For many people, the word “budget” is almost as anxiety-inducing as “dentist” or “we need to talk.” For varying reasons, people’s purchasing habits and the requirements of maintaining a budget just do not align. Whether it’s laziness to track every purchase, limit spending categories to specific dollar amounts, or the fatigue that comes from thinking about every transaction we make, it’s common to set a budget, but far less to stick with one.
But what if the all-mighty spreadsheet or tracking document wasn’t part of the equation? What if all you had to do were a few things and you’d be aware of what you were spending without using any of your time or energy?
Here are three simple ways to budget without a spreadsheet:
Specific Credit Cards for Different Spending Categories
Say what you will about the dangers of credit card debt, but when used responsibly, credit cards can be a powerful financial tool. If you plan to pay off your balance each month and on time, spending with credit cards is much smarter than paying with cash or a debit card.
Instead of using one credit card (or a few arbitrarily) for the bulk of your purchases, carry a credit card for a few spending categories. If you use a lot of gas each month, get a credit card that offers more points or cash back for fill-ups. If you spend a lot of money grocery shopping, get a credit card focused on supermarkets. This strategy not only saves you money on necessary purchases but doing so also makes it easier to track exactly what you’ve spent on a particular category, all without doing any transaction itemizing or math.
Automate Your Spending
Debt, savings, retirement, investments, bills and potentially, even utilities, can all be automated by percentage of your monthly income. Instead of spending without thought and running yourself too thin at the end of the month, you won’t have to worry about covering everything. The time and stress you’ll save will allow you to focus your energy on learning a new skill, increasing your earning potential, or a developing a new hobby.
It’s not going to feel great seeing substantial portions of your paychecks leave soon after they arrive in your checking, you’ll have peace of mind knowing you’ve responsibly paid your bills, yourself, and your future self.
Set an Annual Holiday/Birthday Fund
Many people fail miserably at budgeting because a lot of the purchases we (have to) make aren’t steady and predictable. If you set your holiday and birthday budget on a monthly basis, you’ll probably have no trouble staying within your means most months. But then a month comes where you have three birthdays to attend, and one is a costly dinner. Then the next month arrives and you’re traveling to relatives’ house for holidays.
Before you know it, you’re buying gifts for various members of your family. Your monthly budget is likely destroyed in these months. While you could certainly roll over your monthly holiday/birthday savings from the less-busy months, it’s much easier to set one annual amount you know you can afford, and once it’s gone, it’s gone. This will keep you from indulging in holiday overspending, which is a central piece of advice financial thought leader Andrew Housser routinely gives when offering simple tips for effective financial hygiene. If you really want to streamline the process and can afford the upfront cost, get a prepaid debit or credit card with your annual holiday/birthday budget. You’ll know how much is left after each purchase and once it’s gone, it’s gone; no risk of digging yourself a hole because of poor planning or disorganization.
Once you get past the idea that good financial hygiene doesn’t have to look one specific way, you can craft a strategy that sustains itself and serves your long-term financial goals.