truly {budget}fab*

Posted on 03. Jun, 2009 by dara in penny pinchin'

For those of us who hate budgeting, or perhaps just aren’t that great at it (myself included), I found a somewhat fail proof budgeting method. [cue cheers] Now, before you get too excited, remember that budgeting is also about self discipline. So unless you can practice some discipline and self-control, any budgeting you attempt to do is going to fail.

Before you lose interest…let me quickly break down my favorite method, you can find the other methods on CNN Money. My favorite method (and my own personal method which I guess isn’t so personal anymore) is called The Budget Bucket.

To accomplish this budgeting method, you’ll need two checking accounts and one savings account.

Step 1: Decide how much you want to save each payday. Work with your payroll direct deposit or your bank to have that money automatically deposited or transferred to your savings every payday.

Step 2: Have the remaining balance of your check deposited in checking account #1.

Step 3: Determine your surplus, what’s left after you pay all of your fixed expenses like rent/mortgage, car payment, insurance, etc.

Step 4: Divide your monthly surplus by four to get your weekly disposable income. Have that weekly amount transferred to checking account #2 on a weekly basis. This account will pay for groceries, entertainment, eating out, and fun.

That’s it! It’s that easy!! YAHOO!!!

Now, a few {budget}fab* plugs…for Step 4, it may be easier to divide your monthly disposable income by 2 since most people get paid twice a month. And have that amount transferred to checking account #2 when you get paid instead of on a weekly basis. But by transferring that on a weekly basis, it keeps you from overspending in week 1 and having no money in week 2. How you decide to transfer it dependent upon your personal preference.

No cheating guys and gals…no using a credit card or transferring from your other accounts! This will totally undo the budgeting aspect. I personally think this budgeting method is pretty straightforward and easy to accomplish and could easily be incorporated into a busy lifestyle. Plus, you’re already saving up front, so you don’t have to feel bad about buying that shirt at the mall or spending extra money eating out. Oh, and one more thing…don’t forget to save for retirement first!

Check out this handy diagram from CNN Money below and be sure to check out the entire article here.