2020 taught us that unexpected events can throw a curveball into our lives at any moment. Instead of trying to plan what expenses may look like in a year, it may be a better idea to focus on short-term planning. Many people are opting for shorter, weekly budgets rather than monthly budgets. Here are reasons why.
Keep Track of Discretionary Spending
Most of us don’t blow our budgets on monthly fixed expenses, such as rent or an auto loan payment. Rather, it is our discretionary spending that can break the bank. Money spent on eating out, groceries, entertainment, and clothes can quickly get out of control. Trying to anticipate “impulse buys” over the course of a month can be extremely difficult. For example, if you allow yourself to spend $200 a month on dining out, but spend half of that money in the first week on a nice dinner, it may be challenging to allocate the remainder over the course of a month. Instead, if you break that $200 a month into $50 a week, you would know that you can’t afford to eat out again in that first week, and are better able to visualize how much money you have remaining for the month.
Make Budgeting More Manageable
Many people overspend with small payments that accumulate into substantial amounts of money. When budgeting on a weekly basis, you can micro-focus on each transaction to ensure you aren’t spending more than your designated amount. You’re looking at a smaller number of transactions, which makes the budgeting process easier and more manageable.
Make Constant Progress Toward Your Financial Goals
By budgeting weekly, you may have money left over each week to put toward other financial goals. This money can go towards paying down debt, such as high-interest credit cards, or for savings contributions. Putting money toward your financial goals every week is psychologically beneficial and will make you feel like you are constantly making progress (which you are)! To make a weekly budget, start by dividing your monthly fixed expenses into weekly expenses. Many credit card company’s mobile apps can also create a weekly budget for you, such as Qapital’s app. This app will track your discretionary spending and give you tips on Sunday evenings about how you can decrease your spending and stay on track.
Sources:
https://www.wsj.com/articles/your-2021-budget-plan-ahead-but-not-too-far-ahead-11609246801, https://money.cnn.com/2018/01/19/pf/weekly-budget/index.html#:~:text=There%20are%20far%20fewer%20transactions,less%20tedious%2C%20and%20more%20manageable.&text=Plus%20weeks%20come%20around%20more,you%20to%20tweak%20your%20budget
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