To Budget or Not to Budget, that is the question!

Also see the associated YouTube Video

If you love budgeting, this article may not be for you. However, if you are like me and have failed at budgeting and hate tracking every piece of gum you buy, hopefully, this article will let you know there is hope!

Warning: This approach is not designed for people in serious debt; please get help from a reputable organization such as the National Foundation for Credit Counseling at NFCC.org or by calling 800-388-2227. Remember, there is no shame in asking for help.

There are several names for what I am about to describe, but for me, I call it successful.

Pay yourself first, then have fun with the rest!

I have modernized the Budget Envelope System, where you put money into envelopes for different categories, like food, housing, etc., and only spend what is in the envelope.

My take is a little different.

Step 1. Put it to work before you see it. Work at least one hour for your future.

If you are fortunate enough to have access to a 401(k) or retirement program at work, please contribute at least up to the company match, then set a target to increase it by 1%. Most people will not miss the money they invested.

If you do not have access to a 401(k) or retirement program, ask the employer to split your direct deposit to different accounts, then put it to work.

Learn from Me: I drank and partied away so much money, and if I had followed this at the age of 20, I would have been rocking life. Don't get me wrong; I had a lot of fun when I was young, but one thing I would have changed was to cut back. We will only be in our 20s once, unlike 39, an age many people like to revisit.

Step 2. Non-discretionary

Divide your non-discretionary expenses like housing, cars, insurance, and utilities by 4. For example, if your mortgage or rent is $1,000, divide it by 4 to get $250. Then, list those expenses on a spreadsheet as non-discretionary expenses. Yes, I know some months have 5 weeks but think of that as a bonus.

Keep it Simple Stupid (KISS). Avoid complexity.

Variation: if any of these expenses can be charged to a credit card at no additional cost, make the payments to the credit card, not the utility or other company.

Step 3. Automation is your friend

Use your online banking to set up a weekly recurring payment for the expenses listed in Step 1.

Note: Some companies, like your mortgage, may not post a partial payment, but that is okay; do not worry about the meager interest you would earn.

Step 4. Groceries

Estimate the cost of your groceries, assign one credit card for groceries if possible, and use your online banking to set up a weekly recurring payment to that credit card. This is an easy way to check your estimates and make appropriate adjustments.

Note: Look for the credit card that pays the most on groceries

Step 5. Liabilities

If your loans are consistent, like a student loan, once again, divide them by four and set up the recurring weekly bill pay.

If you have other debts like credit cards or loans, develop a plan and attack them, whether you use Dave Ramsey's Snowball approach or attack the one with the highest interest rate. Attack!

Note: Most of us would benefit from the Snowball approach; I know I did. I believe it is because we see accomplishments that make us feel good. Then, add the items to the spreadsheet you created in Step 1 as liabilities.

Step 6. Credit Cards

Review and pay your credit cards weekly. This is better than it sounds; you will find things you forgot about, like subscriptions or charges your kids made.

Bonus: Paying weekly, I noticed my credit score go up because it raised my available credit.

Step 7. – Excess Money

Automate contributions to your emergency fund.

Automate additional investments

Allocate money to upcoming expenses like vacations and holidays. Yes, you know what is coming.

1. Determine the months until the expense target date, say 6 months.
2. Now multiply the number of months by 4, and we get 24.
3. Finally, divide the amount by 24. for your weekly contribution.

If all your bills are covered, enjoy the fruit of your labor and spend without regret.

Summary

1. Prioritizing Savings: "Pay yourself first" is a smart start—making retirement contributions automatically builds wealth over time without impacting your day-to-day spending.
2. Dividing Non-Discretionary Expenses Weekly: Breaking expenses down by four instead of by the month could simplify things and help avoid overspending. Plus, it makes expenses feel more achievable in small, consistent steps.
3. Leveraging Credit Card Rewards (if you pay your bill in full): The grocery credit card strategy tracks spending in a key budget category and allows you to get cash back or other rewards, making everyday purchases more beneficial.
4. Weekly Debt Payments: Many people don't realize that paying credit cards frequently before the bill closes can improve their credit score by increasing their available credit and decreasing credit utilization.
5. Flexible Discretionary Spending: By allowing for "fun money" after all essential needs are covered, you keep things sustainable and rewarding—something that more rigid budgets often fail to address.

We all have choices; make the Smart Choice for a better life. 

Thank you for taking the time and for investing in you. 

Please leave a comment below; I love to learn.

Who better to learn from than you?