Make Your Budget Work for You - Financial Strategies to Implement Today
Budgets are a hot topic. If you haven’t heard that before, make it your mantra. My budget is a hot topic; my budget is a hot topic.
I say this because the best thing I did for my finances was start a budget.
Unfortunately, I wasn’t raised in a home where finances and financial literacy were top of mind. I didn’t take control of my finances until I was in my mid-late 20s. If this also sounds like you, check out my article for Financial Habits to Start in Your 20s.
Today, I want to share some strategies to make your budget work for you.
Use multiple checking accounts. My budget is categorized into three buckets; I have three checking accounts—one for my fixed expenses, one for my variable expenses, and one for fun.
My fixed account is for the consistent expenses that comprise a large portion of my income.
My variable expenses are bills that change slightly from month to month or things I can cancel if needed. Think of heat bills, electric bills, music subscriptions, streaming accounts, gym memberships, etc.
When I was in debt, this was also the account that I budgeted my credit card and loan payments from. If there was variability in my heat bill in the summer, I used the difference to maximize my credit card/loan payment that month. I also took advantage of the checking account bonuses offered by my banks and made an extra $300.
All because I opened a second and third checking account. This is an easy hack to take advantage of because of my next point.
Set up automatic direct deposit to each of your accounts.
If you don’t have direct deposit, figure out how to get it. I think most companies offer it.
Most importantly, for our purposes, most banks will waive your maintenance fee if you have a direct deposit coming in.
I didn’t know this before, just stumbling upon it, but companies will allow you to split your paycheck. My company uses software like UKG that allows me to send my paycheck to at least five different accounts. So I send the budgeted amount to each of my checking accounts, which waives the maintenance fees. I also automatically send money to savings and a brokerage account now.
This is an easy hack because you only have to set it up once, and it works automatically. If I need to move money, I just Zelle myself or make transfers.
Use automatic payments to your advantage.
Since every dollar coming into my hands had a purpose, I had them fulfill that purpose without me doing the legwork.
I set up automatic payments of my fixed ‘expenses.’
So everything that I knew was going to be constant already had the right amount of money going into the checking account.
So I enrolled in automatic payments (debits) online for my rent, car note, and insurance.
I set it and forget it.
I’m never behind on a payment, and I never incur a late or overdraft fee.
Ditch the debit card. My fixed account does not have a debit card. There’s no need since everything is happening automatically.
I only have a sole ATM card without a VISA logo. My fun account and my variable account are the only accounts that have debit cards, and I leave my debit card for a variable account at home locked away. I’ll tell you why.
My first life lesson smacked me in the face at 21 when my debit card, lying happily in my wallet at home, was used to purchase 1,300 dollars of items in Italy. Someone got my card information, made a physical card, and swiped up a storm before my bank caught it. All the while, I was sleeping away unknowingly at home. My account was overdrawn, I had three automatic overdraft fees (because I wasn’t sitting on $1300 back then), and I was freaking out.
While the bank recognized it was a fraud, I was still out of the money I did have while the bank worked to reverse the fees and get my money back into my account. I was staring at a negative balance and bills due, and I had no backup. It was a huge wake-up call.
Now, I take precautions to protect MY money and prevent this from happening. Starting with limiting how much I swipe my debit card. Which in turn does wonders for my sticking to my budget.
My fixed expenses comprise most of my budget and are safe from this kind of fraud.
If someone gets my fun card, they are only getting a couple hundred bucks, which has no impact on my ability to pay my bills on time. If they get my variable card, I’m still up a creak, but not as far. So I’ve developed another hack: to use my credit card for purchases and immediately pay it off. Read more about how I use my credit card to my advantage in this article.
So there you have it; I hope these strategies help you with your budgeting. If you are looking for somewhere to get started, I have this handy budgeting spreadsheet available for download here.
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