The Most Popular Budget and Why It Sucks

There is one budget that is the most popular of all. I won’t name what it is quite yet because I want to see if you can guess what it is. It is the worst budget of all yet it is the most popular, at least here in America. So let’s get to why it sucks and let’s see if you can guess what it is.

Unexpected Emergencies Sink You

You need a new car tire because you just got a flat, but this budget won’t have that built in. Instead you’re going to be scrambling for money or might have to do something worse and incur debt. These expenses are predictable because emergencies will always hit when you are least prepared. On top of that, a flat tire isn’t a true emergency as you knew you’d need new tires eventually, but those weren’t accounted for in this budget either.

What would happen with a real emergency? You lost your job but you don’t have an emergency fund to use in situations like these… ouch. Sounds like you’re going to be dealing with the next problem of this budget.

Your Debt Will Continue Increasing Unless You Change

These mini emergencies (and non emergencies) will keep popping up and chances are you’re going to go into debt to pay for them. You’ll start paying it off, then another emergency will pop up and you’ll have to add more to that debt and the vicious cycle will continue. You won’t get anywhere unless you change.

Then there are those times where you feel like you’ve been working really hard and you deserve something even though the money isn’t there… but it is OK because you’ll be getting paid soon so you’ll just put it on the credit card until the next influx of money. Dangerous path my friend. Don’t go down it. Chances are, if you’re on this budget, you will go down that path. Another strike against the most popular budget.

You Never Save Any Money

If you’re on this budget it isn’t likely you’ll be saving any money. See, this budget doesn’t worry about saving because you’ll be able to do that later in life. This is how people on this budget justify it, even though it your future isn’t any brighter. On top of that, you’re too busy dealing with the little emergencies that pop up that there isn’t really any way you could see yourself saving anyway. There are more important things to be doing today to enjoy life because you only live once!

Your Present is Brighter Than Your Future

That’s because on this budget you’re spending almost all of your money (or more money than you really have) making your present brighter. The problem is that your future gets dimmer with every extra dollar you spend making your present brighter.

You spend your future dollars to make yourself feel better today and then tomorrow doesn’t feel quite as good. You then spend even more of your future money and you become doomed with a massive debt load you can’t pay back. This is the grim future of many American’s today because they are on the most popular budget.

What is This Mystery Most Popular Budget?

Hopefully you have guessed by now that I’m talking about the paycheck to paycheck budget. Some will argue it isn’t even a budget, but it really is. People plan what bills come out of each paycheck each month so that they can successfully make it to the next month and next set of paychecks without running out of money. The problem with this budget is you’re stuck in an endless cycle and will likely spend every penny waiting for your next paycheck.

Escape the paycheck to paycheck budget and come up with a real budget that allows for you to save money and escape this vicious cycle. It’ll be tough in the beginning but you’ll see your future getting brighter with every dollar you save. Soon these emergencies won’t have you hoping you’re next paycheck is only a couple days away because you’ll be able to pay for them out of your savings. It is a wonderful feeling!

Have you ever been on the paycheck to paycheck budget? What is your advice to help people escape the pain? Do you agree that the most popular budget, the paycheck to paycheck budget, is the worst budget?

Like What You See?

Join the other readers who have signed up for our email newsletter! No spam, just periodic updates to help improve your finances!

About Lance Cothern

Lance Cothern, a Certified Public Accountant (CPA) licensed in the Commonwealth of Virginia, is the founder of Money Manifesto. You can read more about him here or connect with him on Facebook, Twitter, Google+ or Pinterest.


  1. I would argue that one of the defining factors of a budget is the category for Savings. Without that, you’re just looking at an expenditures sheet.

  2. My advice would be to start with one little thing that doesn’t affect you too much. Reduce the cable bill, cancel the gym membership or brown bag your lunch. Put the savings in a jar for a month and then tackle another expense. Seeing the money growing is motivating.

    • Jason Clayton | frugal habits says:

      I would agree. Most people living paycheck to paycheck have no savings. Just redirecting one expense starts to put you on the right track…

  3. I would agree with Pauline. Look for small things you can cut or reduce. Those little things will add up and can be motivating. I would take the savings and start saving, if you’re not currently. Although it’ll be a small amount getting into that discipline is vital.

