Budgeting. It is something we all know we need to do, but it seems so tedious. As long as I keep a general running balance in my head and check my bank account balance, that should be sufficient, right?

If this is you, let’s start with this question. Ask yourself how many times you have over-drafted or had to transfer money from savings to cover the electric bill because you spent more than you should over the weekend. I’ve been guilty of it too. But that’s why I’ve learned to budget.

Because while a budget is boring and very adult, it’s something responsible we all must do if we ever want to be ahead of the debt train.

To set a budget that works through job, location, and expense changes I recommend three things:

  1. 2-3 Bank accounts
  2. Spreadsheet of Monthly Expenses
  3. Direct Deposit


Bank Accounts:

I recommend three, but you at least need to have two. Look for bank accounts that have no fees attached, or if the fee is based on direct deposits, make sure you can meet the minimum every month. is a great place to start to compare benefits and fees. Make sure you consider things like if you need some place local so you can do in person banking, such as needed quarters for laundry (long story, but it’s something I had to consider after moving to Chicago). Consider ATM fees. Ideally no fees are the best option.

  • Bank Account Number One is for savings. I currently have a savings account, but have used a standard checking account for my savings before. Just look at all the fees and earned interest rates tied to each type of account. If you find that having a standard checking account will work best for your situation, just make sure you don’t order checks or a debit card for this account. Savings is your back-up plan. You don’t need easy access to it.
  • Bank Account Number Two is for your bills. This needs to be a checking account, because you will have money going in and out of this account on a regular basis. This is the account tied to all your bills. You need to make sure you keep enough money in here to cover any auto-payments at all times. Don’t go grocery shopping unless you know you have the money to cover those auto-pay bills on the correct days. A debit card for this account is optional. If you prefer plastic, use this debit card for groceries and shampoo, those monthly needs on the list. Just make sure you only spend within the budget you created. If you don’t think you can do that, just pull the cash out of the bank so you know what you can spend on groceries and still make sure the rest of the bills are paid.
  • Bank Account Number Three is optional. This account is your spending money. Since all my bills come out of Account Number Two, I know that whatever is left over from my check is placed here. This is the money I have for drinks with friends or fun shopping or a night to the movies. Once this account is empty, I’m done spending money for the month, because I don’t touch my savings account and the other account is for bills. If you don’t want to have three accounts, pull the leftover cash out of Account Two and place it in an envelope for spending money. This account also works for paying down debt. This is leftover money above what you need for your budget, so you can use some or all of it to put toward paying down that loan or credit card debt faster.


Spreadsheet of Monthly Expenses

Oh spreadsheets. Some people love them; some people don’t. The benefit here either way is the preset easily editable columns and rows that accurately add numbers for you. When you are making a budget, you need to list out your monthly expenses with the totals somewhere. Then you will need to add them together. This is not the place to forget to carry the 2. Another reason for a spreadsheet is that it is editable. If you add a Hulu subscription, you can create a new row, and the total at the bottom will change to include the new expense. This is less work for you. If your rent changes or you have a baby, you can change these numbers to update what you will need in Bank Account Two to make sure you are covering everything.

When looking at your monthly expenses you need to know three things about each bill:

  • What it is for: If you are paying bills and don’t know what they are for, you should probably cancel that subscription right away. LinkedIn Premium comes to mind. They offer a 30-day trial, but make you put in your payment information. If you forgot to cancel, go ahead and do that right away.
  • Bill due date each month: Most people get paid bi-weekly or twice a month. With this in mind, I try to make sure the due dates for my bills fall towards the beginning of the month or the middle of the month. Most of the time, you can call and change your billing date. I recommend splitting the bills into two sections instead of having them all due at once, just in case you unexpectedly aren’t receiving the paycheck you planned for.
  • Total amount: Of course, you should know how much money is going to each place, so you can make sure you have the right amount of money in your bank account to cover the expense.

