As a finance coach who specializes in budgeting, I’ve spoken with a lot of people on why it’s so hard to stick to a budget.
One of the common themes I hear is that it takes too much time and effort.
While I believe that some things that are worth doing take a bit of time and effort, I fully acknowledge that this is a barrier for a lot of people.
That’s why I created the Root Budgeting System.
It’s a way of creating a budget for yourself (not following my version of a budget) so that it’s easy and natural to stick with it.
Anything that is easy and natural won’t take a lot of time or effort to do.
But there are also ways to simplify budgeting further so it takes even less time and effort to maintain.
Here are six ways to simplify your budget to help make it much easier to stick with.
1. Automate Everything
In my book, I teach that there are three pillars of budgeting.
The Root Budgeting System shows you how to create a budget around who you are and what you want, including choosing the principles and methods to incorporate into your budget.
But there are three pillars, or must-haves, that I believe every budget needs to have within it. One of those three pillars is automation.
Why do I think automation should be part of every budget?
That’s, ahem, simple. It makes everything easier!
Every month, I have 19 bills that need to be paid where I have the option to either set up automatic payments or pay them manually.
Imagine if I were to pay all those manually every month. I’d be wasting a ton of time on setting up payments every month when I could be automating those.
The same can be said for income. If you don’t have direct deposit, I encourage you to find a way to get it.
Things are much simpler now with many banks allowing you to deposit your check through their app without setting foot inside the branch location.
But do you know what is even quicker than that? Spending no time getting your money deposited because it’s being done automatically.
Automate everything you can in your finances so you don’t have to spend time doing it.
2. Combine Budgeted Categories
I personally like to track every category I can because it personally allows me to see exactly where my money is going.
I use an app called You Need a Budget (YNAB) for this so it makes it really easy to categorize transactions.
But true to the spirit of the Root Budgeting System, I fully recognize that this doesn’t work for everyone.
Some people get a bit overwhelmed by all the possible categories while others simply want to stop spending so much time on their budgeted categories.
No matter what side of the camp you fall on, you can combine your budgeted categories so you don’t have to spend time figuring out where things go or splitting out receipts.
Life insurance, health insurance, and car insurance could simply be “insurance” within your budget.
You can combine a grocery category with personal care or anything else you might get from the grocery store that isn’t necessarily groceries.
Combine Netflix, Disney+, and other streaming services into a “streaming services” category.
The point is to do what works for you, and that includes the way you handle your budgeted categories.
3. Simplify Your Definition of Budgeting
Did you know that the word “Budget” has four different definitions for the verb form and a whopping seven definitions for the noun form?
Like…what the $&%#, friends?!
No wonder it’s so hard to budget. We can’t even have a solid definition of what it means.
So I present to you a new definition of budgeting—frankly, the only one you will need.
Budgeting is “a living and breathing plan for your money so you do not spend too much or too little.”
Budgeting is a plan at its heart, but following the Root Budgeting System makes it a living and breathing plan.
What that means is simply that your budget has the ability to grow and change as you do so it doesn’t stop working for you.
“Spending too much or too little” in your new definition means that it’s ok to spend money. You should give yourself permission to do so.
Budgeting is not only about watching what you spend, it’s about spending on what you want.
I bet many of you are spending too much on things that don’t matter to you and not enough on things that do matter to you, just like I was.
That’s why within the Root Budgeting System, I teach you how to figure out what you value so you can stop spending on what you don’t care about and start spending more on what you do care about.
It simplifies your budget and makes it easy to stick with because you are not trying to conform who you are around your budget. Your budget is made for you.
4. Put Saving and Investing on Autopilot
If you really want to save money without much effort, “engaging” autopilot is the way to go.
For your savings, you will want to automate those transfers into your savings account, preferably from an online bank with a higher interest rate than a standard savings account.
There are two ways you can do this.
- Set up an automatic transfer for the amount you want to save on payday. This way you don’t even notice the money was in your checking account in the first place.
- Set up a second direct deposit with your employer. Many employers allow this and it’s a great way to literally never see your savings money in your checking account.
The point is to make sure the money you are saving is either not in your checking account at all or is in there for a very short amount of time.
For investing, here’s exactly what to do.
- Set up a brokerage account with a company like Fidelity or Vanguard or a 401K account with your employer.
- Deposit or transfer the same amount of money into your brokerage account of 401K every payday (this is called Dollar Cost Averaging).
- Within your brokerage or 401K account, select a low-fee Target Date Fund or Index Fund to invest in. Don’t just let the money sit in that account. You have to manually select where it is going to go the first time.
That’s it. Then watch your money grow long-term.
My recommendation is to never select a mutual fund or other actively managed funds because of the high fees that will eat up your returns.
Index Funds and Target Date Funds are passively managed and will give you a better long-term return while saving you many thousands of dollars in fees.
5. Create a Mindset of “Everything is Spending”
I have a secret for you. I’m a natural spender.
I love spending money so you can imagine what that can do to my saving and investing goals.
While creating systems to invest and save automatically has been a big part of my personal finance strategy, my big secret is a mindset trick.
I tell myself that everything is spending.
For a spender like me, this has worked wonders. Obviously, we have the normal spending, i.e. going to the store (or these days, Amazon) and buying something.
But for saving and investing, I am “spending” money on my future.
I am spending to make sure I will be set financially for life. I am spending to meet my financial goals to take a vacation in the future or put my girls through college, or whatever my financial goal may be.
My mindset for saving is that I am spending so it becomes more natural for me to save.
I am no longer forcing myself to change who I am to save money. I’m simply spending like I normally would on my future.
Even debt payoff can be considered spending to reduce your monthly financial burden.
Try this mindset, especially if you’re a spender, to simplify your ability to save, invest, or pay off your debt.
6. Set Aside a Small Amount of Time to Work on Your Budget
Making your budget simple to work on can save you a lot of time and effort. That’s why simplifying is one of the best things you can do.
But a lot of times, the reason why we think it takes so long to work on our budget is because it’s been a while since the last time we looked at it.
It’s the equivalent of it taking way too long to do the dishes because we let the dirty dishes pile up for days or longer.
This is something I’m trying to teach my girls right now with cleaning their rooms.
They play and play and play and don’t clean up when they’re done for days on end. When we ask them to clean their rooms, they get so overwhelmed that it’s hard for them to even know where to start.
We’re trying to teach them to keep up with their rooms and take care of their stuff because it takes much less time to do it.
Set aside a mere five or ten minutes every day to work on your budget.
That could look like importing transactions into an app (like YNAB) or spreadsheet so you can keep tracking your finances.
It may be entering any receipts from that day or the day before. It could even be planning for the next few days just to make sure things are taken care of.
Take a small amount of time every day to stay informed with your budget and you will never have to spend hours trying to figure out what is going on.
Simplify Simplify Simplify
Before I knew everything I know now, it used to take me forever to work on my budget. Then I start to simplify things and make them work for me.
Simplifying your budget is a great way to spend less time and effort on your budget while making it feel more natural to do.
Whether you’re looking to stick with your budget or do more with your budget, it doesn’t have to be difficult.
Your budget can remain simple with these six tips. Set up a budget that is natural for you and you will be in control of your money.