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Despite loving numbers, traditional budgeting never worked for me. It’s often too complex and time-consuming. But I discovered a simple, effective system that takes just 10-15 minutes monthly to manage.
Why Budgeting Fails: Most people fail at budgeting because they treat all income as available to spend, ignoring fixed costs. Parkinson’s Law explains this – tasks (or spending) expand to fill the available time (or money).
Creating Clarity and Constraints: To avoid overspending, understand your actual expenses and limit your available spending money.
Our Budgeting System: We use a detailed spreadsheet divided into:
-Fixed Monthly Expenses: Mortgage, utilities, subscriptions ($4,650).
-Non-Fixed Monthly Expenses: Groceries, gas ($1,050).
-Discretionary Expenses: Dining out, entertainment.
We also save monthly for non-monthly expenses like gifts and vacations.
Using Technology: The app EveryDollar helps us track income, categorize expenses, organize bank accounts, and implement zero-based budgeting.
The initial setup involves creating multiple bank accounts, preferably with a credit union to avoid fees. Debit cards linked to these accounts simplify tracking. Once set up, maintaining the system is quick and easy. Knowing where your money goes helps in planning for the future.
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⏱Timestamps:⏱
0:00 - Why most budgets fail
3:04 - Create clarity and constraints
5:26 - Not-fixed and discretionary expenses
7:18 - One-off expenses
10:20 - The bottom line
11:39 - Creating constraints
13:25 - Debit cards and EveryDollar
16:48 - Making adjustments in EveryDollar
18:14 - Closing tips
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