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  • Writer's pictureBridget Sullivan Mermel CFP(R) CPA

No Budget? No Problem! Retire Budget-free and Don't Run Out of Money

We both have a No Budget No Problem philosophy. However, if you have this approach, you'll want to keep in mind the things in this video.

At different stages in your life, budgeting is different. Figure out what your goal is.

People's personalities and strengths differ, too. Some people have no problem tracking each expense. Other people feel like a failure when they, once again, fail at the process.

At different income levels, the same person can take different approaches.

Bridget Sullivan Mermel talks about how budgeting can be a part of acting intentionally and mindfully so that you get the things in life you really want. However, most people aspire to not budgeting.

John Scherer talks about how, if you go budget-free, there are some numbers you need to know.

We offer several ideas of how can you figure out if you're off track and make a course correction if you're not. You'll feel better and sleep better at night if you know that it'll be okay, even without a budget.

John's firm website:

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John: Many people struggle with budgeting, and much of the stress of budgeting is really unnecessary. In this episode, we're going to talk about why you probably don't need a budget, some situations in which you might want to have a budget, and most importantly, how to make the budgeting progress process simple and painless. Hi, I'm John Scherer, and I run a fee-only financial planning practice in Middleton, Wisconsin.

Bridget: And I'm Bridget Sullivan Mermel, and I've got a fee-only financial planning practice in Chicago, Illinois. And John, before we get started on budgeting, let's just remind people to subscribe. It helps us with the YouTube algorithm. Okay, John, so I'm really interested to hear your thoughts on budgeting and how you talk about it with clients, friends, and neighbors, because I know I get that question a lot.

John: Yeah. It's interesting to think about budgeting when you're first starting out, but we also have those conversations down the road. I have them with clients, I have them with friends at various stages when people approach retirement age and say, “Geez, I need to get a budget.” Many of the conversations that we have with people are about budgeting. And number one, I think it's really difficult to do the traditional way of budgeting, which says, I'm going to spend this much money, and then I check every time I want to go out to eat. Do I still have money in the budget?

I know that didn't work for me. It's really hard to take care of things from that standpoint, so the first thing I do is step back and try to ask people, what are you trying to accomplish? What's the goal? As opposed to saying, “Well, I'm supposed to have a budget. This is just what I’m supposed to do.” Well, sure, if you need to, but we'll talk to people about the following things: Are you saving the right amount for your liquidity, for your emergency needs, for your retirement, for college (if that's a goal)? Are you spending more than what you're making? Do you have credit card debt?

If you're taking care of all your goals, then I don't really care if you have a budget. If a client or friend says, “I want to know how much I'm spending on going out to eat.” Absolutely. Let's track that. But if you're reaching all your other goals, there's no purpose for knowing exactly how much you spend in different directions—unless you're not happy with what's going on. So that's the first thing we ask: What are we trying to solve here?

Bridget: Yeah, I think you're right that people feel pressure to have a budget. Okay, now should we change the basics little bit? No. You should be saving 10% of your income and you shouldn't have credit card debt.

John: Yeah, right.

Bridget: Okay, so let's assume that you are saving 10% of your income and maybe a little more for college or some other stuff, and you don't have credit card debt. Okay. If you don't like having a budget, that's fine. Now, sometimes I think that “should feeling” is more about being intentional. And so, I think with budgeting people can get into this deprivation mindset and say, “I should have a budget; I should be depriving myself.” Budgeting can help you get out of thinking in terms of deprivation and into thinking in terms of being intentional.

You can say, “I'm in control. I'm not just reacting to every buy signal that I get every time I log onto my computer.” It’s not saying, “There're all kinds of stuff that I want to buy showing up on my screen.” It’s saying, “I'm not just reacting to all that, but I'm being intentional. I'm thinking about it ahead of time.” So sometimes that's people's motivation if they don't want to just back into it; they want to be practically thinking about it.

John: Yeah, and I love that word “intentionality.”

Bridget: Right.

