If you’re someone who doesn’t have a good handle on their finances but can’t keep a “budget”, you might appreciate my insanely simple way of managing finances.

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by Idonteateggs

This method of handling your personal finance may sound incredibly simple to some, but for me it was life-changing. I wish I had thought of it years ago. For reference I’m single, no kids…so this isn’t for family budgeting. Here it is:

-You just need a savings and a checking account.

-Make sure you have $4,000 in your checking account. That should be enough to cover your monthly expenses with some solid padding. If it’s not enough, adjust that number, but for sake of explanation I’ll keep it at $4,000.

-$4,000 is the key number. This all revolves around $4,000 (or whatever that number is for you).

-The goal is to keep your checking account at $4,000 no matter what.

-so every time you get paid (For me, every other Thursday), you should have more than $4,000 in your checking. wake up on pay day and Immediately do the following: Pay off your credit cards. IN FULL. If you’re still above $4,000, use it to Pay off any debt you owe. If you still have More than $4k, send the remaining amount to your savings account. Now you should be at $4k in your checking.

-if, after getting your paycheck, you don’t have enough to pay off your credit card and stay at or above $4k, you need to Spend less money every month…I know that’s easier said than done.

-Of course, if you’re having a tough month or you recently lost your job, fine you’ll slip into the $3k or $2k, but the nice thing about this menthod is that you have a real understanding of how much money you actually have…Instead of just piling on credit card debt.

Prior to this method I always felt like I didn’t have a real sense of how much money I had. I always just kept everything in my checking account, but I didn’t really know how much I’d have after paying off my credit card, and therefore I never put anything into savings.

Anyway, that’s my two cents. Hope it helps.

 

 

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