My (almost) iron clad money management method for “I find it hard to budget because X” folks like me

• getting started overwhelming?
• categories confusing (does drug store candy count as “fun” or “eating out”? what envelope does my dad’s prescription $ come out of?)?
• trouble maintaining enthusiasm?
• can’t settle on a budget method & getting confused/disheartened as you flip between them?
• find yourself tinkering with your automatic transfers? (guilty)
• dipping into your emergency fund for unnecessary things? (double guilty)

this is my money management method that was a complete game-changer fir me.

NOTE: you can apply ANY budget method on top of this to track your spending, it doesn’t preclude any extra budget effort- this is just such a killer foundation that I’ve abandoned all other budgets for now.

game-changer =

1. have all paychecks go into a bank account that you can’t access (I created a gibberish password & set my mom’s phone # for password reset security, you don’t have to be THIS intense if the idea makes you nervous- the point is to make it difficult/annoying but not impossible to edit your settings later. make sure you note the bank acct deets before locking yourself out)

2. have a $ amount for FIXED ESSENTIAL expenses (plus ~15% of increase room) transfer each MONTH to a different bank (1300/m for me - $900 rent & house bills, $200 car ins, $30 phone bill, remainder = wiggle room)

3. I have a credit line attached to this second bank account. this will be your emergency cushion in lieu of CC or emergency fund sitting in a saving acct begging to be spent (my credit line is set to $2000). this will help you see yourself go below zero, rather than juggling cc/savings balances all over the place.

4. have daily spending transfer from deposit bank to spending bank EVERY WEEK ($100 for me) -this is for food, gas, etc. not mechanic’s fees or plane tickets. weekly is best because it limits money pinches to the smallest possible time.

5. Set big $ transfer for every 3 MONTHS to cover the unexpected or big-ticket stuff that crops up- the aforementioned mechanic fees/plane tickets (Mine is $1300). between deposits, you will dip into the credit line- don’t panic, that’s what it’s there for, just pay it down sensibly as your deposits come in.

that’s it! that’s the whole method. your $$$numbers are up to you of course- this does require some serious soul-searching as to realistic parameters based on your spending style ir how frugal you want to be. the point of this is to slowly but surely build an income cushion that will AUTOMATICALLY grow in stable times & then AUTOMATICALLY spend down in during bad times with no new decisions, strategies, or disruptions.

how does this help?? =

• automatically save. I transfer out of a 3.25% high yield savings acct (ally) which means every penny of my unspent money is building interest.
• soothes money fluctuation anxiety & builds automatic cushion for big dips in income. this spending pattern leaves me 1/3 of my pay check as an automatic buffer to dips in pay here & there due to vacations/hours changes/job change etc.
• predictability & planning. If my friends want to go on a road trip, but I know that a big portion of my upcoming 3month transfer is filling an $800 cavity in my credit line due to a mechanic bill, I can plan accordingly. I can say no, or I can know that I must be extra thrifty with my daily spending $ if I want to afford the trip.
• saliency. KNOW exactly when my money is coming in & exactly how much, so it means that a $15 cocktail starts to feel like 15% of my weekly money rather than something that will balance out ~somewhere~ in the month.
• preventing lifestyle creep. until you undergo a massive faff to change the money transfers by logging back into that deposit bank, a bigger paycheck just means bigger savings, a longer runway, & a plusher cushion. the 15% wiggle room in your initial “fixed expenses” setup should buffer some reasonable rent/insurance increases for a little while- the goal is that editing the $ transfers should be as rare as possible & should be dine under careful consideration.
• job loss panic prevention. Rather than having an “emergency fund” which you must actively maintain and then activate in a crisis (and then remember to re-fund after the crisis is over), my way gives you a ”runway” of time. Obviously this isn’t MAGIC- the money will run out eventually, but assuming that you’ve been sensibly frugal in your initial setup, then stability will be built in. And if you’re wanting to extend your ”runway” while unemployed, you can cut your daily spending & send the difference back to the “sending” bank account. once you’re earning again, you don’t have to do anything new or different. No “emergency fund” to re-fund.
• no categories, or rules. rather than making up rules BEFORE you spend your money, you feel the consequences of the WAY that you spend your money. it teaches good money decisions based on actually FEELING $0, while also having the comfort that you are still saving plenty automatically in the deposit account, and knowing that all stupid money decisions have a MAXIMUM of a 3m pinch. Also, no matter HOW bad your money decisions are, you know that you are only wasting the money that you already allocated yourself. Your STABILITY is not compromised … & isn’t that the entire point of a budget???
• pre-commitment done right. setting up “automatic transfers to savings” as a pre-commitment strategy never worked for me because I just tinkered with the transfer when I wanted access to more money. it was a VERY easy system to disrupt, & a hard one to remember to put back in place. this is pretty much iron clad once it’s set because it’s not in your regular bank account & yet still has built-in contingencies that are tweak-able to your needs (maybe you only want a big money drop every 6 months & are willing to cushion your big spends in between with stricter budgeting on your weekly money / maybe you‘d rather use a credit card for your spending, so you set up $125/wk bill-pay from your deposit bank to the cc while never adding the bank deets to your cc so you can’t vary the pay down rate, ETC♾️)

in short, this money management method = stable yet flexible, predictable, future-proofed, low maintenance, good-habit-forming, set it and forget it, protects from lifestyle creep, etc etc

anyway, this was SUPPOSED to be short & I got very carried away.

hope this helps someone!