John: …Being intentional about what your money is doing. As you were describing it, I thought about being intentional about the goals you might have. Maybe it's saving money to buy a second home (or whatever things you got going on) or to buy a boat like we talked about in a previous episode. Those sorts of things. But then there's also value in flipping the deprivation mindset. I know a lot of our conversations with folks are about saving up, but once you've got all the things you should do taken care of—because there are some fundamentals, as we call them—then you have the permission to spend.

Bridget: Right.

John: Sometimes people think, “Oh, I shouldn't buy this; I'm spending too much.” And you look at it and go, “No you're not.” Maybe one of the things at this point is to take away the budget. When you have money, spend it. There can be value in that depending on what you're looking for. And again, it goes back to the question: What are you trying to accomplish? Don’t fall into simply doing something for the sake of doing it.

What's that movie…Office Space, where they file the TPS reports just to file the TPS reports. No, let's figure it out. And then there are sometimes, as we talked about in the intro, when you really might want to have a budget and think about that. And so, maybe you're not paying off your credit cards all the time—you’re running some debt; maybe you're not saving as much as you feel like you should be—or as much as your goals dictate.

And you have a great description of that earlier. For example, do I need to weigh myself every day to figure out my fitness? Maybe. But when my pants start to get a little bit tight, I've got an idea that, jeez, maybe something's going on with my eating.

Bridget: Right.

John: In a similar way, if the spending and the savings aren't quite where you want it to be, then maybe we need to look and pay more attention—be mindful. It can be in stages, though, too. Just like the eating thing. For some people, when they say, “My pants are starting to get a little bit tight.” Maybe they need to count calories, or maybe they just need to not eat pizza after 09:00 at night and quit eating donuts in the morning for breakfast. They can try that, and then if it doesn't help, they can try something different, but sometimes that's all they need. They don't need to have a budget. They just need to not spend so much.

Bridget: I remember one of my friends, not like me at all, who said, “Yeah, my pants were getting tight, and I realized I had to stop eating that pint of ice cream every night.”

John: Yeah, right. Do you need to count calories to realize that? No. Let's do that first and see what happens.

Bridget: Exactly. Let me just try not doing that every night.

John: Right, but then if you do that and your pants are still getting tight, then maybe you should take the next step and see what the calories are or see what the mixture of protein. There're other things, but you don't need to pull a nuclear option and say, “My pants are getting tight. I need to eat three pieces of lettuce every day.” No, let's cut off the pint of ice cream first. Let's think about those things.

So it's not saying that you absolutely have to do this. In some cases, you can just say, “Let's be mindful of this. Let's not spend quite so much when we go out. Let's not buy so many things on Amazon.” Oh, good, that solves the problem. Oh, wait a minute. That's still not solving the problem. Now, maybe we need to budget some of these things. Is it the grocery bill or is it the Amazon bill? We can do some things with it, right? Right.

Bridget: If I can't get control of it, then that might be compulsive spending, which is a whole other issue and worthy of its own episode. Now, one thing I would like to talk about is that there have been times in my life where I've really kept a tight budget. I've known exactly where my money is going. If I wasn't making as much, I had to really plan it out. I had to really be intentional and plan it out.

And one of my motivations for trying to make more was so that I didn't have to do that, so I had more flexibility. That's one of the things that I value. And I'm working harder, developing myself, doing a lot of different things just so that I don't have to have the pain of tracking my spending about everything as long as I'm within these guidelines.

John: Yeah, that's great. It's interesting to hear you say that because I'm sort of the opposite. For me (and maybe that's why I feel like I can relate to people who don’t like to track everything they spend and stick to a budget) it's just not my nature to keep a budget. It's really hard for me. I can sometimes feel like a failure and think, “That's why I should be doing this and I'm not doing this. Here's this idea, and I'm not getting there.” And that's where for me it's really valuable to step back and go, “Hey, for people like me who don’t like to keep track of everything, it’s okay to step back.”

