It’s no secret that I don’t adhere to tracking a strict budget. I know. I’m the black sheep of the personal finance world.

I understand that tracking daily, weekly, or monthly is what really works for some people and I have nothing against it. But I swear, I’ve tried and failed with it more times than I can count.

I was that 22-year-old college grad who tracked things down to the penny in a spreadsheet. (This was before Mint and YNAB). But when I would open the spreadsheet and see that I was out of grocery funds for the month, I’d have a mini panic attack.

When Jordan and I moved in together, it only got worse. We were both attempting to track both our separate and combined budgets. There were moments money made us hate each other just a little bit. Our disagreements mainly centered around who ate more of the groceries that week (he did) and who bought too many new things for the apartment (I did).

In one slightly embarrassing memory, I remember that I watched him pour a massive bowl of cereal. I then asked, “do you really need to eat all of that?”

I was so passive aggressive.

Though tracking wasn’t the long-term solution for me, I knew I couldn’t float through life with zero regards to my spending. Saving was a priority because having money in the bank was going to give me the runway to do really cool things in life.

So I went in search for an alternative to the track every penny plan.

Solution 1: The automatic savings plan.

After a quick search, I came across the automatic savings plan. The gist of it is that at the beginning of each month, you automatically move money into your savings account and then live off what’s left in your checking, guilt-free. It’s the pay yourself first approach.

Guilt-free? I figured I could get on board with that.

And it worked, for a while. But there were still two problems:

  1.  Though my spending was supposed to be “guilt free”, it did kind of feel like I was wasting my money, and
  2.  I still got money anxiety at the end of each month because I’d usually run out.

In fact, I remember an embarrassing moment one evening in San Francisco. I was in near tears in front of an ATM because I didn’t have enough cash to buy a burrito. If you’ve ever had a craving for a burrito in the Mission only to find out you can’t have it, you’d probably cry too.

Automating my saving and spending wasn’t the cure-all I was hoping for.

Problem: Mindless spending.

Post-burrito tantrum things got back on track for a few months. Sure, I’d run out of money at the end of most months, but I knew to expect it.

After Jordan and I got married and combined most of our money, we stuck with the automatic savings plan because it was easy. But it definitely wasn’t perfect.

One night when he was looking through our credit card bill, he commented that most of the charges we made were those mindless $20 and under purchases that happen too frequently. You know, the swipe that doesn’t feel bad because it’s only $17.45.

Those swipes were fine though because we paid off the balance every month and we were still saving the suggested 20%. That was the textbook definition of fine. But was it really fine?

Don’t get me wrong: saving 20% is a big accomplishment. It took us deliberately adjusting our life so we could hit that target. We’ve always lived in VERY expensive places: San Francisco, Los Angeles, Honolulu, and London. Hitting that 20% meant we were on track to someday buy a home and safely retire at 65.

To be honest, though, we had other ideas of what we wanted to do aside from retiring at 65.  

I wanted to pay off my student loans and change careers. Jordan wanted to build a house.

But we realized that all those under $20 purchases meant we had the problem of mindless spending. For a brief, fleeting moment we thought about trying to meticulously track our budget again.

Nope. Not going to happen.

We worked really hard for our money and we didn’t want to feel guilty spending it.

We also worked really hard for our money and didn’t want to give it up so easily.

What we really needed was to strike that balance but were both a little stuck on where to go next.

Solution 2: The happiness plan.

One day, it occurred to me: what if instead of trying to restrict ourselves from only eating out occasionally or only buying things once in awhile, we focused on only spending money on the things that would truly add to our happiness?

Spend on things we get the most happiness and value from, don’t spend on things that don’t.

This felt like a simple, almost too obvious shift. Weren’t we supposed to do something more dramatic?

But despite the simplicity, we decided to give it a go.

We didn’t carry a list around, make strict rules or anything crazy like that. We’d just take a little pause before purchasing something and ask, “Will this make me happier? How much happier? And why?”

This soon became the perfect balance.There were a lot of things we spent on or wanted to spend on, that made us much happier. Like a cleaning lady and weekend trips exploring the rest of Europe.  

And there are a lot of things that didn’t really make us happier.  Like picking up disappointing takeout all the time. An Amazon Prime membership that had us watching too much TV. Walking out of the drugstore with two new beauty products to try and another bottle of nail polish in an ever so slightly different shade of pink. Or grabbing a latte and pastries nearly every time we went on a walk to Hyde Park, just because it had become a habit.

