Budgeting is an essential tool for keeping your finances in order.
It helps you plan where you spend your money and assists in the financial goals that you’ve planned.
Unfortunately, most budgets can be rigid, and because of this, people tend to avoid budgets. However, there is a way to budget if you hate traditional budgets. It’s not a “no budget” option, but it is more flexible and less restrictive.
The key to this type of budgeting is to have two checking accounts – one for your monthly bills and one for everything else.
Budgeting for Non-Budgeters
There is no such thing as having no budget.
You either have a budget, or you are not tracking your finances.
If you are doing the latter, you may not be happy with your current finances because you aren’t fully aware of your spending. You need some sort of way to know how much you bring in and how much you spend every month.
A budget really is that simple. It doesn’t need to be something you calculate every month to figure out how much you can spend on specific categories.
The way to budget without really budgeting is to give yourself the freedom to spend a set amount of money each month without tracking your expenses. Then, you’ll know you’re staying within your “budget” without being restricted on your purchases.
Have Two Checking Accounts
To do this, you will need two checking accounts.
One account will be for fixed expenses and the other for discretionary expenses. In the fixed expenses account, you will pay your monthly bills like rent, mortgage, utilities, and any other essential cost of living needs.
In the discretionary expenses account, you will decide on a set amount for the rest of your monthly spending. This budgeting method is meant to be simple and something that everyone can do.
To succeed with a two checking account budgeting method, you need to know your exact fixed expenses.
You’ll want to make sure you have enough money in that account for your automatic payments. You don’t want to neglect this account and garner insufficient fund fees. You may need to track your expenses for a month or two to know this exact number.
After that, all of your bills should be paid from this account.
The second thing to be successful is you need to decide how much discretionary spending you will give yourself.
You can determine the amount each month. That’s really the only thing you need to do. When you buy your groceries, coffee, dinners, and clothes, you’ll be able to spend up to that amount.
Once you go over this amount, you cannot spend any more money because you’ve hit your monthly limit.
To find out how much you want in this account, you may need to track some of your discretionary spending to get a general idea of how much you spend. It might take you a month or two to figure out how much to put into this account on a regular basis.
Why This Works For Non-Budgeters
The two checking account method is excellent for someone who doesn’t want to budget but who wants to manage their spending.
It simultaneously provides structure and flexibility, which most people need from a simple budget. However, not everyone responds to detailed budgeting outlining every dollar.
Personal finance is, well, personal and should fit your needs and lifestyle.
The flexibility of this method allows you to adjust your spending. Certain months you may spend more in a category because of birthdays or holidays. In other months you may spend more on groceries because you stay home more than eat out.
You can decide precisely what you spend your money on without writing it out. You may find that you have a typical spending habit because you aren’t restricting yourself to a certain amount of coffee or clothes a month.
You have the structure of a budget without the strict guidelines of a budget. You know your monthly bills and expenses will be covered in one checking account while everything else will come out of a second.
You are giving yourself a set amount to spend every month, knowing that once you go over, you won’t get any more money until the next month. You’ll be able to adjust your spending to your specific needs.
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Budgets for Non-Budgeters: Final Thoughts
Budgeting shouldn’t make you feel worse about yourself; it should leave you empowered over your finances!
If you struggle with sticking to a strict budget, consider the two checking account method, where you can loosely define your spending without every dollar going into a category.
You can still have the benefits of a budget without the significant limitations of a budget.
Updated from Apr 10, 2024
