Use a Spending Plan Instead of a Budget to Give Yourself More Flexibility
It’s good to have a carefully categorized budget if you know exactly what you want to spend your money on each month. However, if you need a little more flexibility, try making a spending plan instead.
As the personal finance blog Becoming Minimalist explains, a spending plan differs from a budget in that the only thing you categorize is your G / L accounts. Rent, utilities, groceries, and yes, savings. The rest is completely up to you.
Once you have determined your monthly income and monthly fixed expenses, you can easily find out your monthly discretionary income (the money you left to spend on your own). Just subtract your monthly fixed costs (step 2) from your monthly net income (step 1). For example, if you have $ 500 a month left after you have paid your fixed expenses, you will have $ 500 in discretionary income. The spending plan now gives you the flexibility to spend that $ 500 at your will: golf clubs, cinnamon rolls, travel, entertainment, extra savings, or an 8.0MP underwater camcorder. The choice is yours.
The obvious advantage of this plan is that it saves you unnecessarily categorizing things that you really don’t need to sort. Does it matter if you separate your entertainment budget from your eating out budget if you take care of the essentials? More importantly, it gives you more freedom and flexibility about your budget. As long as your bills are paid and you save money for the future, you don’t need to feel guilty about every purchase .
Personal Spending Plan That Really Works | Become a Minimalist Through Rockstar Finance