Why Budgeting is a Bad Idea

Whether you’re currently struggling to make ends meet or you’re trying to establish good habits after an insolvency, budgeting is likely to be one of the top items on your financial management checklist.

While it may come as something of a surprise, the truth of the situation is that budgeting is a bad idea.

Here at BankruptcyCanada, we want to help you become smarter with money, and that means investing your time and effort into strategies that work.

Let’s find out why you should avoid budgeting, along with what tactics can be employed to achieve better results.

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The Budgeting Dilemma

At a glance, budgeting sounds like a great idea.

It encourages you to take a more responsible mindset while also developing winning habits, such as analyze both revenue and expenses on a daily basis.

Theoretically speaking, then, the added financial organization can only have a positive influence.

Unfortunately, life isn’t about theoretical success.

In reality, budgeting poses several potential problems, including but not limited to:


  • When you set a budgeting philosophy, you will often overlook at least one bill or ongoing expense. Even if it’s something like a miscalculation of interest rates, this can cause the entire budget to become redundant.
  • By using a budget, you anticipate things to run smoothly. Sadly, a single unforeseen circumstance could put you behind on bills and payments. In turn, it may bring the snowball effect that results in bankruptcy.
  • Successful budgeting means tracking every expense before analyzing the full situation with graphs and statistical data. Even with the right Apps and software, it can be mentally draining while also costing more money.
  • Budgeting requires a level of discipline that you may not have. In addition to successful monitoring, you will have to avoid the temptation to spend money on luxuries. Even the odd lapse could cause major damage.


Essentially, while you will set out to follow a budget with good intentions, it could actually lead you to a worse outcome.

Therefore, finding an alternative solution is crucial.

The Alternative To Budgeting: Pay On Payday

It’s unlikely that all overheads are automatically billed on the same dates, or even at the same frequency level.

For example, your rent may be due on the first of each month while your broadband comes out on the 16th.

Meanwhile, some bills may be taken quarterly, bi-annually, or even annually.

This makes budgeting very difficult to master.

Thankfully, most accounts can now be managed online, which gives you flexibility in how to pay your bills.

One of the best ways is to use online billing to schedule payments that sync up to how often you get paid from your employer.

If your cell phone bill comes to $80 per month, for example, it’s possible to break it down to match your salary payments.



  • If you get paid monthly, you’ll arrange for the funds to leave your account on payday, even if the bill isn’t due until later in the month.
  • If you get paid fortnightly, you can arrange two $40 payments to leave your account every two weeks to clear the monthly fee.
  • If you get paid weekly, you can arrange for four $20 payments to be transferred to the cell phone account each week.


While it may seem like a lengthy process to do this with all of your bills, it’s a process you’ll only need to complete once.

After this, any new bills can be incorporated with ease too.

The Benefits Of Payday Payments

Before adopting any new strategy, it’s necessary to understand the incentives.

Paying on pay days offers three main benefits;


  • You’ll always be ahead of payments rather than playing catch-up, which can also reduce late payment fees and other charges.
  • If you pay weekly, there will be some months where you get five payments rather than four. Or if paid fortnightly, you may get three rather than two. This feels like extra money.
  • Any money left is yours. Whether it’s used for living, luxuries, or savings is up to you. Either way, the ability to spend with confidence is highly rewarding.


Paying Bills That Don’t Sync With Your Paydays

Online billing and account management allows you to achieve the desired outcome with most of your bills.

However, some will not offer this opportunity.

If you pay your landlord by cheque, for example, they’ll probably want it on the same date of each month for their convenience.

While it can threaten to disrupt your new approach to financial management, you can overcome the challenge with one easy job: set up a new bank account.

A secondary bank account can be used to collect the funds for monthly and annual bills, as well as one-off costs.

The best way to manage this is to call it your PLAN account:


  • Projected – this covers your monthly bills.
  • Layaway – this covers luxuries like clothes and unplanned tasks like car services.
  • Annual – this covers annual bills as well as things like the festive period.
  • Need – this covers replacements and necessities, as well as savings.


The best way to master the use of your PLAN account is to write down all bills and work out the weekly, fortnightly, or monthly amount that’s required.

For example, if you have an annual bill of $520 to find, simply pay $10 each weekly payday or equivalent if you are paid fortnightly, monthly, etc.

Do this for all bills and projected layaway expenses, and the days of panicking when those big bills arrive can become a thing of the past.

Once your PLAN account is ahead of schedule, it can be used for emergencies too.

Any additional funds can supplement your long-term savings.

What If This Still Doesn’t Work

Good organizational skills and planning can only go so far.

If your outgoings outweigh your income, additional support is needed.

Whether it’s debt relief or analyzing your expenses, BankruptcyCanada’s team of financial experts can help you regain control, which will instantly lift a weight of pressure from your shoulders.

To find out more, give us a call on (877) 879-4770 now.

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