De-clutter your spending & THROW OUT the budget plan

I’m just hearing you saying to your screen – “Hang on a sec, did you just say throw out the budget planner?”  Surely Caroline as a  money coach,  you must live, breathe and eat budgets.

Would it surprise you to know I don’t?

Have a Budget plan…..  (There I’ve said it)

The problem is when we try to budget we feel too constricted and the rebel in us surfaces.   Sticking to a budget takes willpower.  And that’s an issue.

There have been many studies done that show that willpower is a finite resource.   Take a typical day and just look at the number of times we have to use our willpower, simply getting up in the morning, resisting the urge to have a sneaky look at Facebook and concentrating on your work instead, being nice to the boss you don’t like, eating a healthy dinner rather than take away.  The list is pretty endless and we have to work hard at it, and it wears us out.   A bit like our muscles tire out when your forced to do too many push ups (come on I’m sure one or two of you do exercise!)

Why I have thrown out the budget plan

Budget plans take up too much time, are too difficult to stick to and leave you obsessed with money.

When I first had my own money I would record everything, and I mean EVERYTHING, in a little book.  The 20p on a chocolate bar, to the £10 on a new top… Such were my typical spends at the time.  It distressed me if I couldn’t work out where even the last penny had gone, and I would end up obsessing about it, keeping me awake at night.    I was so obsessed I remember clearly arguing with a friend in the middle of town, and giving her a girlie punch on the arm I was so annoyed at the way she had split our lunch bill…..What a thing (yes really it was not good behavior) ….this could not go on. …

If you feel too scared to relax your grip on your budget and it’s causing you to feel anxious and stress or if for you the idea of even contemplating a budget plan is so far away from not knowing what you are spending now, that it freaks you out, this is for you.

The budgeting had to be ditched.

What I have found works instead

A Mindful Spending Plan

Ditch budgeting.

Opening your mind to a spending plan is just the start.  Feel the warmth of it, how much more open it is, that is about allowing rather than constricting.

Of course the real exciting bit of the challenge is doing it.   I’m all for a bit of keeping it simple and pain free as possible so here we go.

Mindful spending has four “pots” that you allocate money towards.

You can place different types of expenditure in each pot.  Some ideas of what I think works well are:

Fixed Bills  – Mortgage, rent, utilities, debt, phone, car payment, insurance, internet, TV, Charity payments, subscriptions, essentially everything that comes out on Direct Debit

Future – Retirement, Education

Savings – Holidays, Christmas, Birthdays, Rainy Day, Medium term goals such as property deposit

Spending (As you wish, guilt free)  – Going out, food, petrol, public transport, clothes, fitness, health and beauty.

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How to make it work?

This is the point where you work out what needs to go in each pot.

Fixed Bills

Firstly work out the cost of all the automated payments you have.  (Whilst you are doing this check they are all things you actually want).

Future

You may have your pension taken out at source on your payslip.  As a general rule if we save around 10% of our income for the longer term that is good, so check now to see if you heading toward that.  If you have kiddies in tow too, and you are planning on helping them out in the future you might want to consider more.  Alternatively there are lots of saving calculators on the web for example at https://www.moneyadviceservice.org.uk/en/tools/savings-calculator  which will help you work out how much you need to save each month bespoke for your circumstances.

Savings

In my experience it is often the forgotten expenses that cause us problems.  How many times have you or someone you know said it’s an expensive month, lots of birthdays, or the car service is due, or we have a holiday coming up?   The average British household spends £821 on Christmas, and £860 per person on average for their main holiday.    So even just for Christmas you should be thinking about £70 per month……   I would also add another 10% in here for anything you might have forgotten.   Getting money aside in this jar for many is the key to creating more consistency in their finances.

The Three Figures

So you should now have three figures

Fixed Bills

Future

Savings

Subtract these off your take home pay and what these leaves you with is

Your Guilt Free Spends

So with this money you can spend it exactly how you like.  No guilt.  Just mindfulness.

No you “shouldn’t be buying those shoes”, or you “can’t have steak for dinner”.   No need to apply a budget to this money.

You have the money because you have sorted out your bills, your future and short term savings then what you have left is what you have left to spend.

Being mindful means that you are conscious of what you have left in this account, and the things you want to do over the month, and if you want to do them all, be mindful of your progress.

Play with this

Try it out, experiment with this, don’t get hung up on creating budgets for everything.   You will find your own path with it as time goes on.  It may be that you add more jars of your own, for things that are important to you.

The next step

Get my daily actions to wealth here AND get a discount code for the ultimate guide to ditching the budget plan & mindful spending with The Money Buddy.

I’d love to know what jar you are most excited to fill?  Love to read your comments below.  (If you run your own blog your can leave a link too)