How do you track your money? Detailed budget? Pay yourself first? Wing it? There are as many ways to budget as the stars you can see in the sky. And I don’t mean on a cloudy or light filled city night. There are some common threads among them all: know what’s important to you, spend your money according to your values and what brings you happiness, spend less than what you make and make the rest of your money grow. It really boils down to figuring out what works for you and run with that. It’s really that simple. I started with making a budget with amount to spend in each category, and meticulously tracking my spending. That was super important when paying back debt. I could never have been that aggressive otherwise. After that, I switched to pay yourself first method.
Pay Yourself First
This simply means every time you get paid, you first switch a set amount from your account straight into savings. The money left covers the regular bills and any luxuries, hobbies, going out, etc. Since I get paid once a month, the first thing I would do is transfer the set amount I decided to save straight into various accounts.
And so it went on for a few years, and it worked great. Slowly though, I noticed myself obsessing over my spending. I’d look at my transactions daily or even twice a day to see how I was doing. It was fairly innocuous at first. Slowly I started getting stressed over maximizing my savings and wondering if I’d run short before the end of the month. One day, I realized managing my money this way had become a negative experience.
There’s Nothing Wrong With Feeling Frustrated
I want to be clear, if you’re trying to stretch your money or getting your spending in line, there’s nothing wrong with being a little frustrated or stressed for a LITTLE while. I don’t think it’s great over time but change often brings those feelings temporarily. That wasn’t the case for me though. I was familiar with what made me happy. I knew where my money was going. I didn’t experience lifestyle inflation and when one category went over, I’d usually make it up in another. Still, over time going with my budgeting method:
- Created stress over whether I would have enough money to last me until the end of the month
- Felt guilty whenever something went over or not to plan
- I dreaded doing any reconciliation.
So in short, I realized it wasn’t working for me anymore. It had become a negative experience with no benefits.
How We Manage Our Money As A Couple
We don’t have any shared accounts. All chequing, savings and investment accounts are separate. Even now that we’re married, we don’t plan on changing that. Rather than creating any physical joint accounts, we our money together – separately.
We balance out recurring and vacation expenses with a tracking sheet. Groceries and entertainment aren’t part of the equation. We’ve learned to naturally balance that out. Even if one of us spends a little more than the other one month, it just means the other is putting a little more away in savings. And even if our accounts are physically separate, which gives us autonomy on how it’s managed, we collaborate together for expenses, savings and investments. It’s all our money.
Adopting A New Way Of Budgeting
On one of our evening walks, I started asking Mr Whymances about his budgeting. I knew generally what he did but I noticed for the past little while that in addition to reviewing his accounts every few days, he would also comment on moving more money into savings.
His take on saving was rather than move everything into savings in one chunk right away, he divided his pay check evenly by the number of days until the next one. This way, he almost always had some money to put into savings every few days. It was motivating and encouraging to him. My way felt more restrictive and punishing. He could choose to spend more if he wanted, but more often skipped unnecessary purchases that didn’t matter so he’d have more savings.
And that’s when the light went off for me! Pay Yourself First is a great, easy way to manage money. It’s supposed to take most of the work out. You put away what you want saved and have it at for the rest. But it had become more work and negative to me. So rather than fight it, I tried Mr Whymances Way: Frequent Micro Pay Yourself First.
Micro Pay Yourself First
I instantly felt the difference. As I get paid once a month, I no longer immediately moved a huge chunk into savings. Instead, I sprinkle the saving rewards throughout the month. I no longer feel like I’m running a marathon to stretch my money if I want to go for a stretch savings goal. I don’t feel guilty about any purchases, even though they were rare and intentional. Even if I have a savings goal in mind, I’m making micro decisions on spending and saving. Most importantly, it works for me.
What You Need To Know Before Micro Pay Yourself First
I found this to be a great method for me now. But it wouldn’t have been when I was paying off debt or before I understood what I valued and had practice at intentional spending. It’s always a work in progress but I wouldn’t have wanted to be a beginner building my intentional spending muscles while doing this. I suspect it would have to led to frustration as it would be too easy to spend money sitting there.
So what should you have a handle on before trying? If jumping right in is your jam, go for it! Otherwise, here are some things to consider:
- Know your values and what brings you happiness. This will ensure your money is being spent effectively.
- Have a clear idea of how your money has been spent lately (past 3-4 months). You want this to be stable and have a track record of successful intentional spending.
- Have a handle on impulse purchases! There’s no shame in this! It’s just that savings can quickly be railroaded if this is in your style of spending.
What about you? Is there anything you struggle with or feel works for you? Have you ever changed how you budget?