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Budgeting Strategy

Posted on Thursday September 1, 2022

I have a problem with impulsive spending when it comes to credit cards. I understand that the temptation of having easy access to credit is the whole point of them, from a capitalist perspective. Losing track of my credit balance and racking up a ton of debt is as easy as just *not* checking the balance, which is something I excel at.

In order to proactively reduct my reliance on credit and encourage wiser spending habits, I've decided to adopt a new budgeting strategy. It consists of the following steps:

Set up my employer's direct deposit to place 15% of my income directly into a savings account
Calculate a flat amount roughly equal to the remaining 85% of income minus my monthly expenditures (padded by an extra 10%), and deposit this into a "discretionary" checking account. This account is tied to a debit card that I'll use for daily spending on food and non-essentials.
The remaining amount (expenditures plus 10%) goes into a checking account that's set up for auto-pay on utilities, rent, etc.
Leave credit cards at home, in someplace inconvenient. They are only to be used for emergencies; I'm not concerned with building credit right now.

I feel that using a debit card with a fixed amount of disposable income in this manner serves two purposes:

It keeps me from spending more money than I have, and
It lessens my general anxiety by removing unknown variables; I know exactly how much I can spend, and I know that doing so won't interfere with my ability to pay bills.

I understand that this is all probably pretty basic and a no-brainer to folks who are better with money than I am, but I feel proud of having come up with a solution that works for me. I have a tendency to be forgetful, so solutions that don't require any extra input on my part are something I value.

I also understand that having disposable income is a privilege in itself, and so I'm thankful that I'm in this position since moving to someplace more affordable.

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