A Simple Pain-free Budget You Can Actually Stick To

By Carlon Haas | July 24, 2007

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One of the questions I am asked the most is how to put together a simple budget that someone can actually stick to. Let me tell you: I have tried different kinds of budgets, and most of them flat out don’t work or are nearly impossible to stick to.

But the budget that works for me is the one I discovered…

… back in the good old days of elementary school. But before I delve into the nitty-gritty, let me show you how most people I know try to set up a budget and why it is almost impossible to stick to.

Because I am always talking about cutting the fat and clutter from life, some people think I use the “quicken” approach to do this.

Let me explain what the “Quicken” approach is:

You take all your expenses and divide them up by category. For example, here are some categories most people use:

Eating out
Mortgage
Clothes
Groceries
Etc.

And then what most people do is assign how much they will spend per category. So, let’s say you give yourself $100 to eat out that month. If you go over that, then you lose—game over, budget destroyed!

But what if I told you there is an easier way to do this that lets you live the lifestyle you want, can keep you out of debt and living within your means?

The Budgeting Secrets of 10 year olds

One of the reasons people can’t seem to stick to a budget using the “quicken method” is that once they go over the dollar amount they’ve assigned, they feel like they failed or feel like it’s impossible.

And the key to sticking to a budget is in feeling like you can do it.

This budget is like this, and its one most of us all used at one time or another. I call it the “Allowance Budget. “Just give yourself a set amount of money to spend every month and don’t spend more than that.

Remember when you were a kid, you got a set allowance and spent it on whatever you wanted. It was easy. If you didn’t have enough for the toy you wanted, you saved your allowance until you had enough.

I’ve used this method for my personal budgeting for as long as I can remember. I tried the Quicken way once (thinking it must be an improvement…technology is supposed to make it simple, right?), but it never worked as well as my Allowance budget. Luckily, my wife talked me into abandoning the Quicken method…But , honey, they wouldn’t make it that way if it didn’t work…and I just spent money on the program.

You live, you learn.

The only thing left to figure out is the amount to give yourself. It will differ for each household, but a simple way to figure that number out is this:

1. First add up all your necessary expenses: mortgage/rent, any loan payments, estimated monthly utilities/phone, etc. Do not include groceries or food. Only set expenses.

2. That is your base number.

3. Subtract it from the income you bring in.

4. You decide what to do with the remainder. You can’t save all of it, but I recommend saving a good portion of it. If you have enough remaining a good rule of thumb is give yourself double your base amount and save the rest.

There you have it. A simple budget that even a 10 year-old can stick to. Good luck.

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