis initially.

After graduating from college, I lived on a cash basis for a couple years.  It was very empowering financially.  I learned quickly how to live within my means.   In my first month of employment, I ran of out money three days before my monthly paycheck.  

Fortunately, I was paid on the last business day of the month via direct deposit.   Thus, I had funds to pay my rent on the 1st.   However, it was a good learning experience for me.  I managed my finances so I didn't run of out money again.  I lived on a cash basis, i.e. no credit cards, until I took out a loan for my first new car a couple year later.

I started managing my spending to have a little left over by next monthly payday.  I considered that my savings.  I did this for many years.

If I did it over again, I would use the 50/20/30 rule:  50% necessities, 20% savings, 30% wants.  I wrote about how to do this in Be One's Own CFO for Personal Finances.

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This is not financial budgeting, nor spending advice. Please consult a professional advisor.

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