The 3-step system I use instead of a traditional budget
- I was never able to stick to a spreadsheet or budgeting app, so I developed my own system.
- My husband and I work together to set financial goals and then set our spending levels accordingly.
- We also regularly check our bank balances to see how many are coming in and going out.
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As a personal finance writer, the benefits of budgeting make up 75% of my financial advice. Unfortunately, when it comes to following this advice on my own, I have tried and failed many times. With dozens of budgeting apps and shareable spreadsheets at my disposal, I don’t have a single good excuse for these failures.
I’m not the only one to blame for my family’s lack of budget, however. While my husband is generally more optimistic about this and always seems to have a brilliant new budgeting app that he’s sure is set to change our lives, he usually gives up as soon as the initial excitement sets in as well. dissipated. But I accepted our limits, because if I had to distill the remaining 25% of my financial advice, it would be: “Know thyself”.
Why traditional budgeting never works for us
True or false, personal finance writer or not, I have accepted that I am not a person who will track my monthly expenses on a spreadsheet, app, or leather-bound journal, and monitor them accordingly. Traditional budgeting is not for me. I find the apps that connect to our bank account and break down our spending with a handy pie chart more overwhelming than helpful. Because while my husband sees “Target” and thinks “Olivia’s happy place”, I see ”
, back-to-school supplies, and of course, a facial contouring kit that the marketing team really knew what they were doing. use it again.
I know not everyone can relate to our struggle. Lots of people have a budgeting app they swear by where they spend Thursday nights with their partner and a bottle of wine poring over a shared spreadsheet. But, if that’s not you – if deep down you recognize, like I did, that you’re never going to magically wake up the kind of person who can explain every dollar to your name and a plan for it. Ways You’ll Use It – I’m going to share with you the three ways my husband and I overcame our inability to use a traditional budget while staying financially fit.
Our 3-step alternative to traditional budgeting
1. Set financial goals
While reviewing the details of our spending usually leads to arguments, and we trade Thursday nights with a spreadsheet for some frenzy-worthy drama, staying in shape financially requires us to spend at least a little. energy to strategy.
For us, the first part of creating a strategy starts with setting goals. If having a few thousand dollars saved by the holidays is your financial goal, you don’t have to jot down a spreadsheet to get there; you can just set aside $ 150 per month. A spreadsheet can help you organize your strategy, but if that’s not right for you, set up a monthly money transfer to the appropriate savings account and move on.
However, for your financial goals to work, they can’t just be lofty ideals, they have to be at the center of how you spend your money. For my husband and I, our financial goals determine our financial priorities, and although those priorities are never written into law in the form of a traditional budget, they translate into our choices. First, we pay our bills. Then we devote money to our financial goals (retirement savings, mutual funds, vacations, etc.).
2. Remain aware of our financial situation
Of course, this method assumes that we will have the money to live on after we pay our bills and financial goals. This brings me to the second thing we do instead of a traditional budget: we make sure that our financial goals are determined by our financial realities. This is where the personal finance gurus sigh and mutter, “Yes, this is what budgets are supposed to do,” but I will continue to ignore them and tell you what my husband and I are doing. the place.
Every time our financial situation changes, we do the math. For example, if one of us gets a raise or a student loan comes out of the carry-over, we pull out a spreadsheet and calculate how that will change our finances. We rarely do this for the same reasons that we can’t stay on a budget, but a rough overview of our position works for us because a rough overview allows us to calculate how much money we make and how much we typically spend. We keep this number in mind as we set our financial goals and take on new bills to make sure we still have enough to live on each month.
3. We carefully monitor our bank accounts
I recognize that this loose system of third parties – bills, goals and life expenses – may seem recklessly abstract, but my husband and my traditional lack of budget doesn’t mean we survive on hope, prayer, and a complicated network. no credit cards either. We keep track of our finances; we just skip the budget part and get our numbers straight from the bank. We do this by regularly checking our bank balances and signing up to receive alerts on our phones whenever money comes in or out of our accounts. This monitoring method allows us to know in real time the specifics of our financial situation.
I see traditional budgeting as a very effective middleman, which means that by cutting it, I agree to follow and organize my money on my own. This practical approach to keeping our money on track in confluence with our larger financial situation, all in the service of our financial goals, works like a vital budget. While this vital budget does not have the seal of approval of conventional wisdom that a traditional budget does, it works very well for us in ways that traditional budgeting never did. And in the end, the best budget is the one you’ll actually use, even though technically it’s not really a budget at all.