Automate Your Budget – Building the Budget that Sticks to Itself

Do you have a hard time sticking to a budget?

If you often find yourself mentally subtracting a purchase from your bank account in fear you won’t have enough money for your coming payments, you have a budget problem. Alternatively, if you find that you have hundreds of unallocated dollars in your account you also have a budget problem. Allocating your funds with this system will  make you feel more wealthy. This post will outline an awesome way to simplify your bills and spending. The answer to your issue is two checking accounts and one savings account.

We’re going to call them Spending Account, Billing Account, and Savings Account.

Setting up your accounts with the bank: 

  1. Spending Account:
    Call or walk into your banking institution and set up a second checking account. This account will be your general spending account. Have the teller assign this account to your debit card for making day to day purchases. This will include things like gas and groceries.
  2. Billing Account:
    Using your existing account as your Billing Account is easiest because all of your bills and direct deposit are likely already set up with this account. We will use this account to process all of your fixed monthly costs such as car payments and rent.
  3. Savings Account:
    If you do not have one already, set up a daily interest savings account. This will be used as an emergency fund. We aren’t worried about interest rates here. We need a separate account that can be easily accessed for extra costs in the case of an emergency.

Automating the Process:

In this example, we will use a bi-monthly pay of $1200.00. By combining our monthly fixed payments, we found that we need to allocate $600.00 for bills, and $100.00 for our emergency fund. In total, we need leave $700.00 in our billing account per pay check.

  1. Set up an automatic transfer on the day after your pay day. This will be the amount remaining after subtracting your fixed billing amounts ($1,200-$700= $500). We will make a $500 transfer from Billing Account>Spending Account on the day after your pay day.
  2. Set up a second automatic transfer on the day after your pay day from Billing Account>Savings Account.
  3. If you have a TFSA, you can direct a third transfer from your Billing Account>TFSA.

Automating my billing process has reduced a lot of stress around bills. My bills are already mentally paid by allocating the funds in that account, meaning I don’t need to think about how my purchases will affect my future bill payments. Additionally, I combine all of my monthly bills into two payable amounts giving me the exact same amount of spending money each pay check.

Have you ever tried using two bank accounts? Do you plan on giving this a try? Let me know in the comment section! If you have a bad habit of over spending or spending on credit, check out my post on breaking a bad habits.

Thank you for reading this. If you liked this article please do me the favour of sharing it. I greatly appreciate your support.

Connor Graham

Connor Graham

Hi, I'm Connor Graham. I help others achieve financial freedom and self-improvement through my tips, ideas and insight. Combining my knowledge of real estate, finance and marketing, I describe creative ways to manage your finances and invest in yourself.

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4 Responses

  1. Nimo says:

    This is a great way to simplify as well as keep track of how much you really have without having to worry about those infamous “pending charges”!

  2. Hackypie says:

    Great advice here! We’ve kinda been doing this with a second account; sending a monthly amount over for those yearly bills that used to always smack us unaware (like subscriptions, car tags, house insurance, etc.) It feels really great to have that money already set aside.
    We’ve also set up allocated funds for when our car breaks down, vacations/travel, etc.
    This year I’ll be withdrawing cash for groceries as it’s the only way I can keep myself on a tight grocery budget.

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