  4. There aren’t many whom I find stimulating but you may turn out to be one of them. In this post two things made me think: 1) ‘unexpected emergencies’ – my first thought was ‘what other kinds there are’ and then realised that we don’t expect emergencies but can be prepared for them; and 2) ‘your present is brighter than your future’ – again this depends on our view of the future; assuming the future is there you never know what it holds, but if one assumes that we construct our future – our actions today should prepare a better time for us and those close to us. Ummm…interesting :).

  5. I lived on the paycheck-to-paycheck budget for years and it was a complete nightmare! After struggling to manage money I finally got my act in order and wrote out a budget. When I learned how little disposable income I had, then I simply created a plan to increase that number. It involved cutting back on my lifestyle and increasing my income!

  6. I was headed in that direction before I really got serious about personal finance. I did have a pretty big emergency fund, but I blew through that really fast because I wasn’t careful enough for conscience about where I was spending money. Luckily I got a grip before I blew through everything, but I still struggle with making enough money each month to cover expenses AND save.

  7. I was there for a while. It was awesome (NOT!). I spent every dollar I made, and was always paying my bills late. I would say in contrast to this, the best budget is the month-ahead budget!

  8. I never thought of that as a budget, but I expect some do. I was always a saver so this pretty foreign to me. To me a budget is a structure to help you achieve your financial goals. Paycheck to paycheck would be the antithesis of that concept.

  9. You COULD trick yourself with the paycheck-to-paycheck budget by auto-deducting each pay period. You end up with a nice savings.

  10. I live paycheck to paycheck… to fund my investments.

    I think a good way to get someone off the lifestyle of living paycheck to paycheck to fund new toys, gadgets, etc. is to get them started (somehow convince them) on putting away some funds for savings each month. I know, that’s definitely much easier said than done.

    Once a person gets started on saving though, I find that most want to keep at it. After all, it’s fun to see progress and results! Do this for awhile, and pretty soon you’ll be pinching every last penny so you’ll have more to invest with.

    • Very good insight. I love saving and hope others can get hooked!

    • Mandy @MoneyMasterMom says:

      Us too, we pay ourselves $600/week and the rest is shoveled away. Sometimes I have to be careful about paying bills on time, because most come in a ten day period. But a little organization does wonders.

  11. Nate Fancher says:

    Hey I’m new here and looking forward to reading your blog. (Hoping to win that iPad too).


    Totally right on with this post by the way! I couldn’t agree more that living paycheck to paycheck IS A BUDGET. People plan ahead with it. They stress over it. I love how you said it’s the most popular. Yep. Unfortunately so.

  12. Kelly@Financial-Lessons says:

    Very interesting. I think the easiest way to get out of a cycle like this is to make a concrete and actual budget, and then fit in a way to pay yourself. Having to pay yourself and build your savings account in the mindset like that aspect of your budget is like another bill, is the best way to build wealth over time. Thinking of your savings account or an emergency fund as another bill to pay is a good way to not live using this paycheck to paycheck budget.

  13. I have never been on a paycheck to paycheck budget and I can’t imagine it. Having the freedom to buy things, take vacations, invest in certain things, etc is so important to me. I have saved up a nice chunk so that I don’t have to worry about things like that. I use Mint to budget and check my transactions every day!

  14. Good post! I definitely think a budget isn’t fully mature until it tackles not just paying your bills but also how you plan to save some money and satisfy financial goals. Businesses run this way and that’s how the good ones stay in business. Lack of planning is a plan to fail.

  15. The problem we have is that we barely get any money saved up in our emergency fund and we have to use it + plus some!

  16. I am currently on the paycheck-to-paycheck budget, even though my spreadsheet would tell you otherwise. I have the desire to get on track, but have lacked the motivation and sense of support in my household. This week, I decided I’m done and declared “It’s On!” – so I’m going back to the square one we completed 3 years ago, getting our debt gone and building a savings that will keep me from freaking out every time my car groans, my kid breaks a tooth or my microwave sparks.
    Thanks for this post – I never would have considered living P2P a budget (which indicates I have control over it), but now I see it as a habit I’d like to kick. Woohoo!

Share Your Thoughts