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Do you think "Extreme Budgeting" is nuts? Our Financial Planning Partner Bridges explains what's involved. 

Can extreme budgeting work for you?

The phenomenon of extreme budgeting is gaining a lot of attention, as many households are keen to rein in their exposure to debt. As the name suggests, extreme budgeting requires a quantum leap in the approach to the household budget, involving a resistance to the pressures of consumerism and an emphasis on self-sufficiency and a more frugal lifestyle. While the changes required by extreme budgeting are quite dramatic, on the flip side the potential benefits are compelling. 

While extreme budgeting may sound like its supporters are confined to tree-changers or alternative lifestylers, many of those who proclaim its benefits have much more mainstream objectives in mind. Some are doing it as a ‘detox’ from personal debt that has gone out of control, while others have grander goals, such as achieving early retirement by directing large proportions of their income toward savings.

So what’s involved?

Basically they live by the mantra that they must think critically about every dollar that they spend and that their ultimate financial goal is always of greater importance than the things that they give up. Nothing is taken for granted and every aspect of consumption is scrutinised.

This attitude is then brought to life in a range of everyday habits, rules and behaviours, which include things such as: 

Prioritising is the key

Many of us get caught up in the race to own the latest and best of everything in an attempt to live up to a perceived status or lifestyle that has been promoted to us in the media. Extreme budgeting seeks to press the pause button and take stock of lifestyle and what is really important, so that conscious choices can be made to live life more simply and conservatively.

This may not seem all that appealing on the surface, but if the end goal means something like retiring at 55 instead of 65, then the end certainly can justify the means.

Bridges Financial Services Pty Ltd (Bridges). ABN 60 003 474 977. ASX Participant. AFSL 240837.

This is general advice only and has been prepared without taking into account your particular objectives, financial situation and needs. Before making an investment decision based on this information, you should assess your own circumstances or consult a financial planner or a registered tax agent.

Examples are illustrative only and are subject to the assumptions and qualifications disclosed.

Part of the IOOF group

In referring customers to Bridges, Laboratories Credit Union Ltd does not accept responsibility for any acts, omissions or advice of Bridges and its authorised representatives.

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