DISCLAIMER* This isn’t a boring budget piece. This is an easy tip you can use to watch your spending. We know that BUDGETING sucks; this is a much easier replacement that takes less time.*
How many times have you sat down and painstakingly worked out a detailed budget – or at least wanted to? Maybe you argued with your spouse a little about what should go where, but you had it under control. Maybe you even had that nice “I-did-a-budget glow” for a day or two.
Then you got paid, waited a few days, and watched your carefully crafted budget give a last dying heave and splatter into nothing – with all the grace of a bug hitting a windshield. We’ve all been there. Learning to make a budget that takes everything into account is hard, and there’s a lot of trial and error involved. In fact, Darwin’s theory of budgeting is that your budget has to evolve, not dissolve. Don’t be too hard on yourself. There is a nearly fail-proof way to simplify everything, and it’s much easier than you think.
The solution? Use cash. It’s just human nature. When we look at our bank accounts and see $100, we think, “It’s ok to buy that latte / bagel / bag of chips.” Worse yet, sometimes we don’t even look at our bank accounts and just buy stuff anyway.
When you pull out your wallet, see that hundred dollars, and know that* it’s all you have* suddenly you don’t want to hand it over.
Here’s the formula for success:
Step 1: When you get paid, check the amount in your bank account.
Step 2: Subtract any expenses that haven’t cleared, anything that will run through automatically, and anything that you have to pay by cheque.
Step 3: Add $50 to $100 to that total (this is your padding to ensure that you don’t bounce anything). It also gives you a small cushion in case you do go overboard. If you can’t do $50 right now, do $25 or even $10.
Step 4: Pull the rest of your money out in cash.
Step 5: Divide the cash up according to your budget; food, gas, entertainment, etc.
Step 6: Now you can only spend the money you have. When it’s gone, it’s gone. It takes some discipline, but the power of cash is often stronger than my budgeting will power.
You’ll never have to worry about bank fees, bouncing cheques, or even balancing your checkbook as often. All you have to do is check your account once in a while to make sure that everything cleared. You’ll also be surprised at how fast that little bit of “padding” adds up in your checking account. The rewards for using cash really are great – try it yourself and avoid the splattered bug syndrome.