I like to experiment with my budget. One of my latest budget Frankensteins has been to separate what I refer to as my “must pays” from my discretionary spending.
These “must pays” are bills that absolutely have to be paid. If they don’t get paid, I lose a house, the electricity goes off (not good in the south during the summer), or I don’t drive to work. So, extremely critical stuff.
Everything else? I lump it into one category called “Flex Spending”. It’s not miscellaneous by any means. It’s a budget category that gives me the flexibility to choose (on a weekly basis) my priorities. If I want to go camping next weekend, I know I’ll need about $100 for the campsite fee plus all the food. If camping is my goal, then I need to not spend $100 on other things. Could be eating out, going to the movies, or browsing the bookstore.
Here’s why I’m liking this budget method so much—freedom. I get to consciously set weekly, achievable goals. These are goals that I, along with my family, get to choose. Instead of denying myself all discretionary spending, I focus on one goal each week. The only rule is the goal must be something that results in a positive experience.
So, instead of, “My goal is to not declare bankruptcy this week, so we need to save $100″, but rather, “Let’s go camping this weekend, woo hoo, fun!” See the difference? Each goal is admirable. Each goal requires the same amount of money. One goal creates memories.
In a recent post on Lifehacker, Whitson Gordon wrote about fixed vs. flexible spending. In the post, he writes:
“If you want more control over how you budget your set expenses and flexible spending, consider separating the two so you know exactly how much you have to use this week.”
The weekly frequency works great. It’s not so short, like a daily schedule would be, that you’re overwhelmed with minutiae. But it’s not so long, as with a monthly budget, where you lose site of the smaller items.
Mr. Gordon concludes his article with:
“After separating the expenses, you don’t have to constantly stress out about mow much money to save for those bills and worrying about the due dates (though you should still check regularly and make sure everything’s going as planned).”
Got any unusual budgeting techniques that work for you? I love to hear ’em.