The B Word

It’s not the word you’re thinking about. This week we’re talking about budgeting.

Many of us have been conditioned to believe that the only way to be successful with money is to create a budget and stick to it. You’re supposed to write out all of your expenses and “give every dollar a job” for the month. There’s no deviating from the written budget, or else!

But let’s face it: Budgets are notorious for leaving us feeling overwhelmed and restricted, not to mention frustrated and discouraged when life doesn’t go exactly according to plan.

“A budget is telling your money where to go, instead of wondering where it went.” —John Maxwell

There’s no question that learning how to manage your money and live within your means are critical skills for your long-term wellbeing, but after more than a decade of being a die-hard advocate of zero-based budgeting (shout out to YNAB), I’m here to proclaim I’ve kissed budgeting goodbye.

Oh, well, okay… perhaps a better way to phrase it is, I gave up my old ways of budgeting. When I did, I found a financial confidence I didn’t realize was missing from my life and now, instead of assigning dollars “jobs” and worrying over which budget category a purchase falls into or whether I’m going to overspend in one category or another, I spend about 5 minutes each pay day implementing our spending plan by making sure our money is where it needs to be to meet our needs and achieve our short- and long-term goals. The rest of the time, I’m relaxed knowing our bills are covered, we’re making progress toward our goals, and we can spend guilt-free with what’s left.

Before we continue, I want to address that every person or family’s income situation is different. You’ll likely need to make adjustments to the steps below if you decide to give them a try. In our family, I’m the primary income-earner. I’m paid the same amount twice a month and receive variable quarterly distributions, making my income relatively predictable. My husband, however, is an independent contractor. He’s paid on a per-job basis, and his income varies week-to-week, sometimes by quite a lot. Since we can’t predict exactly what our income will be each month, we designed our spending plan in a way that makes sure our immediate needs (food, bills, utilities, etc.) are covered while still being able to contribute toward our other financial priorities.

How We Gave Up Budgeting and Gained Financial Confidence

Step 1:

Think about your financial priorities and open the accounts you need. I’m a big fan of the High-5 banking method and highly recommend that you at least try having two checking accounts: one for fixed bills and expenses, and one for spending. This has been a game changer for our family and is the key to not worrying about spending. If it’s in the spending account, it’s available for spending on anything we want. No category needed!

Our family has the following accounts:

• Checking #1 – Bills & Fixed Expenses
• Mortgage, car payment, utilities, minimum debt payments, insurance, subscriptions, etc.
• Checking #2 – Spending
• Groceries and eating out, entertainment, personal care, gifts, clothes, etc.
• Savings # 1 – Sinking Funds (Short-Term Goals)
• Annual subscriptions & dues, taxes, summer camp, Christmas, etc.
• Savings #2 – Travel
• Any overnight travel, vacations big and small
• High-Yield Savings – Emergency Fund
• 3-6 months of expenses
• Brokerage Account – Long-Term Goals
• Home renovations, eventual land purchase, etc.


Step 2:

Make a list of your monthly bills and fixed expenses (you may have done this already if you’ve started to build your emergency fund), and assign each bill to the paycheck it will be paid from. For larger bills like your rent or mortgage and car payment, assign 50% of each month’s bill so they don’t take away too much from one paycheck.

Calculate what’s left over after your bills and fixed expenses are accounted for. This is the amount available for completing your emergency fund, your short- and long-term goals, and your spending (our family counts any spending we can reasonably control as variable and lifestyle spending).

I created a simple Google Sheets spreadsheet to simplify this process, which you’re welcome to copy and make your own.

Step 3:

Have all your income deposited to your bills and fixed expenses checking account. Each day new money comes in, take a few minutes to transfer what’s left over after your bills and fixed expenses are accounted for to the appropriate accounts. We do this based on percentages, and you can find a simple calculator to take all the guesswork out of how much goes where in the Google Sheet I shared in Step 2.

If you haven’t fully funded your emergency fund (3-6 months of expenses), make sure to include your emergency fund as an account to receive a transfer on pay day.

This is what works for our family, but remember what will work for yours will likely be different. It may take a couple months to figure out, and you should feel comfortable making adjustments until you find out what works best.

• 55% to Spending checking
• 20% to our debt avalanche (see my post on paying down debt)
• 15% to Sinking Funds savings
• 5% to Travel savings
• 5% to Long-Term brokerage

Eventually we’ll have our debt paid off, and then we’ll get to decide how to adjust our current percentages. Until then, our lifestyle spending and travel are limited but not cut out entirely. Using percentages has helped us stay motivated to reach our goals of paying off consumer debt, avoid taking on additional debt, and enjoy a little bit of the income we bring in each month.

Step 4:

Live your life, and enjoy spending within your means and the peace that comes along with it.

If there’s money in your spending account, then you can spend on whatever comes up. Grandma’s birthday lunch? Go for it. New running shoes? Get ‘em. Your daughter’s upcoming field trip? You’ve got it. Concert tickets? They’re yours. No more categories. No more overspending. No more stress.

Unless, of course, there’s no money in your spending account. That’s where it gets tricky, and that’s when you have to put your adulting skills to the test. Get comfortable telling yourself “not yet” and “no.” The first weeks or months of this new way of managing your money can be eye-opening regarding your spending habits (it was for us), but before long you’ll begin to feel proud that you can wait for things you can’t pay for yet. The balances in your account will grow as you get honest with yourself about your needs and wants, and the confidence you feel about your money and your spending decisions will grow along with those balances.


• Automate everything you can! If you have the option to set up a bill on auto pay from your checking account, do it. You won’t have to stress about the funds not being there on the due date because you’re prioritizing your bills and fixed expenses, and you’ll eliminate the risk of forgetting about a due date.

• If you have enough wiggle room (after your emergency fund is fully funded), you can set up fixed savings goals for your short- and long-term goals and begin to treat your minimum savings amounts like bills and fixed expenses. Just set up an automatic transfer from your bills checking account to the designated savings account and treat that transfer like a bill. You’ll feel even better for prioritizing your short- and long-term goals.

I would love to hear about non-traditional budgeting methods that work for you and your family. Feel free to share in the comments! And if you give up budgeting as you know it to give this a try, I’d love to hear about that, too!

Until next Thursday!