The Wealthy You #1 - The Easiest Budget You'll Ever Make

Hey all,

Today I’m going to share with you a really simple budgeting technique that I used a few years back when I was just starting to be more money conscious. Nowadays I like to use a more detailed approach, but if you are looking for an easy fix that will help you keep your finances on track, you have come to the right place.

The basic idea of this budgeting technique is to take your net income, deduct all of your fixed monthly expenses plus the amount you wish to put towards your savings, and then give yourself a daily allowance by dividing up the rest of the money between each day.

This is much simpler than most other budgeting techniques in that you don’t have to break down your expenses or even keep track of them at all. All you need to be aware of is the total amount of your income and your fixed expenses. By fixed expenses I mean your bills: things like rent, utilities, phone, cable, loan payments, and so on.

So let’s look at an example. Let’s say Bob takes home $3,800 and has $1,800 in fixed costs every month. Bob also wants to save $600 a month for retirement and $200 towards a trip. That leaves Bob with $1,200 to spend over a 30 day period, or $40 a day.

The great thing about this calculation is that you probably only have to do it once, and then adjust it whenever your income or fixed costs change, which is not that often for most people. That means you can go months on end without ever having to calculate anything for your budget anymore.

What I usually did is that I kept a mental tab of my spending during any given day and then at the end of the day I would just note whether I was over or under, and track the total variation for the month at the end of every day. So, continuing with our example, if on the first day of the month Bob spends 26$, he’s at minus $14. Then if he spends $42 on the second day, he’s at minus $12, and so on. As you can see, it’s very simple to keep track of your finances that way.

Another distinct advantage about this method – at least I found it really neat – is that you can really easily make up for larger purchases, and then it’s sort of like they never happened. Continuing with Bob, imagine he needs to buy a concert ticket for $120: all Bob needs to do is buckle down for 3 days and not spend anything and tadaaa, his concert ticket is all paid for. Remember that his allowance is already taking into account his savings too.

I think this pretty much sums up the technique. Before leaving, here are a couple of tips I would offer if you’re planning to give this a try:

• Stay well under your daily budget on regular days so that you have room to go over when you need to (and you will sometimes)
• Try to start the month with a few consecutive days of near-zero spending – this will give you a nice little cushion and you’ll feel great knowing it’s there when you want to splurge on something
• On the same train of thought as the last point, try never to take your balance too far above par early into the month – it sucks playing catch up
• If you think it’s reasonable given your daily allowance, take out a small amount, say 10%, off the top (so Bob’s budget would be $36 a day in this case). You can then carry this 10% forward month after month for when you have an extra big expense to cover

That’s all I can think of for now. I hope some of you guys will like this idea and decide to go ahead with it. If you enjoyed this post please upvote and comment below, and be sure to come back and let me know how it’s working for you if you try it out!

Enjoy today,

William