We were surprised at how many moments we would reach for our wallet to buy something, only to realize that we really didn’t want it. Or how many nights we went out to dinner because we were bored and not creative enough to come up with a different activity.

The simple shift of stopping to ask, “will this make me happy?” started getting us bigger results. We didn’t run out of money at the end of the month. We didn’t get a tinge of guilt when we spent money. And we were surprisingly calmer about money mistakes (like when I accidentally called the US from my UK phone and racked up a horrible bill. Whoops).

But most importantly, we felt more in control. We started to see how we could make a plan for the things we wanted to do in life.

The combined solution

As the amount we spend each month naturally decreased, we wanted to make sure we kept sending our money where it needed to go, without having to think about that too much.

We stuck with the automation piece of our plan, to make sure we were always paying ourselves first, but with the extra cash accumulating at the end of each month from our happiness approach, we could make plans for some bigger goals in life.

We started to create new savings accounts for each of these new goals. And seeing those grow and knowing we’re getting that much closer to all of the things we can’t wait to do gave us even more of a motivation to continue.

Making automatic withdrawals to our savings at the beginning of each month and then spending mindfully with a focus on happiness for the remainder of the month was the winning solution that finally felt good, was easy, and actually works.

Where we are now.

Over the past few years, this simple approach has radically changed how we talk about and use our money. It’s helped us become better partners in managing our money. My debt is gone, I’ve changed careers, and we bought a piece of land that we will hopefully someday build on. We’ve taken a dream trip on a safari to South Africa and we’ve enjoyed hopping around Europe these past few years.

The little changes have added up to some really big things.

We now save 40-50% of our income each month without feeling like we’re deprived of anything (because we know that we don’t actually want to do or buy those things anyway).

This process has made us both feel a whole lot clearer about how we want to use our money. We’re not spending unconsciously and we’re not saving just to save. Most of the time things feel pretty easy. And when it comes to money, it’s good to feel easy.

But just like with anything else, we didn’t magically solve our problems and now things will forever perfect. The simple solutions of sticking with an automated plan and focusing on happiness works, for the most part. But there are two things that we continually have to watch for:

Balancing a social life

Moving around a lot over the past decade has meant that we’ve had to put an extra emphasis on creating new friendships in each new city. And we don’t always meet and hang out with people who want to spend in the same ways we want to spend.

While this used to be uncomfortable and we felt like we had to choose between our money and having a social life, we realized that’s not the case. After one particular night where we had loved the company but hated the fact that we just spent so much money at a restaurant we didn’t care to go to for a meal we didn’t particularly like, we realized it was time to get better at saying, “No, but…”

As in: “Thanks so much for thinking of us for dinner Sat night! We’re not that into heading to that restaurant but we’d still love to see you. Want to meet up for a drink beforehand? Or to head to the new exhibit at the V&A museum on Sunday?”

Honing this skill has helped us take control of both our money and our time, while still you know, having a life.

Not slipping into bad habits

Just like everyone else, we can still fall prey to bad habits that seem to creep up out of nowhere. Like when I tore my ACL and had to uber to and from work each day. Totally necessary since I couldn’t walk. But 2 months later when I’m walking around like a champ and still Ubering to and from work? Bad habit.

Or our newly created habit of never being able to walk past a certain grocery store here in London without popping in for a little “treat.” This store is literally my Achilles heel and neither of us can walk out without buying so much snack food that we really don’t need. Really – at least once every two weeks I’d walk out with a bag of “healthy” chips, a container of guac, and a bag of cookies (plus about 85 other items that looked interesting) and call it a balanced dinner.

To make sure we don’t go too deep on a mindless spending binge, every few months as we take a look through our bank account and credit card statements, we do try to ask ourselves if we’re still spending in line with our happiness.

95% of the time the answer is “yes”. But when it’s no, we realize it’s time to break that bad habit. Bye chips & guac for dinner.

Will we stick with this strategy forever? Maybe. But we may also get to a point in life where we need to start tracking our dollars more closely. Or we may figure out a new system altogether.

The point is we now have a solid foundation to build from and a real understanding of how to handle our money to live our best life.

Erica Gellerman Bio The Worth Project

Erica Gellerman is a CPA, MBA, personal finance writer, and founder of The Worth Project: personal finance and family travel. website. 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.

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