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Tuesday, 13 June 2017

unF*ck your budget

I am guilty of the same crime as every other personal finance blogger - a crazy over complicated budget with too many categories and auto-calculations and future projections. It can be pretty overwhelming even to me.

Thankfully you only need to do one teeny tiny thing to move your budget from panic stations to responsible adult.

The F*ck It Budget

Matt over at Finance Yoself outlines the "budget" that most of us use when we pick up our first job - the F*ck It Budget. Here's how it works, according to Matt.
The F*ck It Budget (FIB) is deceptive. At a glance it looks like normal behavior for most people:
1. Get paid 
2. Pay bills 
3. Spend what’s left (use credit if necessary)

At first this looks pretty responsible, after all our hypothetical spender is paying bills first, and since they earned the money they're entitled to spend it... right? As Matt says "Any decisions in step 3, whether good or bad, are met with a resounding F*ck It!"

You're entitled to do whatever you want with your money. But there's a good chance you'll regret those F*ck It moments when you have a surprise bill and don't have enough money leftover to afford a latte in an avocado shell (it was almost a thing...)

The F*ck It Budget suits many of us through high school and early adulthood when our biggest concern is not being able to buy more prepaid credit for our mobile phone. But once we start dealing with boring adult responsibilities like paying rent, saving for a house or a holiday, paying for car repairs then the money dries up quickly.

The Oh F*ck!! Budget

Sometimes the equation works, and sometimes it doesn't - on a big month with rent, car repairs and a trip to the dentist your bills could easily outpace your income. When this happens many people turn to credit cards and suddenly find themselves behind the 8-ball. Now you have an extra bill each month, and less left over to do whatever the f*ck you want with.

When ignored, the F*ck It Budget can quickly lead you into a spiral of debt with no idea how you got there, then it's the Oh F*ck!! Budget. However, I promised you a really super simple budget that doesn't require elaborate spreadsheets, tracking your expenses or any of that other nonsense (that I absolutely love).

Here it is, one extra step and a tiny alteration and we're going to fix the F*ck It Budget, without ruining your ability to say F*ck It. In fact, you'll be able to spend to your hearts content without that nervous, sinking feeling.

The unF*cked Budget

1. Get paid 
2. Pay bills 
3. Hide money from yourself 
4. Spend what’s left (use credit, but pay in full every month)
And that's it, you're done! Now you can spend what's left and say F*ck It to your hearts content. You can do it with confidence knowing that even if the amount left hits zero, there is some money hidden away so you can feed yourself tomorrow.

The unF*cked details

So how do you hide money from yourself? In a high interest savings account. If you really don't trust yourself it's best to have it with a different bank than your usual money so you can't see it easily and it takes a little longer to move it to where you can spend it. When I was young and hid money from myself if I wanted something while I was out shopping I had to call my Dad to move some money. 

If you're looking for an account to open, look no further than ING Direct. They're currently offering 3% interest if you deposit more than $1,000 a month, plus $100 sign up bonus with my referral code: EBB062. You won't pay any fees, at all, ever. Not even ATM fees. Plus, having to deposit $1,000 a month to get the great interest rate will help keep you on track with your savings. Don't worry about being penalised for removing money when you need it, you only need to deposit $1,000 to get the bonus, what you do with the money after that is up to you.

As for spending whats left, the only caveat I have to add it not going past your limits. Spend what you have and not a cent more. Credit cards are a powerful tool when used correctly, but spending more than you have is a recipe for a debt disaster.

That's it. In one tiny step you've saved your budget and can graduate to 'responsible adult'. You can start by hiding $50 from yourself each paycheck and work your way up, or you can go all out and hide half your paycheck from yourself then slowly ease back to a comfortable level. Find what works for you to inspire you.

Remember that hidden money is for a rainy day. There's nothing wrong with spending it when you need it. Emergency car repairs? Check. Out of sick days and down with the flu? No worries. Stolen bike? You've got this covered.

4 comments:

  1. "Hide money from yourself." =) and your spouse/partner as well =) or at least come to a mutual agreement that there'll be a portion of income that will be hidden away. I think that makes sense.

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    1. Absolutely hide it from everyone ;) The other technique I've heard is to give yourself / your partner an 'allowance' - an agreed amount that you can spend on whatever you want without complaints. Of course, once it's gone, it's gone!

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  2. I finally figured out that for some reason I can't comment on your blog using Safari, either for Mac or iOS. After many fruitless attempts over the past months (I really was trying!), here I am on Firefox.

    I'm like you - love mucking around with budgets, and probably over complicate. Anyway, we each get an allowance, which has made our money lives so much less stressful, as we have different attitudes to saving and spending. We don't need to hide money because we are now committed, but I can definitely see how this would benefit our nephew. I'll pass it on - thanks!

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    1. Great to see you here! :D I'm actually spending the weekend looking at switching to WordPress because everything (tutorials, widgets, etc.) seems to be geared to it. Now that you've figured the site out, I might be moving :p Murphy's law like that.

      I think teens are the best candidates for hiding money. Apparently the 'risk center' of your brain isn't fully developed till 25 (the year can insurance magically gets cheaper) so avoiding having to make those sort of decisions is far easier than trying to make them right. Especially for young'ens

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