Monthly budgets don’t work very well.

Screetch. Crash. Record scratches. Dramatic silence.

I know, I know, I know, but it’s what you’ve always done. And your mom. And her mom. And your uncle’s half-sister’s hair dresser’s step cousin’s mom. While that may be so, I want you to think about how you are currently budgeting and ask yourself this question…

Is the way I’m budgeting currently, actually working?

If the answer was yes, then good for you for opening this post in the first place – leave a comment and teach us your ways. For the rest of us, the truth is the definition of insanity is doing the same thing and expecting different results.  Might be time to switch things up a bit.

Now, let me clarify one thing. In this post I’m referring to a “budget” as a category you actively spend money on regularly  . Not utilities, mortgage, health insurance budget, vacation budget, and not even necessarily gas (since I think of gasoline more like a utility). Because those usually do operate on a monthly basis, and you don’t have much control over those expenses for the most part.

When I say “budget” I’m referring to regular spending that is in your control such as: shopping budget, grocery budget, home decor budget, date night budget, etc.

Traditionally these budgets are set on a monthly basis. Today we’re going to flip that on it’s head!

Here’s why setting MONTHLY budgets is probably hurting more than helping you:

1) Your life runs by weeks, not months.

When you sit down and look at your upcoming calendar, I doubt you’re organizing your life (in detail) an entire month at a time. Sure, you may glance ahead for a general overview. But most likely you operate on a weekly basis…so why shouldn’t your budget? Trust me guys, a monthly budget is so yesterday.

Oh yes I did just quote a Hilary Duff song…

2) The smaller the number, the more manageable it is.

Let’s take a grocery budget for example. I recommend aiming for $100 per person in your family, per month (as explained here ). For my family, that is $600/month.

If you give me $600 cash on June 1 and tell me to make it last all month, what am I going to do?

Well first I’m going to get $600 in $1’s and make it rain while dancing in the money while jumping on my bed like they do in the movies. Obviously.

Then I’ll do my shopping as usual, not being all too cautious because $600 smacks is a lot of dough. I’ll burn through all $600 in a week and a half (gasp! I have no idea how that happened, Bubba! seriously!) and tell myself I’m not going to spend money for the rest of the month...yeah right .

30 or 31 days is a LONG TIME, folks! Don’t do that to yourself! Single digits is the goal. Our brains and will-power handle small numbers MUCH better than large ones.

HERE’S WHAT TO DO INSTEAD:

1) Break your monthly budget down by week.

My $600 grocery budget suddenly turns into $150/week. It’s not only easier to track and wrap my head around, but it paces my

spending for the month which helps me avoid going over…by like, 10million times. Clinically proven.

Ultimately you only need to focus on that budget for 7 days (or 6, if you don’t spend money on Sundays like I do). THAT’S IT. Anyone can handle staying strong for 6 days.

See, doesn’t that seem so cute, cuddly, and doable?

2) Keep your budgets to 3 or less

There are lots of envelope budget systems floating around, where you have an envelope of cash for every little thing in your life: Haircut envelope. School fees envelope. Eating out envelope. Dog food envelope. Groceries. Gas. Snail Bait. Diet Coke runs.

Well…what happens if you don’t need snail bait that month? Or what if you need more groceries than usual because you have family in town? It gets confusing with a capital C, guys!

I recommend 3 budgets or less. I, personally, only have two: 1) Grocery  ($150/week), and 2) Other  (about $100/week right now, thinking of moving it up to $150 now that the kids are older and in way more activities – we are working on the numbers now).

“Grocery” = consumables (food, toilet paper, dog food, toiletries, diapers, formula…snail bait) and “Other” includes everything else I spend money on during the week (outings with the kids, gas station drinks, shoes and clothes, a throw pillow for the couch, soccer cleats, baby shower gift, fast food run, etc). See all about that in my “Simplest Budgeting Technique Ever” post .

3) Allow for breathing room

By only having 2 or 3 budgets it allows for flexibility. For example…

I have $150/week for “groceries”, $100 for “other”. Let’s say I have NO food in the house and spend $200 on groceries that week. That’s fine! I still have $50 for “other”.

The next week I don’t need as many groceries since I did a huge haul, just $40 for random consumables. That means I now have $210 for “other”, which allows plenty of money for whatever I need that week, and had to give up last week (aka just 6 little days ago).

4) Find a good tracking system.

If you’re old-school and like writing things down like me, I recommend my good ol’ envelope tracking method. or even a check register (if you youngsters out there even know what that is…). If that’s not your cup of tea keep track in your phone! Use a financial app like Mint.com. which is what Bubba uses to manage and track all of our bank accounts. bills, savings accounts, etc. You can also use a good ol’ spreadsheet in the Google Sheets app, or whatever works for you.

Heck, I can’t remember the last time I even went to the bathroom without my phone, let alone left the house without it. Find a method that works for you, and track EVERY dime. Give it a good month before trying something new; new habits don’t form overnight, you know.

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So there you go! Next time you sit down to budget, break the monthly sum down weekly and it’ll make your life a whole lot easier.

Now if you don’t mind, I need to go find me some snail bait…

Source: funcheaporfree.com

Category: Bank

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