The Hidden Price Of Living Without a Budget

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Living without a budget is very common, but sometimes, what’s popular and what’s best for your finances don’t overlap.

Every year, some financial organization polls the nation to see how many people follow a spending plan. And every year, they reveal how budgets aren’t as commonplace as financial advisors would hope. While the responses may vary slightly from survey to survey, most show that the average person isn’t in love with the idea of budgeting. They spend money on the fly, hoping it all works out at the end of the month. 

Your neighbors, coworkers, and loved ones are very probably spending their money the same way — without a budget. While you might not think much about following in their footsteps, living without a budget can come with some hefty consequences. 

Without a clear idea of your financial comings and goings, it can be hard to achieve your biggest money goals, like paying off debt, saving money, or improving your credit score. On the flip side, a budget can help you find the motivation to pay off debt, start socking away savings, and maxing out your three-digit credit score. 

Below, let’s explore why living without a budget can be so harmful to your finances. Once you see those consequences, we’ll share tips on how to craft the best budget for your needs. 

What happens when you live without a budget?

Spending your money without a plan won’t instantly doom you to financial ruin. This article isn’t meant to scare you into budgeting; it’s here to inform you of the risks you take by opting to ignore financial advice. 

What happens when you live without a budget?

A budget gives you unparalleled oversight of your spending and income. It lets you know how much you can afford to spend on essentials and non-essentials alike, with some leftover for important savings. It also shines a spotlight on what you truly spend on these things. If you haven’t tracked your spending before, it might shock you just how quickly things add up. 

With your head in the sand, you’re more likely to fall into the following traps. 


Part of a budget’s job is to inform you of your financial limits. By tracking your income and your essentials, you’ll know how much you have to spend on other things. If you don’t have this oversight, it can be easy to overestimate your fun spending and dip into more than you should for takeout, gadgets, clothes, and vacations.  


While you might have a good mental tally of your usual expenses, these monthly essentials aren’t the only things you’ll come across. 

Every month is different. One day, you have to take your car into the shop when your airbag light won’t go away. The next, you rush your cat to the emergency vet over breathing problems. Without a budget, these hard-to-predict expenses can be stressful. 

One of the foundations of a strong budget is savings so that you can handle the unexpected without worry. Every month, you set aside some money into an account where it grows with each contribution. Eventually, you’ll have enough to cover an emergency vet bill, even if it’s more than your paycheck. 


Chronically overspending and living without savings can land you in a lot of debt. If you accidentally spend what you need for the essentials, you might have to put these urgent bills on a credit card or line of credit. You might not even be aware of how much you’re putting on these accounts when you don’t track your spending. 

Debt Consolidation Loans

People who overspend are also more like to need personal loans and lines of credit when emergencies strike. If you don’t have a cash cushion as a backup, you might have to borrow to cover unexpected repairs and expenses.

The average household in the U.S. owes a tab of $101,915 across their various accounts, including mortgages, car loans, and lines of credit. These monthly payments can soak up a lot of your paycheck, leaving you with less money to use like you want.


You aren’t guaranteed to overspend and take on debt when you don’t have a budget. Many people even manage to get by perfectly fine without one. However, there’s a good chance you aren’t maximizing your money in ways that help you achieve the life you want.

Some of life’s biggest expenses are impossible to purchase without having a plan. Take a house, for example. The average down payment can range anywhere from 3% to 20% of your purchase price. For the average price of a home — which was $348,079 in 2022 — that would cost you as much as $69,615.80. Even the lowest down payment percentage rings up to more than $10,000. 

Reaching these large sums can be hard without a plan in place to help you set aside money. 

How can you build a budget that serves you?

Now you know the dangers of living without a budget, let’s focus on something much more constructive. What can you do to make a realistic budget that you can actually follow? Check out these tips below.

Use an app

Budgets get a bad rap as boring, challenging, and time consuming. But it doesn’t have to be that hard. Numerous budgeting apps exist nowadays to automate your spending plan. All you have to do is sync your financial accounts and punch in your goals, and these platforms will customize a budget tailored to your needs. 

Not only will they tell you how to spend your money, allotting a percentage of your funds towards the essentials, but they can also do all the typical dirty work that comes with a budget. The best apps out there will track your spending in real time, alerting you when you get close to your limits and reminding you of important bills.  

Don’t forget the irregular items 

Most of your budget will go to regular bills that you can expect on a regular basis. Things like rent or mortgage payments, utilities, credit card bills, and groceries are some of the most common expenses you make. 

While they assume the biggest piece of your financial pie, they don’t take it all. Infrequent expenses also factor into your spending. But since they might only happen once a year or on an irregular basis, it’s easy to leave them out of your plan. 

The best way to anticipate these expenses is by tracking your spending from the last year. Let the list below jog your memory: 

  • Annual memberships, subscriptions, and premiums 
  • Charitable donations
  • Household items and toiletries
  • Household maintenance
  • Income and property taxes
  • Landscaping and gardening 
  • Salon visits
  • Vehicle maintenance

Automate your bills

Paying the important stuff on time is a breeze when you automate your bills. Log onto your online bank account and pre-authorize your creditors as payees, then set the amount of money you want to send them every month. 

Automate your bills

Once you accept these payment rules, your bank will transfer these funds like clockwork, so you’ll never forget to pay a bill again. And when you pay promptly, you can avoid late fines and credit damage.

Don’t think in black and white

The budget earns an undeserving reputation as a spending plan that will suck all the joy out of your life. 

Let’s be honest — it’s partially true. Some extreme budgeters and followers of the FIRE method (Financial Independence, Retire Early) cut out every single discretionary expense from their life to save as much as humanely possible. But they represent a tiny minority of people willing to live on practically nothing. 

The average person doesn’t have to be so stingy with their budget. A balanced plan — one that prioritizes essentials with fun things — is enough to establish financial security and keep you on track. 

It’s easy to assume a punishing all-or-nothing attitude when you first start budgeting. After all, you’re either on budget or not — there’s not much grey area when it comes to your spending plan. But don’t let negative thoughts derail you from your goals or discourage you from making a plan in the first place. 

A negative state of mind can really end up harming your chances of success. It may leave you feeling demoralized or inadequate when you slip up and splurge on a vacation or new gadget, and these negative thoughts may cause you to lose confidence in budgets altogether. 

Be willing to say goodbye

While you don’t have to cut out all the fun of life, the reality of a budget is that you will have to cut back on some spending to make sure your finances are balanced. 

For some people, this can be as simple as keeping takeout and online shopping trips in check. For others, they might have to make more drastic changes to their expenses, like downsizing and selling their car. 

If you aren’t sure where you fall on this spectrum, refer to the 50/30/20 budget. It gives you a basic framework for how much you should spend on each major category of expenses. Your essentials should take half (50%) of your take-home pay, while your wants should absorb 30%. You should save the remaining 20% across your emergency, retirement, and sinking funds. 

The takeaway

Living without a budget isn’t the end of the world, but it won’t set you up for success. In fact, it might even increase your risk of overspending, leaving you unprepared for emergencies, and taking out loans online. 

To reduce the chances you run into these problems, create a budget today. This spending plan is a cornerstone of good money management. It helps you understand your responsibilities and recognize your limitations. Between the two of these things, you can figure out a plan of action that helps you focus on what matters most to you. 

About the author 

Peter Keszegh

Most people write this part in the third person but I won't. You're at the right place if you want to start or grow your online business. When I'm not busy scaling up my own or other people' businesses, you'll find me trying out new things and discovering new places. Connect with me on Facebook, just let me know how I can help.

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