The Smartest Money Moves for People Who Hate Budgeting
Tracking your spending every day can help you stay on top of your finances and build long-term wealth, but it can also make budgeting feel overwhelming.
Here are four methods that simplify financial management, and let you focus on the essentials of budgeting instead of overanalyzing every little detail of your spending.
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1. Automate paying yourself first
Paying yourself first is a common personal finance strategy that entails allocating some of your paycheck to your savings in a similar way to how you allocate money to your essentials, like gas and groceries. You can’t spend what you don’t see, and automatic transfers are a form of forced savings.
Set up automatic transfers to your savings and retirement accounts so that you’re prioritizing your future goals. You can gradually increase how much you move to your savings and retirement accounts over time. Making this automatic also frees up headspace to focus on how you will use your remaining paycheck.
2. The zero-based 'fun' envelope
Zero-based budgeting involves giving every dollar you earn a job. Allocating a specific amount of this money for “fun” — like dining out with friends, going to the movie theater or other hobbies — means you’ll have a set amount of money and will ideally keep you from spending more than that set amount.
Set aside a portion of each paycheck for this discretionary spending and use it for fun. But once your fun envelope is empty, you cannot spend any additional money on discretionary items. You have to wait until the next paycheck arrives.
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3. The 'core four' check
Your money is likely spread across many categories, and that may make it challenging to keep track of them all. While you can review monthly credit card statements and create detailed spreadsheets that track all your spending, focus on the “core four” categories to save time.
Housing, utilities, food and transportation are often the four biggest expenses. That means that when trying to cut costs, focusing cost reduction efforts in these four big categories can lead to the most savings.
For example, consider cooking at home instead of dining out or ordering from DoorDash, or using public transportation instead of calling an Uber when trying to save. Regularly check on your spending in these categories so you are aware of any surprises, like if your spending balloons one month to the next.
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4. Have a service downgrade day
There’s a good chance you subscribe to monthly plans for various products and services, like television streaming platforms. You may also have some that were once useful but now sit unused and are quietly eating away at your savings. Others could be chipping away at your bank balance while a less expensive tier of the same service could provide what you need.
Choose a certain day regularly, like the last day of each month or quarter, for a service downgrade day. Review your spending and see which subscription plans you can cut or downgrade.