“Budgeting just doesn’t work for us!”

Have you tried budgeting with your spouse and it has only led to stress and disagreements?

If so, it’s not your fault! Most of us are taught a method of budgeting that is destined to fail. If you google “budgeting,” you will likely find an excel sheet where you list your income and expenses. It spits out the amount you are over or under for the month. And voila! You have a budget. 

THIS IS NOT A BUDGET. It’s a snapshot. It doesn’t take into consideration the timing of how we spend money or the different ways that we spend money. 

If you’ve only tried this type of budget, I understand why you’ve felt frustrated. You need a budgeting system that’s more expansive—one that goes beyond a point-in-time snapshot to help you take action.

Your first step toward a more expansive budget is to organize your money. If you follow the steps I’m about to teach you, you’ll gain financial clarity so you’ll be able to start moving forward with confidence. 

Most couples lump all their expenses into one big “money going out” category. But not all expenses are created equally.

  • Some expenses have a fixed amount and happen on the same date each month.
  • Others are expected and ongoing, but the amounts vary. (Hello, Target!)
  • Still others are infrequent or happen more or less out of the blue.

If you treat all three types of expenses the same, your budget will never serve you as well as it should. The good news is, it’s easy to fix. 

Step One: Organize Your Expenses into Three Categories

1. Fixed and recurring expenses. These expenses have a fixed amount and happen on the same date each month, such as your mortgage or rent payment, car loan payments, and cell phone bill.

2. Day-to-day spending. These expenses are ongoing and expected, but the amounts vary. Think grocery trips, eating out (including coffee runs), Amazon purchases, gas, and so on.

3. Non-recurring expected and unexpected expenses. These are infrequent and/or out-of-the-blue expenses. Some are more fun (travel and gifts) than others (car repairs and home maintenance). Most couples are paying for expenses in these three categories in the same way, but they impact our budget in unique ways, and it’s crucial to handle them differently. 

If you don’t organize your expenses into these three different categories, you will see money in your bank account and have no idea if it’s enough to cover your bills and expenses until you are paid again. It’s like looking in your pantry and seeing an abundance of food, but having no idea if you have what you need to make meals for the week!

Step Two: Turn Your Day-To-Day Spending Into a Fixed Expense

Many couples begin each month with grand optimism: OK, anything left over this month is going straight to savings (or debt reduction or the college fund). 

But when the end of the month rolls around, they’re discouraged—and surprised!—to find there are no leftovers. How does that happen?

Every time we swipe our debit card for day-to-day expenses—Amazon purchases, Target runs, grocery trips—our bank balance dwindles. That’s obvious. What’s not obvious is by how much it dwindles… because the amounts are all over the place. So it’s nearly impossible to accurately predict how much you’ll have left over for your future goals.

To fix that problem, it’s essential to separate your day-to-day spending from your recurring, fixed bills. Here’s how:

Set up a separate checking account and call it your spending account.

Divide your monthly day-to-day spending by the number of times you get paid each month. 

Transfer that amount to your spending account every pay period. Use this account for all of your day-to-day expenses.

Now your day-to-day spending is a fixed expense. It’s count-on-able, so your coffee habit can’t sabotage your savings plans. 

This action has helped dozens of my clients to pay down debt. By transferring a set amount to a spending account every pay period,  they stopped worrying about every-day expenses ransacking their bill account. They went from waiting until the end of the month to see how much extra they had to pay down debt to knowing EXACTLY how much they had to throw at their debt on every payday. This clarity gave them power. 

Step Three: Plan for expected and unexpected expenses

I call these whammies, because that’s exactly what they feel like.

You run your kid to the dentist, and wham—they need three fillings (and braces, probably).

You open the mail and wham—your annual HOA fees are due again. Already.

You’re still basking in your post-vacation glow when wham—your credit card bill arrives.

Wouldn’t it be incredible to feel un-phased by those whammies? 

You can be.

Decide, together, on your savings goals—then set up separate savings accounts for each category. For example, you might set up accounts for car repairs, vacations, gifts, and “that lake house we’ve been dreaming about for years.”

Divide your current annual spending in each category by 12. For aspirational goals (like the lake house) simply decide how much to start socking away each month.

Transfer that amount to the corresponding savings account every month. For example, if you spend $2400 on holiday gifts, transfer $200 each month to your gift account.

If you’re willing to treat these expenses as if they’re monthly bills, you’ll be astounded by how free you feel. No more stressing out about “surprise” expenses. Can you even imagine? It’s a game-changer.

When you don’t budget for expected & unexpected expenses, it’s like trying to finish a puzzle without all of the pieces. You know something is missing but you can’t put your finger on it. And, this can lead to disagreements in your marriage. When you put money into separate savings accounts every month to prepare for expected & unexpected expenses, it’s like fitting together another puzzle piece, bringing clarity to your overall financial picture. 

With this new budgeting system, every month starts to look the same. Your paycheck comes in and you pay the bills that are associated with that pay period. You transfer money to a spending account like you are paying a bill and only use that spending account for day-to-day expenses. You save for upcoming expenses in separate savings accounts, each with a specific purpose. 

And here’s the best part…when you implement these steps, your marriage is stronger, more connected and full of possibilities. You experience, maybe for the first time, being on the same page about money with your spouse. How would that feel? What can you do now? I have seen clients switch careers, buy new homes, invest for retirement, start businesses, travel, send their kids to college and more. What do you want to see possible in your couple’s future?

Are you ready to take your budget from surviving to thriving? If so, join me for a free live budgeting workshop! Register here: https://amyscottcoaching.com/events/.