Easily the worst personal finance idea ever
🔸 Plus: 🔸Fearne Cotton splits with husband just days after surgery 🔸 Sports stars are turning into crypto bros 🔸 Plans for London's tallest tower given the go ahead 🔸
Your 2-minute guide to demystifying money and making you richer
The markets, year-to-date
S&P 500: 6,051.27 ⬆️ 27.59%
FTSE 100: 8,300.33 ⬆️ 7.50%
Bitcoin: $101,346.00 ⬆️ 129.27%
GBP to USD: 1.26 ⬇️ 0.87%
GBP to EUR: €1.20 ⬆️ 4.27%
(As of Friday market close.)
The worst personal finance idea we’ve heard
There are some terrible personal finance ideas out there. Moneyin2 has covered a lot of them — 100% crypto! Investing via astrology! Premium bonds! Luxury watches! CFDs! Stoozing!
But CNBC did an article recently that took the prize for describing the single worst personal finance idea we have ever heard: “You don’t need a budget.”
Budgeting is bad, according to author Dana Miranda:
“Budget culture is our dominant approach to money that relies on restriction, shame, and greed,” Miranda told CNBC Make It in an interview, likening it to diet culture.
“Research shows in budgeting, and we see the same thing with a much broader body of research in dieting, that that kind of restriction doesn’t work,” she said.
“People tend to fail at sticking to those rules, and so you are inevitably going to feel like a failure. You’re going to feel that shame because you’re not reaching those sorts of arbitrary goals that are being set.”
It’s difficult to know where to start with this nonsense
Dieting and budgeting are not the same thing, obviously, and yet Miranda conflates the two. “Budgeting” is a broad term but in essence it requires something very simple: That you understand your income and your outgoings, and that you arrange them so that you have more money coming in than going out. If you cannot do this, or cannot put yourself on a practical path to achieving this, then — frankly — you have got problems that personal finance advice will not be able to solve.
Worse, Miranda recommends not saving. Seriously. Not saving! In its place, she recommends spending when you feel like it, but “mindfully”:
Instead of scrimping and saving your money, Miranda recommended “conscious spending,” as an alternative. “It’s like an intuitive or mindful approach to spending and using their money.”
“So instead of making a plan for your money on where every dollar is going to go and trying to stick to that and punishing yourself when you don’t, rewarding yourself when you do, take it more mindfully, moment by moment,” she said.
“So how does money serve you in this moment? How can money serve you in a broader way outside of the numbers and spreadsheets that we tend to put it in?”
Don’t make a plan! Do what you like! Live in the moment!
Financially, this is insane
Here is the hard truth: Your money doesn’t care about your feelings. Your money doesn’t care if you are being mindful or intuitive or if it is “serving” you or not. You might not be looking at a budget or a spreadsheet but your money definitely exists inside both, at your bank, work pension, or in your ISA.
At the end of the day, week, month, or year you will either have less or more money than when you started. This largely depends on your own personal behavior, and whether you planned your spending or not. It’s called budgeting. There’s no way around it. There is no way around maths or taxes or the weather, either. You need to deal with it.
Figuring out where your money is actually going — and then reining it in a bit so that you can save and invest — is probably the single best starting point for anyone who wants to achieve financial security and independence.
Amazingly, Miranda recommends overspending on credit cards(!)
When asked about the risk of overspending, Miranda said it’s okay to take on credit card debt. Although controversial, she said carrying debt isn’t always “ethically wrong” or as “destructive” as society would have you believe.
“I consider those as part of the resources available to you to spend,” she says. “As long as we understand how our debt products work and the consequences of different decisions that we make around debt.”
To be clear: Credit card debt is the single worst financial baggage you can add to your life. Even the “best” 0% rate credit cards come with add-on interest rates starting at 25%.
Is Miranda serious? Well, she has a new book out titled “You Don’t Need a Budget” so we have to assume so.
Perhaps this is just inflammatory language designed to grab headlines, because Miranda does recommend going on a “money date” with yourself and figuring out your “money map”. Both of those sound suspiciously like budgeting but without the word “budgeting”.
Also, Miranda owns a house. So there’s that. Do you think she got it by not sticking to a budget?
The Moneyin2 Guide to Wealth
The Moneyin2 Guide to Wealth will get you the biggest return on your savings by maximising cash matches from your employer, free cash from the government, and shielding your investment gains from tax. It takes you step-by-step through the world of pensions, SIPPs, ISAs and ETFs — all in plain English.
And for dessert …
Fearne Cotton splits with husband Jesse Wood just days after she has tumor removal surgery.
Sports stars are quickly turning into crypto bros. (We saw that coming, no?)
Looking for the perfect sugar cookie to make for gifting friends, family and neighbours? Look no further than this recipe.
Plans for London’s tallest tower were given the greenlight. The building known as “1 Undershaft” will be the same height as the Shard.
More from Moneyin2:
Do you want Moneyin2 to recommend your Substack?
Get in touch at contact@moneyin2.com!
We want to hear from you!
What money issues do you want us to tackle in this newsletter? Let us know at contact@moneyin2.com.
Follow us on social media
Facebook, TikTok, Instagram, Twitter, and Threads.
Partner with us!
If you want to sponsor Moneyin2 get in contact here.