An Alternative to a Budget

Most people want to save money but don’t know how to. They’ve tried to budget, only to have it not work out for them the way they’d hoped. There is a way that you can put your savings on autopilot, though. I have used this method and found that it’s been the only way I’m able to truly save the money I want to.

The problem I often hear about with budgets is that the person writing it didn’t save any money and still went over the amount they allotted. One key problem with a budget tends to be that people will write it down and then forget all about it. They’ll write out how much they should spend per category and then never really keep track of it. I’ve been guilty of this before plenty of times. I would set up amounts for specific expenses, let’s say $300 for entertainment, to find that in the end I would be over by $100 or more. This can easily happen if you are not checking your budget consistently. I would later come across an app called Mint that helps keep track of your budget right from your phone.

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When I was going over my budget, I wasn’t allowing myself to save the money that I had originally intended to save. I wasn’t saving because I was paying myself last. After all my bills and expenses were taken care of, I would put the remaining money into my savings account. Then from there, the savings account would basically become another checking account whenever I really went over on my expenses – but that’s a whole different story.

I decided that paying myself last wasn’t what I wanted to do anymore.

So, as soon as I got paid, I started putting away the money I truly intended to save in a separate savings account online. I didn’t open a debit card for this savings account and had it set up to automatically draft the specified amount directly from my checking account. This worked out great and I slowly started to increase the amount I was saving every month. The reason why I think this works so well is that you pay yourself first, then your fixed expenses, and lastly your variable expenses. If there is anything leftover, it’s a surplus that you can use for extra savings or as an investment.

I would still recommend that you do some work to figure out how much you’re going to need for your expenses. It may take some time to get used to, so I would suggest you start small and work your way up to exactly where you want to be. This method is great because it makes you revolve your spending around what you have left after you’ve already put money away to save. And there’s plenty of reasons to want to focus on building your savings. One important reason is that everyone should have money set aside for emergencies. Emergency funds should generally be three to six months’ worth of expenses, but I’ll give you more information on that in another post.

I am not saying that a written budget is a bad system. If it works for you, then keep using it. If the written budget system doesn’t work for you, though, I would give this a try and see if it works for you. You should always pay yourself first, especially since you’re the person who worked to make that money in the first place. Why not save up for something nice? If you wait to pay yourself last, there might not be anything there in the end.

If you have any questions, you can contact me or leave a comment below.

New content will be up every Tuesday and Friday.

Check out our article on budgeting here: Do I need a Budget?

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