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

The No Budget Budget with Ken Robinson

Join us as we welcome a very special guest, Ken Robinson, the author of Don't Make a Budget: Why it's So Hard to Save Money and What to Do About it.

Ken Robinson has revolutionized the concept of budgeting with his groundbreaking system that prioritizes paying yourself first. Through his book, he provides invaluable insights and actionable steps to help you regain control over your financial well-being.

We all know that using cash allows us to witness the tangible nature of our limited resources gradually diminish. But what about credit cards? In an era where plastic reigns supreme, Ken Robinson unveils the secrets of aligning your spending habits with your core values. Discover how credit cards, when used strategically, can serve as powerful tools in this quest for financial empowerment.

Join us for this eye-opening episode as we unlock the secrets to budget-free money management and learn how to make smarter financial decisions. Don't miss out on this opportunity to transform your relationship with money and pave the way towards a brighter financial future. Subscribe now and embark on this transformative journey with us!

Topics covered in this episode:

The pitfalls of traditional budgeting and the alternative approach

Understanding the concept of "pay yourself first"

Practical steps to implement Ken Robinson's system

The visual impact of cash versus the convenience of credit cards

Aligning your spending with your values through credit card usage

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Here's Ken's firm website:

John's firm website:

For advisors around the US:

Thanks for watching and please subscribe!


Bridget: How do you manage your spending if you don't make a budget? That's what we're going to be talking about today, and we've got the guy who wrote the book on it. Hi, I'm Bridget Sullivan Mermel, and I've got a fee-only financial planning practice in Chicago, Illinois.

John: And I'm John Scherer. I've got a fee-only financial planning practice in Middleton, Wisconsin. And we're coming to you today live from the ACP Advanced Planners Retreat in Tucson, Arizona. We're really excited to have Ken Robinson here as our guest, and Ken is the guy who wrote the book. What's the exact title of your book, Ken?

Ken: The book is called Don't Make a Budget: Why It's so Hard to Save Money and What to do About it.

John: Good. I'm glad that you had that mouthful and not me😊

Ken: Haha. Thank you so much for having me.

John: Yeah, this is awesome. So I'm really excited to share with our viewers that exact topic. You literally wrote the book on how to stay within your spending if you don't have a budget. Why don't you just tell us some of the tenets of the book and what you wrote about.

Ken: Well, the system that I wrote up starts with paying yourself first and provides specific steps on how to do so, and it harks back to when we spent cash most of the time. In one way, if what you're spending is actual cash, actual dollar bills from your wallet, it's really easy to make sure you don't overspend because when the cash is gone, you know you have to wait until the next payday. You can see this limited and dwindling resource every time you make a purchasing decision.

And there's some really good research that says that when you are making the purchasing decision, if that's at the same time that you're spending the money, you're likely to spend less than if parting with the money happens later on, like when we use a credit card, for example. Well, these days we're all using cash less and less. A lot of people are not using cash at all. So the challenge is, how do you have that same kind of feeling of knowing that it's actual money going out the door?

And the answer is pretty simple, you just don't hear about it very often. And that is it's fine to use credit cards, but just keep them paid off. And what I mean is pay them off every day. And that keeps the actual spending happening very close to the time of the spending decision. We've all had buyer’s remorse, and the sooner you see the money going out the door, the sooner you feel remorse if you should. And if you shouldn't, then it's fine. You'll know that you spent on something that meant something to you.

And when you're paying off your credit card every day, and you're then looking at your bank balance to see how much is left, you can say, “Oh, I've got another seven days before payday, and I only have this much left in my bank account. Was that a good idea to buy what I bought today? Well, yeah, it's groceries. I certainly need to eat.”

In my case, it might be something for my bicycle, but that means a lot to me, and it wouldn't mean a lot to somebody else who doesn't value bicycling as much as I do. It helps to automatically line up your spending with your own values, not what somebody else thinks. “Here's the monthly average for recreation.” No. What does it mean to you? And it's also permission to spend if it's spending on something you truly value.

Bridget: I have a quick question on this. I would think that some bankers in the audience might say, “Well, what about a debit card? That's what that's for. So why don't you talk about why you recommend using a credit card and then paying it off every day versus just using a debit card?”

Ken: The legal protections on debit cards, historically, are not as generous as the legal protections on credit cards. If there's a charge that for some reason needs to be disputed on a credit card, you have, I believe it's 60 days to lodge a written objection. And the credit card websites that I'm reviewing make that much easier than it used to be. You can often lodge that official request for a chargeback online.

The other issue is that when you give somebody a debit card that's going immediately out of your bank account; there's no buffer. And if a bad guy (that's the technical financial term😊) gets hold of the debit card number, they're not running up a bill that you can then object to and have zeroed out. They're taking money right out of your account. And the time to respond to that under the law is much shorter than it is with a credit card.

