8/18/17: Money Management: Establishing a Lazy Budget/Anti Budget using Automation
It’s important to know what’s coming in and what’s going out. One time-efficient way to manage a budget is to use automation and direct deposit.
- First set up the direct deposit of 10% of gross income (before taxes) into a separate high-yield savings account that is hard to access. Bank Account #1
- Note the name and amount of each bill and its estimated due date. List the bills in order of importance. So bills needed to sustain a roof over my head, and to get me to and from work are listed as a higher priority than discretionary expenses. (This would make it easier to cut the lower-placed items when and if necessary.) Total the amount of the needed expenses paid each and every month and how much that means for each paycheck. This is the amount that should be set up to go directly from my employer to my main checking account that is used to pay necessary bills. (Optionally, automatic payments can be set up for the important bills so that these bills are never paid late. Make sure to monitor the amount removed from the account to make sure that only what is authorized is withdrawn.) Bank Account #2
- Some necessary bills are not paid monthly: insurance payments, property taxes, car repairs, home repairs, etc. These quarterly, semi-annually or annual amounts can be removed from each paycheck and sent to another separate savings account until needed during the year. Bank Account #3
- The balance of each paycheck can go the final bank account to use on whatever I please. Bank Account #4
Note, we can request for the due dates of some bills to be changed if that makes it easier to manage.
We can use calendar alerts to remind us of due dates; low-balance alerts for bank accounts; text alerts or email alerts for bank withdrawals or credit card accounts payments, etc.