My "Focused-Weekly-Cash" Budget

Tuesday, April 15, 2014

Over the years friends and family have asked me "how do you budget?"  They don't ask because they think that I budget perfectly (or if they do then they are greatly amiss) - they ask simply because they know I have a system...and have had a system for a long time.

Now let me sidetrack onto the idea of a "system."  To me a system is not a stagnant, never-changing, system-for-the-sake-of-a-system method.  A truly functioning system is organic, ever-changing, serving the needs that I have at present and that I predict in the future. 

That is an important preface to my budgeting experience because I have tried A LOT of systems.  But again, to me a system is ever changing.  And because I've constantly adapted our system, I now have the most simple, most successful, and most fulfilling budget method that I have ever used.

Three-Key Components:
  • Focused
  • Weekly
  • Cash
Focused: Place Your Energy Where It's Most Effective

This component has been a part of my system for as long as I can remember.  Maybe because as an Accountant I think in terms of "fixed" versus "variable" expenses, which is the essence of this step.  But truly, I simply separate my expenses into one of two categories: "out-of-sight, out-of-mind" or "mindfulness needed."

Into which category an expense is placed is not crazy important, but the more I place in "out-of-sight, out-of-mind" the simpler my day-to-day budgeting will be.  And I like simple.

Currently, the only three budget items I have in my "mindfulness needed" category are Groceries, Clothing, and Entertainment.  I chose these because I can actively manage how much is spent in these categories from budget period to budget period.  All other items I cannot do much to change short of refinancing, shopping for new insurance, or changing Internet providers - which I will not be doing on a regular basis since I enjoy sanity.  So such items can aptly be placed in "out-of-sight, out-of-mind," assuming I do reassess as needed.

Weekly: Saturday to Friday

I first chose a weekly budget simply because this was the common denominator of our two paycheck cycles (that is the only algebraic term I will use - I promise).  Since my husband is paid biweekly and I'm paid monthly, calculating our income weekly was the most accurate method. 

But aside from the practical, why I will never go back to monthly budgeting is because I find a weekly budget so much more motivating and gratifying.  At the end of each week, I'm met with the fruits of our labor as I deposit into a "dream jar" any unspent cash.  I also can reassess weekly rather than monthly whether our budget is working or needs to be tweaked, therefore I'm quicker to adapt and change (harping back to a successful system being organic).

And perhaps most importantly, our weekly budget is Saturday morning to Friday night.  Since our primary and essential spending occurs during the weekend (think weekly grocery trip and other errands) those takes first priority as they should.  Then, and only then, might we have leftover money to spend during the week on work lunches or miscellaneous expenses (generally non-essential or luxury items).  If we decide to do a lot one weekend, we simply know that it means no work lunches that following week.  But that is much better than the Sunday-to-Saturday alternative of everyday work lunches but then no grocery or fun money come Saturday (or going over budget since groceries and fun will likely be had regardless). 

Cash:  Yes, The Green Paper Stuff

It's almost embarrassing how crazy simple and almost antiquated this component seems, but in my opinion it makes all the difference.  It is interesting how the most effective aspect is not a new idea at all but something that our parents and grandparents and great-grandparents used for generations back.

I was hesitant to go to cash because we live in the digital age and I thought I would miss out on some great convenience.  But in all honestly the success I'm reaping from using cash far outweighs any of the inconvenience that my mile-long drive to the ATM brings to my Saturday morning (besides, I'm generally out-and-about anyway). 

Now my assumption was that cash would be effective because I'm physically handing over money each time I make a purchase.  I've heard it's harder to spend cash than to swipe a card.  While true, this does not fully describe what goes through my mind when I spend cash.  The reason cash has been most successful for me is that each time I open my wallet I physically see the amount of cash remaining.  I'm then reminded that the cash in front of me is the exact money that will someday fund my "dream" (whether a room remodel, a car, or that retirement that I someday want to enjoy).  So every time I open my wallet I have to make a choice - is the item on the counter worth delaying my dream? 

To illustrate, the $7.00 sunglasses that I bought this week will not delay my dream significantly and I went ahead with the purchase.  But if it had required using the last $20.00 in my wallet, no doubt I would have waited until the next week!  My goal is to every Friday deposit at least $20 into my "dream jar."  So yes, the item on the counter may in fact be "essential" but making that choice (item vs. dream) every time I make a purchase keeps me on track.  And you can bet that I'm motivated to pay the least possible amount!  Case in point - $7.00 pair of sunnies.

May we spend well and live well!
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