How I set mine up:
1) I opened a new checking account. I wanted to do this at a different bank to make it harder for me to transfer money between accounts, however, I just love (and trust) my bank too much and couldn't find an alternative that I really liked. This new account I call my "bill paying account" to only be used for bill payment. I did not get a debit card or any checks to go along with this account. Theoretically, I shouldn't need those because I pay all of my bills online.
*We'll call my other checking account my "spending account" for the sake of this post.*
2) I rerouted my paycheck to submit a certain dollar amount into my spending account. I set this at $350 every two weeks (so $700/mo). I honestly still think this is too high but I'm going to work on becoming stricter and stricter over time. The remainder of my paycheck goes into my bill paying account. Now this $350 (twice a month) is to cover anything outside of my bills. For me that means:
- Groceries - I spend between $100-200/month on this. Sometimes more of less depending on how much I eat in the streets.
- Gas (I only use gas for recreational purposes, so if you drive to and from work I think it's okay to take your gas money out of your bill paying account).
- Entertainment - Eating out, movies, bars, etc. Essentially extracurricular fun.
- Shopping
- Lunch (when I don't bring it to work) - this also includes my Starbucks habit
- Hair/nails - I only get my hair done once every 2 months. I usually get a mani every other week, a pedi every 3-4 weeks and a polish change on the off weeks. By the way ladies, polish changes are a great way to save money on getting a mani or pedi every week but still keeping your nails fresh.
- My cleaning lady - Yes, I have a cleaning person once a month to do the heavy cleaning in my apartment. For many of you, you can do this yourself, but I choose to pay because I hate heavy cleaning.
- Anything else you can think of that I forgot to list but is a want, not a need.
4) I split my bills out between my paychecks by listing which bills comes out of my 1st check and 15th check (I get paid twice a month). I keep track of this list in my planner.
1st check
- Rent
- School loan #1
- Cable
- Tithes
- Carnote
- School loan #2
- School loan #3 (there are so many of these damn it)
- Electricity
- Cooking Gas (this is only billed once every 2 months)
- Savings transfer
- Credit card payment
Progress Report:
In the beginning, it was very hard. I would overdraft on my spending account (luckily it's linked to my savings so any extra money gets auto transferred and cuts down on fees) and I would transfer from my bill paying account to my spending account to have more money to spend on something I wanted to do but didn't budget for (because I have a little extra cushion that I leave in my bill paying account). I had to learn how to cut down on eating out and spending money on entertainment so I could make sure I had enough money in my spending account for gas and lunch.
Six months later I think I got it! I would have to say, it feels amazing to have so much control over every cent I have. I don't feel like I'm missing out or can't do certain things socially, I just plan better and I've learned to say no when I am overextending myself. Instead of feeling like I'm missing out, I feel like I'm being responsible and not wasting money. Sometimes I even end up with extra money in my spending account at the end of the month.
I grocery shop more often. I bring my breakfast and lunch to work more often. Overall, this bucket budgeting has changed my life. Lol.
The next decision will be: how do I decide when I should increase (or decrease) my spending allowance...
Until then...happy budgeting!
If you have a fun, effective budgeting technique you've recently implemented and would like to share with readers, please email me at 25andretiring@gmail.com
