Starting and maintaing a spending plan (a.k.a. Bu**et) is a laborious task but, like much of life, the key is to simplify, simplify, simplify. Let’s face it. If it’s complicated and time consuming, it won’t last long in your life.
So, here are some easy yet profoundly meaningful ways to make sticking to your spending plan a breeze.
The 50 Percent Plan
Everyone has a different way to approach their spending plan, but I’ve found this a good place to start. The idea is to fit all your normal monthly expenses (such as food, insurance, housing, Internet, utilities, transportation) into 50% of your monthly income. The other 50% will be divided between savings, debt reduction, personal entertainment, and giving (that is why we’re here, after all). The way you choose to divide the 50% will depend on your situation. For example, your percentages could go like this:
10 percent: Eternal Wealth Building – Use this to invest in the lives of others, bringing them to Christ and bringing yourself “true riches”. Rather than being a drag on your spending plan, get creative and turn this into entertainment. One woman I know uses this money to buy ingredients to make banana bread which she then sells, giving all the proceeds to her church. She and her girlfriends have a blast doing it and they effectively double their giving.
10 percent: Where You Worship – This is your traditional tithe and offerings.
10 percent: Short-term Savings – Use this for emergency expenses or occasional expenses like auto maintenance and repair, home repairs, surprise medical expenses, etc. This will save you from breaking into your other categories when the need arises.
10 percent: Long Term Savings/Debt Reduction – If you are in debt, use this to pay it off as quickly as possible and begin saving and building margin.
10 percent: Fun Money – This is guilt free money to spend on celebrating, relaxing and having fun.
Sometimes a spending plan can get a little unwieldy with a million categories and subcategories. Combine similar expenditures and you’ll make your spending plan much easier on the eyes.
I love cash. You’ll spend 30% less than when you use a credit/debit card and with cash there’s no chance of overspending or tracking how much you have left in that category. Plus, you’ll feel like a high roller when you whip out that wad at CVS. Try using the cash method for one or two categories at first and expand to more as you get comfortable with it.
This is the age-old coffee can method. Throw your cash in designated envelopes for the month (or week) and when the cash is gone, so is your spending. It’s simple, it doesn’t involve tracking, and it allows you to transfer from envelope to envelope without adjusting your spending plan.
Dump credit cards
Get rid of extra credit cards. Those rewards points aren’t worth it and it’ll simplify your financial life immensely. In fact, get rid of all credit cards. The interest is high, the capacity for overspending is dangerous, and there are potential spiritual pitfalls, even if used for emergencies. Consider George Muller, a man who cared for 120,000 orphaned children: “I could buy a considerable amount of goods on credit, but the next time we are in need, I would turn to further credit instead of turning to the Lord. Faith, which is maintained and strengthened only by exercise, would become weaker and weaker.”
Even at it’s simplest, a spending plan still takes some maintaining. Set aside at least 15 minutes a week to tend to it. You spend 40+ hours a week making it, so it’s only logical to spend a little time checking up on it, especially when it can save you a bunch.
Most banks will let you set up automatic transfers to savings on a regular basis. Set it and forget it.
Find a good account with free checking and a good interest rate and stick with it. There’s no need for different accounts with varying purposes when consolidating to one will make your life easier.
Pay bills at the same time
Vendors will change your due date with a simple call and you’ll only have to worry about paying your bills once a month. That’s a good thing.
Have other tips? Let us know!