This summer our kids are doing a reading program. I'm reading with them, and they track every minute they spend reading. It's hard for me to do those things. It's not my nature to do that stuff. And so, sometimes I feel like, “Oh, I'm not doing it right.” Okay, how can I address this in other ways? It's not that you necessarily need a budget, and if you do need a budget, let's say your pants are getting a little too tight and you think, “I'm not saving what I want to. I've tried to just cut out things and it hasn't worked.” Then I think the big thing for people to do is not so much lay out a prescription—here's what I'm going to spend next month—but rather the first step is to look back at what you've spent.

And in today's world with so much going on credit cards, you can print out your last twelve months of credit card bills and look at it. I don't want to go through each line item and see where it went; I just want to see the number. How much did I spend this month? With a couple of credit card bills and a couple of bank statements, you can go and see pretty quickly what’s happening. Here's the mortgage that comes out of the bank account and here's your insurance and some utilities.

And then at the end of the day, how much do you really spend? When you take a look at that you might go, “Okay, that’s a reasonable number,” or “Golly, why is that number twice what the other number was?” And just look at some of those things. A lot of times it can be that simple as asking, “What are the last twelve months of spending?” And that's not trying to dig into all the things. But still you go, “Wait a minute, what's going on here?” Maybe you need to dig in and see how much money is going to your coffee habit versus your other things.

Bridget: Right.

John: But at the first level, it's asking, “What's the next step?” Just laying that out is important. And then you can look back and go, “Oh, that's what’s happening!” For people approaching retirement, do you need to have a budget that tells you where everything goes? I don't think so. Do you need to know how much you spend? Yeah, that's really important. But you can look at that and you go, “If I’m not going into debt, I’m in good shape.” Here is your spending. How do you feel about that?

Maybe you say, “Jeez, I just don't like that for various reasons.” Good, then you can take some action on that. But the big point for me is being aware. When you pull out the credit card, it just goes like chips in a casino. It's just really hard to keep track of money at times. We've had this with clients who way, “We're spending too much. No, we're not spending too much.” Let's do this exercise. Then they say, “Oh, that's not as much as I thought it was,” or “Oh, holy moly, where's all the money going? I didn't realize it was that much.” That awareness is the first step before you have to go and pencil in every expense.

Bridget: Yeah, and it's interesting because I am more of a tracker. You can see that I have a tracking watch, and I like keeping track of things. It helps motivate me. But I don't always track my money, and I gotta say, right now I'm not really tracking my money. I'm tracking other things, but not that particular thing. But when I do want to get more intentional about my finances, one of the things that I'll do is just take a spiral notebook with me and mark that down every time I spend some money. It doesn't matter what it's on. It’s just to observe. I'm not trying to cut down, I'm just trying to observe what I am spending money on.

And funny story—to me anyway—is that one time I did this exercise, and I was looking at all my spending. At the time I was taking improv classes, and I realized that a lot of my money was going to buying drinks for everybody, because in the improv class there were people like me who had a business, but then there were also people who were just starting out. They were making minimum wage, and so I'd say, “Oh, I’ll pay for your drink.”

And I didn't begrudge that. You know what I mean? I didn't have a problem with that, but I didn't realize how much I was spending on it. And so, it was a matter of saying, “Oh, am I okay with that? Yeah.” I was spending more money on that particular thing than I would have thought, but that was fine with me, I wasn't necessarily going to adjust it, but it was just nice to be aware of what was going on.

John: Be aware of where your money is going, then you can be intentional. And then start off with what you are trying to accomplish. You don't need to have a budget, but you might want to have it for various reasons. Try to figure out what you're trying to accomplish first, and then see how detailed you need to be in order to get what you're trying to accomplish.

I think that's a great place to wrap things up. I'm John Scherer, and this is Bridget Sullivan Mermel. We both run fee-only financial planning practices, and we both work with clients across the country. We're members of the Alliance of Comprehensive Planners (ACP). You can find out more about ACP by visiting If you want to find an adviser in your area, please check out again,

Bridget: And don't forget to subscribe. That helps us out, and we really appreciate it.

At Sullivan Mermel, Inc., we are fee-only financial planners located in Chicago, Illinois serving clients in Chicago and throughout the nation. We meet both in-person in our Chicago office and virtually through video conferencing and secure file transfer.

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