15 Minutes a Week Leads to Budgeting Bliss

For most people, budgeting on a monthly basis just doesn’t work.

You sit down, try to figure out what you’ll be doing and spending your money on for the next 4 weeks, and ultimately sit down for a few hours a few weeks later to try to figure out how good your guesses were.

That’s no fun for anybody.

You can really get your budget under control by doing some work up-front, and by spending 15 minutes a week on it, every week. The every week part is the key. Here’s a quick snapshot of how this works:

  1. Review last week’s transactions.  Everybody’s system is different.  Use whatever works for you.  Whether that’s  logging-in to your bank’s online banking platform, opening a notebook or spreadsheet that you’ve created, or a tool like Quicken or Mint.com that automates some of the process.  Whatever method you use, record all of your expenses from last week.
  2. Categorize your spending. Lunches out, Gas, Groceries, Utiliites, etc. Identify each expense and put them into categories that make sense to you. These categories will probably evolve over time, so give yourself some latitude to make changes as you go along.
  3. Estimate your spending for next week. Look at your calendar, and get a ballpark figure of what you’ll need to spend next week. Date night, lunch with a friend, a trip to the grocery store on Tuesday, etc. Estimate these, and decide how much you’ll spend for the week.

That’s it in a nutshell. I think there are two critical things that make this process better than monthly budgeting:

When you wait a month to review your spending, you’re looking at dozens of transactions in your accounts, and having to consult your calendar to figure out what that strange charge was 3 weeks ago. By spending time on your budget weekly rather than monthly, you look at 10-20 transactions, that are still fresh in your mind so there are fewer research projects. You also get feedback about what worked for your budget this week, and what didn’t work.

You then look forward to next week, and estimate your expenses next week. By the start of the week, you’ve got a pretty good idea of what your work and social calendars look like, and what additional money you might need for one-off expenses like school projects, special events, and the like.

Budgeting weekly requires a little discipline to make sure you spend the time on it every week. Let one week slide and it becomes two, and then you end up with a stack of receipts and an hour and a half of work to try to get back on track. Just do your 15 minutes a week and avoid a big catch-up project. If you can practice this discipline, you’ll learn more about your spending habits and where your money has gone in the next month than you did in the last year.

I’ll be writing more about this topic in the coming weeks, so please let me know what you’d like to see discussed in this space.

For budgeting, what has worked for you? What has been your challenge with sticking with a budget? Any tips or questions?

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