Why is it so hard to budget? We know why we have do it. It makes sense. It will help us reach our goals. So why don’t we do it? It’s complicated. Not the answer to the question, but budgeting itself. Apps, spreadsheets, calculus. For many, it’s too much. So what are some effective ways we can budget what we have? How can we make budgeting easy and seamless?
GET ORGANIZED
We have to take the resistance away from the equation. Even with the extra quarantine hours no one has time to spend hours crunching numbers each month. So how do we fix it? Automation! We start with two checking accounts and one savings account. The first checking account is for spending, the second checking account for bills and the savings is for savings. Side note, if your bank has fees for a second checking account consider opening an online checking (which often has no fees or minimum balances). Other options include credit unions and split direct deposit.
DIVIDE AND CONQUER
Next, we take our required overhead costs per month (rent, insurance, utilities, etc) and divide it by the number of times we get paid in a month. We also decide how much we want to or are able to save each month. Then set up automatic transfers or split direct deposit for each pay period. So without thinking the money goes where it’s supposed to and you’re covered. What remains in your 1st checking account is for you to spend at your own discretion. With bills and savings taken care of there are no worries. Feel free to set up additional savings accounts for different purposes. After the initial set-up, the process is seamless.
And that’s it. Feel free to stop there.
FOR THOSE THAT PREFER MORE TRADITIONAL METHODS
Cash envelopes and pen and paper still provide a very practical method to budgeting. For those that prefer apps and spreadsheets they can be practical too. The goal is simply to be in control of your finances and have the accurate information needed to make the right decisions for you. So whatever method you decide to use, you’ve got this!
Until next time, Crystal
Crystal Hicks is an accountant with well over a decade of experience in tax, finance, audit and accounting in New York and Florida. Each week in Money Talks, she’ll share her advice to help individuals to navigate their financial challenges!
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