John: Ken, when you talk about paying your credit card daily, kind of almost tying it to the wallet, is it going online and making that transfer? Are you talking about physically writing a check on a daily basis, or is there any difference between those things, in your opinion?

Ken: I think the difference is in the mind of the consumer and whatever makes the consumer feel more like they've actually parted with something of value when they make a purchase. That's what they should do. I know a lot of people don't even have a checkbook anymore, and it's fine if they pay off the credit card by making an electronic payment every day. The key is that it's something that ties into their feeling of, “Oh, I don't have as much money as I used to because I made the decision to buy a new bike helmet, to buy this present for someone who is important to me, to go out to dinner, because I knew I had the money to go out to dinner.”

Whatever the spending decision is, the spending experience should be as close in time to that as possible. There's a limit to it. I don't think you need to pay off the credit card every time you charge the credit card so that you're making payments six times a day. I think once a day is probably enough, and it's certainly a lot better than once a month when you might be saying, “Now, wait a minute, what was this $70 for? What was this $9.50 for?” Because the little things do matter. The little things can add up. So even if it's a small expense, I like to see it paid for every day.

Bridget: Yeah, I love the idea because I feel like it makes it intentional, and it makes you conscious. One thing I do that’s similar to paying my credit card every day is trying to track my eating. Researchers found that you eat 15% or 20% less if you just keep track of it. Similar with spending, you can think, “Yeah, this all looks great,” and there's no immediate consequence. And then there’re consequences weeks or months later when you actually wake up to it. That's one of the reasons I like it; it reminds me to be in the moment, to be intentional. This actually helps you with that.

Ken: Yeah. Very conscious decision making is what it's all about. So many of our spending decisions are unconscious, and especially now when there are so many subscription type services. Well, if it's the day that your streaming service has charged your credit card, pay it off that day. Don't let it become anonymous in a sea of other unrelated expenses, like the brake job you needed for your car, and then you're not even aware of the streaming subscription.

And over time, you may find, “You know what? I’m really not using that particular streaming service anymore. I'm happy with the other two that I'm paying for,” or something like that. Or you might decide, “I'm getting a lot of joy out of that. And the thing that I really need to decide that I want to cut back on is I'm spending all this money getting coffee on the way to work in the morning. Maybe if I just brewed it at the office, it would cost less.” And by the way, I've run the numbers. You can brew seven cups of coffee at the office for the cost of one drip coffee at the Gourmet Coffee House.

Bridget: Okay, I have a question for you. I buy most of my clothes online, and then I do returns. How do you handle that? I'm getting money back from the credit card company or the retailer.

Ken: I think when money is coming back to you, the technical financial planning term for that is that's a good thing😊And what's going to happen is if your bank balance is a bit lower than it needs to be, that's just going to make you think more consciously about whatever the next expense is. You could always, when you return it, say, “You know what? I've sort of prepaid the $45, and so my next $45 of spending on the credit card, I don't need to make the payment for that debt, because I've already prepaid that $45.” There's no problem with doing that. The key is that when you go beyond it, you want to make sure that your bank balance reflects your spending decisions.

John: One of the things I love hearing you say, Ken, was about how buying bike equipment for you would be a great investment, whereas for me, it would be a terrible investment, even though I might do some of those things. There're fewer absolutes. It's not like saying, “Here's the rule and that's what you follow.” No, it's different for all three of us, and for all the viewers.

It's being intentional about what's important to you, and then paying attention to it and tying it to that tangibleness. And this was valuable when the book first came out years ago, but now everything is so subscription based. There are many things that hide. $10 here. If it were coming out of my pocket, $10 a day would be noticeable. When it shows up on my credit card once a month, I tend to forget about those things. Paying attention and being mindful is such a great lesson.

Ken: And I always say that one of the great enemies of keeping your spending under control is the phrase, “It's only…” It’s only $3 for that coffee.” But if you saw $3 on the sidewalk, would you stop to pick it up? And you'd stop to pick up a dollar. And most of us would stop to pick up a quarter. And I think if it's worth stopping to take, it's worth thinking about it just for a moment before we decide to give it away. And by paying off the credit card every day, it's going to get you into that habit of thinking about your spending for just a moment. Do I want this thing? And if the answer is yes, then you can go ahead and do it without any guilt.

Bridget: Great. It's a great time to wrap it up. I'm Bridget Sullivan Mermel. I've got a fee-only financial planning practice in Chicago, Illinois.

John: And I'm John Scherer. I've got a fee-only financial planning practice in Middleton, Wisconsin. And we're coming to you from the ACP Advanced Planners retreat. We've got Ken Robinson, author of the book, Don't Make a Budget: Why It's so Hard to Save Money and What to do About It. And if you like the things that you hear here on our show, we talk about it at the end of every show but check out to find advisors that think similar to Ken, Bridget, and me.

Bridget: And please subscribe.

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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