How to Fix Your Budget and Ditch the Guilt

Let’s just face it…budgets don’t work.

Ok, sometimes they work but–I’m guessing– if you’re reading this, yours isn’t serving you.

Here are three of the big reasons budgets fail:

  1. Life happens. You can plan down to the penny how much you will ideally spend on food next month, but plans change, people come over (maybe. In small groups.) Cars break down, basements flood, kids have field trips they SWEAR they told you about.
  2. Not everyone in the household is on board. Whether it’s a spouse or a teenager, anyone with access to the bank account affects how the budget is handled.
  3. Budgets are generally very restrictive. Similar to number one, we like to fantasize about fitting our future selves into smaller boxes. When we can’t fit into these tidy, arbitrary confines, it feels like we’ve failed.

What if we reframe it and call it “guilt-free spending?”

Doesn’t that just sound better?

Here’s how it works:

There are some important rules to keep in mind.

Guidelines for the expense account:

  • The expense account can have a debit card but it should never be in your wallet. It should only be used to pay a bill that doesn’t accept an ACH or credit card.
  • This account should be on auto-pilot, taking in a little more funds than necessary to cover all the bills. I like to pad it with at least $100. Sometimes errors happen, things pay twice (not likely, but they do.) The last thing you want is to have your rent or mortgage bounce.
  • Set up alerts to let you know if the balance approaches $100, or whatever you’ve padded it with.
  • Only add signers to this account who you trust. If you have roommates, it may be safer to ask them to transfer you funds through Venmo or PayPal or a good old fashioned check.
  • Getting this set up takes some time, but once all of your billers and the direct deposit are in place, you should never have to think about it again.
  • I like to set up a payment to my credit card, usually a little more than the minimum, that will get paid no matter what. I always pay my cards down, but I’m checking those statements daily and paying the remainder of the balance manually.

Guidelines for the operating account:

  • This amount may fluctuate month-to-month, so I like to set up balance alerts here too.
  • How you spend it is up to you. Maybe you withdraw the cash so you can physically see how much you have. Maybe you’re buying a big item online. Maybe it’s a date night you’ve been planning for.
  • This account is a good indicator of your spending habits. If NOTHING gets funneled here, or it’s not enough to do the things you want, something needs to change. If making more money isn’t feasible, then it’s time to revisit your expenses.

The bottom line: it isn’t about how much you make…it’s about how much you spend.