I came across the topic of reverse budgeting via www.fivecentnickel.com, and it is an interesting twist on the common way to manage income.  The premise is simple: instead of allocating every dollar of our income to specific categories, we determine exactly how much of it we want to save.  After that, anything is fair game.

My first impression is that this would be a good budget for people who absolutely can’t stick with a typical budget.  It’s simplicity should guarantee minimum maintenance and time consumption in following it.  I think it definitely could work for some people, but it’s not foolproof. 

For starters, we need to make sure we are saving a good amount of the income.  Since simplicity is the key to this budget, we aren’t calculating exactly how much we need for different things, so we have to make a good estimate of how much we can and should put away each time.  It’s hard to know for sure how much we can set aside to maximize our savings while living comfortably.  It would get easier for sure after we get into the habit of it though. 

I’m thinking that reverse budgeting would be most effective for people who have an income that is significantly higher than their fixed expenses.  If I were to budget this way, I wouldn’t want to constantly have to calculate in my head what bills are due when, how much gas I will need for the next 2 weeks, etc.  The only way I could really follow this budget without worrying all the time would be to have a comfortable income that is way above my estimated necessary expenses. 

I’m pretty comfortable with how I currently budget my money, but reverse budgeting is definitely worth trying for some people.