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Find a system that works for you. Successful budgeters agree: A workable budget is one that fits not only your money but your lifestyle and personality.
As I see it, there are two main methods: macro and micro.
Some people swear by macro methods that are based on covering the big chunks -- living expenses, savings, retirement -- and leaving the remaining cash to your own discretion. The 60% Solution is such a plan.
A micro method is based on more detailed control and adjustment of individual budget categories, transferring cash between categories as needed. The envelope system -- where you spend only the cash available in each envelope -- is a micro plan.
Bellamy adds another layer to her micro budget by timing her expenses to each of her 26 yearly paychecks. She pays one set of bills and sets aside savings with the first paycheck of the month, and then pays rent and smaller bills with the second. Her two "extra" paychecks go straight to her Roth individual retirement account.
Patrice Bishop, a faithful Women in Red reader, says she experimented with many different methods. "Long story short, none of them worked out and some even led to bounced checks," she wrote in an e-mail. "I think they failed because I was basically copying other people's ideas without taking into consideration my own personality."
Bishop ended up creating what she calls "the living budget," where she puts her savings aside first -- and then lives on the remaining $1,680 per month. Each paycheck covers her expenses because "I act as if that amount is all the money I have in the world."
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Stay flexible. Life happens, and a good budget can adjust to your changing needs.
A macro method like the 60% Solution does this by having you allocate 10% of your gross income for short-term savings and 10% for long-term -- so most of life's little (and big) surprises are covered.
A micro method can be flexible because you can adjust one category to provide cash for another.
"I sometimes get in a spendy mood," Bellamy admits. She goes shopping but is careful to pluck bits of cash from other categories -- and not splurge mindlessly. "I'm careful to make sure I have the money somewhere before I spend it."
Above all, a good spending plan is and will always be a work in progress.
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McNaughton says that although she has stumbled many times -- and dropped the budget ball many others -- she's ready to try again.
She is using a system she has dubbed the "on the go" method, using a paper calendar where she tracks not only the bills that are due on certain dates but the amounts she spends each day.
"I really wish I could have a fresh start," she says wistfully.
I think she's well on her way.
Published Nov. 28, 2007
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