For most folks, creating a budget is the easy part. The challenge comes in managing to keep it. I’ve found one simple trick keeps our family on track better than anything else. The Once-A-Week Spending Rule.
We have exactly ONE DAY PER WEEK that we allow ourselves any bank transactions. That’s it. This is the day we pay our bills, get our groceries and fill up our gas tanks. We also withdraw any cash we will need for our cash envelopes (more on that later). It’s a pretty simple trick, but it works better than anything we’ve ever tried.
Choose Your Spending Day
Ideally, you will be able to choose the same day every week. It should be a day when your deposits have cleared and you have enough time to pay your bills, update your budget and withdraw your cash. The important thing is to keep yourself committed to doing all financial transactions (except cash) on one day. The remaining bank balance can be allocated to bill payoff, emergency funds or savings accounts. Just make sure you have assigned a task to every single dollar so you aren’t tempted to spend.
Use the Cash Envelope System
We are big fans of the cash envelope system in our home. It’s an invaluable tool for keeping us on track financially. With regards to the Once-A-Week Spending plan, withdraw a set amount for each cash category and add it to the envelopes. Once it’s gone, it’s gone! Our categories are: clothing, food, auto/gas, birthdays/holidays and short term savings. The money in our “food” envelope covers groceries, school lunches and dining out. When I save big bucks at the grocery store using coupons, I have ample funds left over for a nice restaurant meal with the family. When I don’t, we don’t go. How’s that for incentive?
No More Impulse Purchases
When left with a specific amount of cash for six days, I am forced to be more mindful of my purchases. For example, if I plan a trip to Target to pick up a few sale items, I will not be tempted by the clearance holiday items or the new candles or any of the other trinkets that use to find their way into my cart. I know that if I indulge myself, I will pay for it…and so will my family.
What About Emergencies?
Emergencies are our only exception to the rule. The Once-A-Week Spending Plan has enabled us to have a well funded emergency fund because we no longer give in to impulsive purchases. If the air conditioner breaks or the car needs servicing, we are able to use an account we have specified for emergencies and take care of it. It’s important to have an understanding with all members of your family as to what constitutes an emergency so you’re all on the same page. For us, it is a dire need that will adversely affect our ability to function: car maintenance, home maintenance or health care.
What About Online Purchases?
I have a separate account that I use only for online purchases. I think of this account as an envelope. It’s my “online envelope”! I keep a specific dollar amount in it, and when I use this account, I replenish the funds by depositing cash from the appropriate envelope to get the balance back up to the original amount. Make sense?
Example: Most often my online purchases are for clothing. After making a $50 purchase, I remove $50 from my clothing envelope and deposit it into this account so the balance always stays the same. It may seem like a lot of extra effort, but I do this sort of banking monthly so it doesn’t cost me too much time. Plus the benefit of staying on budget far outweighs the inconvenience. Doing online shopping this way means I am still on budget and not overspending.
Tweaking Your Cash Envelopes
If you don’t have a clear idea of how much you need to spend each week on food, clothing, etc., it is likely that this new system will need some tweaking. Don’t be discouraged if the first week is rough. Just reevaluate your spending needs and make adjustments to the amount you add to each envelope. Continue modifying until you find the appropriate amount. It may help to start a Cash Journal, keeping track of all your spending for 1-2 months. This will help you see the big picture of where your money is going, and inspire you to reel in spending in some areas that may be a little out of control.
I have had great success by limiting my financial transactions to one day per week. My debit card is no longer overused as it once was. We have seen great improvements in our savings and debt payoff as a result of leaving the bank accounts alone all week too.
Share in the comments if you have additional tips for staying on budget.