Living on a per diem
When the first of June rolls around, I’m going to try out a new monthly budget. Kate and I are working to save some money, so I figured I could benefit from paying more attention to my finances. Unfortunately, I’m not very good at math, so anything but the simplest budgeting system is right out the window for me.
Thankfully, the good people at Lifehacker recently linked to a guest post on a financial blog called Get Rich Slowly. The system it describes is based on giving yourself a daily cash allowance. I thought I’d share it here, just in case anyone who might be reading this is looking for a simple but effective way to budget and save.
Essentially, what you’re meant to do at the start of each monthly budget cycle is set aside the money for fixed expenses, unique expenses that you know you’ll have to deal with that month, and anything you might want to save. After that’s done, you head down to the bank, withdraw the remaining amount in cash, and divide it into separate portions for each day of the month. From then on, you add another wad of cash to your wallet every day.
In my case, I started by adding up the paycheques I’m expecting this month. I subtracted rent, insurance, the portion of each cheque that I’m putting into my savings account, and stuff like that. After that, I was left with a pretty decent per diem, and I plan to spend it just as I would if I weren’t keeping track of it. If I spend less than expected, and my wallet starts filling up, then I’ll put some of that money back into my savings account. If I spend more than expected, then I’ll know I’ve got to rethink some of my spending habits.
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