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Frugal Without A Budget

Some people consider budgeting a waste of time. I’m one of them. I happen to have a budget. And here’s how I maintain it: I don’t. I do a budget once a year, and then either get too lazy to make adjustments and updates, or just plain forget about it. Yet, my frugality remains… it is a part of my way of life. I am further encouraged to Not keep a budget by what I do every month. It is something I learned from the great Robert Kiyosaki, author of Rich Dad, Poor Dad. What is it?

He called it, Pay Yourself First. This is what I do every single month without anything getting in my way. I take 10% out of my checking account (paid via direct deposit) and transfer the amounts to the Brokerage account I share with my wife, Jessica, and to our individual Roth IRAs. I currently net $6,400 a month from my job as a vice principal. This amount will change next year when I go back to teaching, but it won’t change my strategy. $640 is split into three accounts: $400 to my Brokerage, $120 to my Roth IRA, and $120 to Jessica’s Roth IRA. This $120, by the way, does not represent my lone monetary contribution toward retirement. It’s extra! I contribute $200 to a 403b AND of course I also have my educator’s pension being automatically withdrawn from my pay.

The entire $640 is put to work. I invest in both the taxable, Brokerage, and tax-free Roth IRAs. If you do not have a 401k or other retirement account, I would suggest you “pay yourself first” more than 10% of your net salary. For all of you who have grown tired of the extra chore of keeping a budget, here’s what paying yourself first will do for you:


Just think, if you “pay yourself first,” and in best cases, put cash into a non-liquid account, like an IRA, there’s no coming back. You can’t pull the money out if you’re running short toward the end of the month. Well, you can’t without a penalty, so you most likely won’t do it. You’ll do everything in your power, like watch every expense, all month long to not be in a bind.

Even putting the money in a liquid account, like a Savings (don’t do this, please!) or a Money Market (a little better), will deter you somewhat from cheating, and transferring the money back to checking. You’ll need to stay disciplined. The bulk of my “pay yourself first” money goes into my Brokerage account. But I then turn around and buy stock shares with it. This puts me two steps from liquidation: sell shares and wait for the cash to become available, and then do a transfer request from Brokerage to checking. So you see… it’s a pain in the ass to liquidate, meaning, I better make sure Jessica isn’t going crazy at the supermarket!