
Here’s a secret that would probably shock most of my friends: I loathe budgeting. Even though I’m a CPA and have an odd obsession with spreadsheets, I can’t track where things go. I’m not detail oriented. And even with apps and programs (which I’ll use occasionally to check in on things), I hate feeling restricted.
But, I obviously like the results of budgeting. So what’s a financially responsible, budget allergic person to do?
My solution: The Non-Budget, Budget
An easy way for me to manage my money, without having to think about it. To set it up takes a bit of time and organization, but after that you can cruise on auto-pilot.
Cliff notes version:
Once I abandoned budgets forever (after a particularly soul-crushing freak out that I was “over” my food allowance for the month), I decided to set up a completely automated system. Luckily Jordan is just as much of a non-budgeter as I am and he was all about an automated system.
All of our money flows into one checking account and then flows out to different savings accounts. A lot of different savings accounts. I have automatic bill payments set up to also be taken out of our account during the first week, so I never think about the fixed expenses. The remainder can be spent as we please.
Eat out too much, buy an expensive something, or take too many ubers for the month? No problem. We’ll be eating ramen for the remainder of the month if we run out of cash on the 23rd.
If we don’t spend everything (and that actually happens, occasionally), we can roll that over to the next month or toss it into a savings account. It usually goes to a vacation savings account or our “freedom” account. Which feels ah-mazing.
Detailed version:
Step 1: All money is deposited into one checking account. My paycheck, Jordan’s paycheck, anything we earn on the side. It all goes in here.
Step 2: Automated withdrawals at the beginning of the month to designated savings accounts. And we do have many. Here’s a quick overview of where that cash goes:
- Investment/retirement account: while Jordan does have a 401K that comes out pre-tax, we also fund a separate retirement account as well.
- Vacation savings: because travel is something we do on the regular.
- Emergency savings: We keep 6 months of expenses on hand just to be sure we can cover the random bills that pop up.
- Home savings: we own a home and someday we’d like to own another one. So we put a little bit in savings each month for that future big purchase.
- Tax savings: I work for myself and we also have a semi-annual property tax bill to pay. We save monthly to make sure the IRS doesn’t hate us.
- Freedom account: We’ve got goals. Big ones. That includes being able to take some risks in our lives without having to worry about our financial well-being. This is where we fund those dreams. This is my favorite account.
Step 3: Automated withdrawals to personal checking. This is basically the same thing as step 2, but it’s going to personal checking accounts. Jordan (my husband) and I each have our own checking account for personal spending and each month a set amount is deposited in there. Some months I spend almost nothing from there and other months I spend it all. But it’s guilt-free because it’s coming out of this account. These were the most important accounts we set up for the sanity of our marriage.
Step 4: Bills, bills, bills. At the beginning of each month, we pay our bills, with the aim of having them all paid in the first 7 days. We automate what we can, and manually pay what we can’t. These bills include:
- Mortgage
- Rent
- Credit card bill
- Phone bills, utilities, etc
- Student loan payments (nope, not anymore. Paid those bad boys off.)
- Gym membership
Step 5: Spend the rest. Seriously, having this on auto-pilot makes life so much easier. We then spend what we need to the rest of the month, knowing that the important things have been paid for. If I want to go to a yoga class, go out for a fancy dinner, or buy all of the flowers at the farmer’s market, I can. Guilt-free.
There have been moments that we’ve run out of money early, which can be a bummer. But running out of money for eating out is no big deal compared with wondering if you can pay your credit card bill, your mortgage, or save enough at the end of the month. It just meant that for a weekend we stuck to a $20 budget (yes, $20 for the entire weekend), and ended up reaching into the back of our pantry for canned things we could try to make meals out of.
I know that all of our needs, including our freedom account (my absolute favorite), have been taken care of. And that peace of mind means that I can spend less time worrying about money and more time worrying about all other things (there’s no rest for the anxiety-prone).
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Thank you for this! I also hate budgeting. I just changed my credit card due dates to the first of the month, every month. I love your technique. Just curious, what category does website domain/host fall into?
Hmmm. I’m not sure I understand the question, but I’ll try to answer! I actually have a separate business checking account and anything related to business is paid through there. But if I was paying it through my personal accounts, it would be included in the middle bucket – the essentials/necessities that I have to pay automatically at the beginning of each month.
Also, for your savings accounts, do you have six different accounts at the same bank? Or do you spread out banks? How do you manage those?
A blog post will be coming on this 🙂 I keep them all at the same bank, but a different bank than my checking account. I didn’t want to make it too easy to transfer money from savings and if I kept both checking and savings at the same bank, I’d probably be tempted to dip into my savings.
I love this format so much and am excited to try it! How do you factor credit card expenses into this budget? For instance, right now, we use a credit card for most of our daily expenses so that we can rack up airlines points. How would that work in tandem with the different accounts? Thanks for your insight! I’ve been appreciating your weekly newsletters, too.
Hi Krystal! Here’s one option for you. Do the initial setup the same way and have all of the automated payments + savings coming out at the beginning. Then you’ll be left with a number left over that you live off for the remainder of the month. For ex, your total income for the month is $4,000 and your automated payments + savings is $2,000. You’re left with $2,000 to live off of for the rest of the month. You know that no matter what you can’t spend more than that. If you think you use your credit card for most of your daily expenses and you rarely use cash, set a balance alert on your credit card. If you probably use $250 in cash per month and the rest of the month you spend on the CC, set up a balance alert for a balance less than $1,750. When you’ve spent that amount, your cc will send you a text. We have a $500 balance alert on our cc. Once we’ve hit that balance we get an alert and it reminds us to check in with our spending for the month and see how we’re doing. I really love the balance alert feature!
Hope that helps!