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The three-step guide to budgeting for people who hate budgets

So you hate budgeting. The  good news is there’s a way to hate it less. Don’t believe me? Here’s my three-step guide to budgeting for people who’d rather be doing literally anything else.  Give it a try.

Step 1. Figure out what you need

This first step means making a date with your bank statements. Pick a rainy day (and yes, you can watch TV at the same time).

To figure out how much you need, pull up your last two or three months of credit and debit card records and creep your spending.

How much money do you need to spend on a monthly basis? Housing, groceries, and utilities are non-negotiables. Decent internet, a phone plan, transportation expenses, insurance, and loan payments can also count as necessities.

Next, grab an old calendar and write down what you paid for necessities on specific days.

This simple activity gives you an idea of when money normally leaves your account, so that you know what expenses you have to cover at the end of your pay cycle. This exercise can also make you aware of spending patterns, like how often you stock up on groceries and about how much you spend each trip to the store.

The shortcut

Skip the calendar and just make a list of numbers that cover what you need for a month. Add up these numbers. Yes, of course, you can use a calculator.

Step 2. Figure out what is leftover

This step involves some simple subtraction. Take the amount you get paid in a month (hint: peek your paycheque), subtract the amount you need to spend on necessities, and bam.

(What you make) – (what you need) = what is leftover

You can spend the leftover money on anything you want, which is not really the kind of freedom you think of when you hear the word “budgeting,” right?

Pro tip

Consider paying yourself first (i.e. saving) a necessity.. Try setting up a recurring weekly deposit with Moka and put away at least 10% of what you earn. Oh, and if you’re freelancing or self-employed, don’t forget to save money for taxes, too.

Step 3. Spend the leftover, if you want

This last step is the fun part: You can spend as much of the leftover money as you want. Overpriced lattes, fancy exercise classes, concert tickets, you name it.

Don’t have a lot leftover? Maybe that’s the wake-up call you need to ask for a raise or eliminate unnecessary recurring expenses, like old subscriptions or surprising bank fees. Sure, it may take a few months before you can afford something you really want, but you’ll never be scrambling to pay your electricity bill if you stick to this budget. Plus, you’ll avoid racking up debt and the expensive interest that comes with it.

Just remember to stop spending when the leftover money is gone.  Try keeping a simple running tally of every fun (i.e. not necessary) purchase you make and when you’re close to the total, you’ll know it’s time to slow down.

The shortcut

For an automated solution, set up an extra bank account. Every time you get paid, transfer the leftover to your extra account and leave the money for your necessities in your original account.

This means you’ll have one card just for fun spending and one for the necessities. Make sure that any automated payments are coming out of the right account and you’ve got a hands-free solution that does your budgeting for you.

That’s it

See, that wasn’t so hard, was it? A budget is just a plan for how you’re going to use your money to do as much of the stuff you want as possible.  If your goal is to feel like you still have flexibility and fun built into your plan, this simple approach is a great way to have your budget cake and eat it, too.