Hate Budgeting? Try A Spending Plan

Posted by Richard on July 20, 2023

Maybe you are not a detail person. You sit down, look through all your spending and, suddenly you are caught up in tiny details. Making a category for new socks doesn’t sound right, but it’s not like it was a frivolous spend like a ‘clothing’ category suggests. Pretty soon you just get so confused that you quit.

A spending plan, unlike a budget, can feel more big picture. Here are the basics:
1. Pay yourself. Send some money automatically to a savings account at another bank, even if it’s a small sum like $20. You can do a jar on the counter, too, if it won’t be too tempting to nick from it occasionally. This money is going to save you from going into debt if you have an emergency.

2. Add up your Must Haves. Rent or mortgage, cell phone, car payment. These are roughly the same price every month and you can know when you will need to pay and how much.
But also in that category, you’ll have some variable expenses. Utilities are a must-have, but they change month to month. Just check an average month and pick a figure. Do the same for groceries. For this category, also leave some space for unknowns, like a veterinary bill. Even if you don’t spend it this month, you’ll need the money in future months.

3. Add up your Like to Haves. By now you should know just about how much money you have left after you pay for everything you must have. What’s left is what you can spend on things like dining out or a new video game. The only rule is that you must never charge your Likes. Keep an eye on your spending for things you like. You’ll want to watch your spending closely to monitor this category.

Remember, at some point, it might appear you have money in your checking account for a Like to Have but, in fact, this is money pegged to a variable expense in Must Have.