Why budgets don't work...

By categorising expenses and limiting spending, they argue, you can have enough left over every month to save money and grow rich.

The problem is that when you budget, you pay everyone else first - the landlord, the credit card companies, the phone company, and so on. So at the end of the month, you have nothing left to put in the bank. You promise yourself you’ll do better next month, but you never do. There are always unexpected bills to pay, unanticipated sales to take advantage of.

Budgeting doesn’t work. But there is something that does: putting some predetermined percentage of your income into a savings account each month before you pay any of your bills.

Think of yourself as a personal corporation and the money you save as your personal income. All the other money you spend on house and car payments and so forth are the expenses of your personal corporation. Only the portion that goes into a savings account is really yours.You might, for example, have a portion of your paycheque automatically deposited in your savings account each month - as soon as the check is deposited.

Pay yourself first by putting as much money as you can into a tax-deferred savings vehicle (like an RA).Do this for yoursef, you spouse, and children. Then pay the government next by creating a separate holding account into which you deposit a percentage of every fee that’s paid to you - the money that you going to owe in taxes. Then you pay your bills. Then you will realise that what you have left divided by the days in a month is adequate to cover expenses.