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The joy of the "no budget" plan
The great thing about the "no budget" plan is that it would free you from the need to worry about how much you spend on groceries or drive-through lattes each week. Nor will you have to worry about what to do when your "entertainment envelope” is nearly empty. Instead, you would be able to just spend money on the things you like and move on. Of course, you will need to keep track of your spending to make sure you don't overdraw your checking account. And if you use credit cards for the points or cash back you should be able to pay off your statements using the same automatic withdrawals as you did for your insurance premiums and mortgage or rent payment.
Other spending plans
Of course, there are numerous other ways to manage your finances. The important thing is to learn what works for you and which you would enjoy using. Here are five spending plan alternatives worth considering if you feel the "no budget" plan just isn’t for you.
Personal finance software
Personal finance software such as Quicken or QuickBooks can be a good way to manage your money when you connect it to your bank accounts. This will ensure that everything is automatically updated, synced and categorized for you. In addition, most personal finance software will allow you to create an unlimited number of categories that you can customize. Are you an aficionado of microbrews or do you buy friends breakfast once a month? You could create categories to cover this. Plus, personal finance software can show you exactly where you stand versus your goals so that you will know if and when you need to make modifications.
This is where you do a complete reset and start from zero every month. In addition, your income minus your outgo must equal zero. If you earn, say, $3500 a month, then you will need every item that you spend/invest/save equals $3500. If you use this plan, you will know where every one of your dollars has gone.
If you'd like to know more about this method for managing your finances, here's a video that explains it and also offers some how-to tips for using it to pay off debt.
If you have Microsoft Excel or some other spreadsheet program you could use it to create a spending plan. Even if that seems a bit old school, it can still be an effective way to manage your finances. Of course, you will have to create your own spending categories without any outside help and then remember to input your actual spending on a day-to-day basis.
Checkbook and register
This is very, very old school but it's possible to use your checkbook and register to manage your money. What you would need to do is make sure you record all of your transactions and then balance your account manually. You would use a credit card to pay for most things and then write a check at the end of the month to pay off your balance – making sure you record it in your register.
Keep it all in your head
Believe it or not, according to the website Bankrate approximately 16% of women and 20% of men keep their spending plans and their budgets all in their heads. I personally don't think I'd like to try doing this but it obviously works for some people.
Learn what works for you
This is a case where one size definitely doesn't fit all. You need to determine which plan would work best for you and how to track your spending. This is the only way you can know if you're spending your money on the stuff that’s really important to you. If you fail to do this, it’s just way too easy to lose track of your money and let your financial goals just slip away.