When I first decided that I needed to control my money more effectively, I dove right in: I bought fancy budgeting software, I paid close attention to every penny… and I burnt myself out in less than a month.

I needed to start smaller.  Simpler.  Make it easy to budget.  Lower the barriers that were stopping me from being where I wanted to be.

That’s what I did, and that’s what I’ll teach you to do.

Step 1: Pay attention to your “everyday” spending for two weeks.

It’s hard to figure out how to make your money work for you when you’re not sure where it goes.  For the first two weeks, don’t restrict your spending: simply pay attention to what you spend money on, and make a record of it.  It takes a few days to get used to, but make the process as simple as possible: when I started taking notes, I would literally open the Notes app on my phone and jot down a quick Category and Price.  If I bought a cheeseburger for $3.50, I would open up Notes and write “Food 3.50”.  Once a week, I would compile these notes in a Google Sheet and add up the totals for each category.

In exchange for less than an hour of work, I had an accurate 2-week snapshot of my daily spending.

Is it a sweeping, amazing change?  No.

Are you done yet?  No.

Are you in a better position than you were two weeks ago?  Definitely.

 

Step 2: In Weeks 3 and 4, try and spend 5% less in each category than you did the previous two weeks.

This requires a little math, but it’s nothing difficult.  Say you wound up spending $150 on food in two weeks.  Okay, cool.  Now you know what it looks like to spend $150 in two weeks on food.  That’s valuable information.  Put it to work.

What’s 5% of $150?  150 * .05 = $7.50.  So, write this at the top of your notes: “Food Limit 142.50″.

This is when the magic of the brain really starts to work: you know that, spending casually, you spent $150.  With that in perspective, do you think you can spend $3.75 less per week on food?  Of course!  That’s one Starbucks coffee a week (if you’re like me and get a Venti Unsweetened Iced Coffee, which remains my Kryptonite).  That’s just over 50 cents a day.  Nothin’ to it.

Now, do the same thing with each other category: if you spent $100 on going out with your friends, spend $5 less in two weeks.  C’mon, do you really need that last PBR at the dive bar?  (… don’t answer that.  Just find a way, dammit.)

Of course, this 5% reduction doesn’t work for everything; some overhead must remain overhead.  (That said, if you found a way to reduce your rent by 5%, let me know… I sure could use it!)