Personal Finance

How to Budget When You Hate Budgeting

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Budgeting doesn’t have to be so mind-numbingly tedious. It’s as if everything we now know about budgeting was written by accountants for people who think like accountants. The rest of us need intuitive tools fit for English majors.

I must confess that I have never, not once, balanced my checkbook. A recent survey of Bogleheads suggests that even in a forum of savvy personal finance lovers, only half balance their checkbooks. But that does not mean we advocate negligence. My wife or I review our monthly credit card and bank statements carefully. If the bank ever makes a mistake we miss, it will be a small one. I’m willing to pay that price for the pleasure of never having to spend a minute doing subtraction in my checkbook while the grocery line backs up behind me.

My budgeting goals are similar. I look for the most pain-free methods to stay on top of my finances. We have a prudent reserve set aside, so we don’t get swamped by one bad month. At the same time, I hate feeling unprepared. If you have ever opened an unusually high credit card bill without a plan to pay for it, you know the hollow sensation I’m talking about.

Like many others, I was initially enamored by the budgeting tools offered by Mint and other such services that offered to download all my financial transactions. After a few months, though, I found the process increasingly annoying. The longer I waited between each Mint account review, the more impossible it became to manage our money flows.

Was that drugstore purchase for my wife’s birthday card or for cough medicine? And because checks can take several weeks to clear an account, these reporting tools can’t reliably indicate how you stand at any given moment. After a year, I finally gave up.

Making Budgeting a Little Easier

I call our new strategy “Budgeting Lite.” Before the new year, my spouse and I revise our annual budget and give every dollar of income a home. We make a plan for spending, saving, and projected charitable giving. But that doesn’t mean we must track every dollar every day.

To implement this plan, we use a tool called You Need a Budget (YNAB). There are other budgeting tools that you can use to implement my “Budgeting Lite” philosophy – and that’s the key, ultimately any tool you choose should work for your own needs.

However, this one works best for me and my family, no less because it makes financial coordination with my spouse so easy. (I’ll note, too, as a fee-only fiduciary adviser, I don’t accept any payments — also known as revenue sharing, kickbacks, or commissions — for referrals to You Need a Budget.)

This tool differs from many other budgeting tools because you are not required to download your financial transactions. You start using YNAB by entering the dollar amounts you have allocated to each budget category. My wife and I both have the app on our phones, and they are synced so we can use one unified family budget. After each trip to the grocery store or online purchase, we enter the transaction. We love the fact that at all times we know exactly how much we have left to spend for the month.

This budgeting strategy (we call it Budgeting Lite) helps us maintain control while spending a fraction of the time that more comprehensive budgeting strategies require. Instead of tracking 20 or more budget categories, I’ve narrowed this list down to six. We don’t enter expenses we’ve set up on auto-pay through the bank such as our mortgage payment, phone, Internet, and other utilities. These bills are predictable. In the case of heating and cooling costs, we estimate on the high side for budgeting purposes. We also don’t monitor our savings, which are all automated.

We do track our discretionary spending. Food costs can quickly add up if we aren’t mindful. We also have a miscellaneous category for everything from going to the movies to buying a wedding gift to paying a library fine (when our youngest son tore apart several pages from a borrowed book).

Examples of Budgeting Lite Categories

  • Food
  • Miscellaneous
  • Medical
  • Automobile
  • His personal
  • Hers personal

We also monitor expenses that tend to be irregular and big-ticket items. For example, so far this year, we’ve had two major repairs to my aging Volvo that may be on the fast track to the junkyard. Since we use a low-cost high-deductible health insurance plan, medical expenses can also be extremely variable. Rather than being surprised by a big bill, we are prepared for it.

A personal category that acts as an unaccountable monthly allowance is essential for couples. Even with a small allocation like $50, this category recognizes the unique preferences of each individual. What is highly valued to one person may be considered foolish to another.

Budgeting Lite empowers us with financial confidence and more time to do the things we love most. If you are in good financial health but want to be more mindful about your spending, try implementing your own version of Budgeting Lite today.

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