When we put off starting a budget, we’re not specifically avoiding responsible money management. We’re trying to avoid the bad feelings associated with deprivation, shame, and a lack of control. But in avoiding those things, we do end up missing out on taking control of our financial lives.
Now is the time to stand toe-to-toe with your financial situation, whatever it is. The best way to stress less about money this year is to face any problems head on.
Ready to take control? If you’re a Simple customer, you’re in luck! We have several built-in features that make it easy to take control of your money and set yourself up for budgeting success. I’d like to show you how easy it is to set up a basic budget in about an hour.
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Why Budget With Simple
There ain’t no budget like a Simple budget, ‘cause a Simple budget…
Doesn’t punish you when you mess up. Because all of your budgeting happens in a single account, you don’t have to worry about accidentally overspending. If your Safe-To-Spend® dips below zero, you still have some wiggle room. You’ll borrow from your largest Goal, and can easily catch up by paying yourself back later. Simple doesn’t charge overdraft fees.
Doesn’t force you to rely on the strength of your willpower. With Goals, saving happens automatically, with no effort on your part. You commit to saving, and Goals takes the money from your Safe-to-Spend in small daily increments. Saving this way ends up being way more effective than if you tried to collect and stash large chunks of money on your own.
Doesn’t deprive you of the things you love. In fact, we encourage you to start playing with Goals by saving up for something awesome (keep reading for our suggestions). Because Safe-To-Spend and Goals help you use your money more responsibly from one account, you’re bound to find a little extra here and there that you can roll up into an affordable luxury.
Plot Out Perfect
Let’s start plotting out the perfect financial month using Simple.
In this post about how to make budgeting less painful, we followed these steps:
We committed to spending less than we earn, and spending on the things we value.
We thought critically about what we want. We examined past experiences with money and determined how we might spend it more intelligently (and more decadently).
We tracked our finances. This allowed us to see how we spend our money now, and how we might improve.
We determined what a perfect month would look like financially. We did this by looking back over the things that we want and where we are now. We started to think about ways to reconcile the two, like using an incremental savings plan.
Look at your monthly income. On what dates does it arrive in your account and how much is it? We’re using this number as our starting point, and subtracting out Needs, Shoulds, and Wants.
First, let’s add automatic payments or Goals for all of your Needs. Needs include any payments related to housing, food, transportation, clothing, and health. Think about the items towards the bottom of Maslow’s Hierarchy of Needs. Get these covered first.
There are two ways to budget out these payments: by setting a Goal, or by scheduling a recurring payment with our Payments & Transfers features, which will allow you to send a check or pay a bill. Either way, it’s fee-free so you don’t have to pay extra to pay your bills.
To set up a bill payment or mail a check, select the Payments & Transfers button on either our web or mobile app. Then select Pay Bills or Mail a Check.
You can set up recurring payments, which can be useful for regular fixed expenses like rent or car payments, here, too.
When you schedule a payment, your Safe-To-Spend is adjusted automatically for payments within the next 30 days and on an ongoing basis per your designation. You can continue to build your budget without doing any mental math or worrying that you’ll accidentally overdraw your account.
Now, for known expenses that don’t have fixed costs, like gas or groceries, create some spending pools to spend from using Goals. Estimate the amount you’re likely to spend this month on each, start a Goal for that amount, and choose “Save now.” You’ll see that money moved from your Safe-To-Spend to your new Goal.
By creating a spending pool for each expense, you’re effectively hiding that money from yourself so you’re not tempted to spend it on anything but what it’s intended for. When you buy something from that category, you can edit that transaction to spend from the Goal you created.
Some common Needs Simple users save for include:
- Car insurance
- Car payments
- Bills (water), (electricity)
- Internet/Cell Phone
- Health Insurance
I use ‘Shoulds’ as a catch-all term for expenses that tend to keep us up at night. These are things that make us nervous, like credit card payments, or 401(k) contributions. Shoulds are usually important to our financial well-being, which is why they get us so worked up.
Some of your Shoulds will be fixed amounts, like regular IRA contributions. You can set up recurring payments or Goals for these just like you did with your Needs payments.
You may have Shoulds that are too large to save for all at once, like an emergency fund. Goals helps you put money away little by little by simply picking an amount and an end date when you set up the Goal.
Each day, a portion of your Goal will be brought in from your Safe-To-Spend. One day you’ll wake up and realize that you’ve completed your Goal without even realizing it.
Some common Shoulds Simple users save for include:
- Emergency Fund/Rainy Day Fund
- Student Loans
- Credit card payments
- Holiday presents
- Moving out
- Roth IRA
Now, the fun part. You can choose to budget for your Wants however you think is best, either over time or all at once.
If there are things you know you spend money on (or would like to spend money on) each month, you can set up a Goal at the beginning of each month for your ‘Fun Budget’ or something similar. Setting that money aside keeps you from spending it on random stuff that month.
For large purchases, saving over time makes more sense. Most of us can’t throw down for a trip to Iceland out of pocket, but more of us could if we saved up little bits over time. Simple makes it possible.
Some common Wants that Simple users are saving for include:
- Vacations/Road Trips/Cruises
- Looking Good
It’s Really That Easy!
It really, really is. Using Goals and recurring payments, you can tailor a budget to your needs with Simple.
How do you use Simple to budget? It’s gratifying to hear how you’re using our product to save more money for the things you love. Tell us all about it on Facebook.
Disclaimer: Hey! Welcome to our disclaimer. Here’s what you need to know to safely consume this blog post: Any outbound links in this post will take you away from Simple.com, to external sites in the wilds of the internet; neither Simple or our partner bank, BBVA Compass, endorse any linked-to websites; and we didn’t pay/barter with/bribe anyone to appear in this post. And as much as we wish we could control the cost of things, any prices in this article are just estimates. Actual prices are up to retailers, manufacturers, and other people who’ve been granted magical powers over digits and dollar signs.