These three things can be put into the spreadsheet like so:

Day Due Bill Amount
1st Rent $800
1st Internet $50
15th Student Loan $300
16th Car Payment $250
Total $1400

You will want to total up the last column so you know what your budget looks like for the month. I recommend organizing the rows by due date. That way, you can see what comes out the first half of the month and what comes out the second half. Try to make sure those amounts are about equal, so once again if something happens where you don’t get paid (layoff or didn’t get sick days), you aren’t in a bind to pay the majority of the bills all at once.

Don’t forget Netflix, Audible, and all those other subscription services. Other bills to remember are things that you pay quarterly or biannually (insurance, etc). Add up what the amount is for the year, and then divide by 12 so you know you are setting that money aside. Then when the bill comes due, you know the money is already there.


Direct Deposit

Now that you have a budget and can see how much you need to pay the bills, you know how much money you will need in Bank Account Two. If you are paid twice a month, take your budget and divide by 2. This is how much needs to be deposited from each check (from our example, $700). If you are paid bi-weekly, I recommend multiplying your budget by 12, then dividing by 26 weeks. This is how many paychecks you receive in a year when paid bi-weekly. For our example, you will need to direct deposit $647.

The remainder of each check should go into savings and Bank Account Number 3 for spending money. Always make sure you are putting more into savings than you are spending, but also make sure you leave some spending money each month so you don’t feel trapped and broke all the time.


A Few Final Notes:

  • Auto-Pay: If you can, set up your bills for auto pay. Most companies offer a discount for auto-bill-pay. Take advantage of whatever savings you can take. In your budget, leave the regular amount, not the discounted amount, just in case you ever need to cancel the auto-pay feature. Make sure the bills are coming out of Bank Account Number Two the day after funds are deposited so you don’t overdraft.
  • Groceries etc: Part of your bills needs to be a budgeted amount for groceries, shampoos, pet food (because who doesn’t have furry friends?), and fuel for your car. You need to have a general idea of what these regular odds and ends cost you. Round up here to give yourself room. Try to make sure you spend within (preferably under) your budget each month.
  • Cash: I know most of the world uses the convenience of plastic to pay for things these days or tap to pay. I recommend since you have a debit card, use that at the free ATM to pull out cash whenever you can. Cash is physically countable. What this means is it is easier to stick to a weekend budget at the bars if you are paying with physical money, instead of keeping an open tab. Cash will also keep you on track with those midday latte runs. (Side note: Cash can also help keep you on your food plan. If you are calorie tracking, you can budget with cash how many lattes you get for the week. When the green bills are gone, you know no more lattes.) The last benefit to having physical money in your wallet is you are at less risk of identity theft.
  • Shopping in person: It is so easy to surf Amazon and take advantage of free shipping while eating lunch at the office, or waiting for the bus, or (if we are really honest) while using the bathroom. This unfortunately makes over-spending easy too. I recommend browsing in-store. If you can’t physically buy it that day, you have to go home and rethink about getting online to make that purchase. This doesn’t mean you shouldn’t shop online, but sometimes browsing an unlimited store means we buy things we didn’t really need or want, just because it was something to do.


So where should you start?

The spreadsheet takes less than an hour to create. Setting up your direct deposit is as simple as getting the forms from HR at work. It usually takes a full pay cycle for it to switch over. Setting up auto-pay should be done after the direct deposit takes place, but then that can be scheduled when you go online to pay your bills.

Once the budget is set in place, it takes care of itself for the most part and you can go about your day-to-day without trying to make sure you keep a running account balance in your head. If something in your life changes, you can easily go back to the spreadsheet to add a bill or subtract a bill. You may need to update your direct deposit to reflect the change. I recommend you only change the direct deposit if you need more money deposited into the account. Make sure you are spending within your means. Take advantage of using cash whenever you can, because this is helpful for keeping you on track. Try to leave the debit card for Account Number Two at home unless going to the grocery store. This how you don’t accidently spend your cable bill money on a cute sweater for your dog (guilty party below).


Happy spending!

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