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.
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:
- 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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Erica Gellerman, CPA
Erica Gellerman is a CPA, MBA, personal finance writer, and founder of The Worth Project: a weekly money newsletter you actually want to read. Her work has been featured on Forbes, Money, Business Insider, The Everygirl, The Everymom, and Lifehacker. When she's not writing about personal finance you can find Erica exploring Europe from her temporary home base in London.