Reverse-BudgetingPublish date: Mar 31, 2023
Tags: budgeting lifestyle
I suck with money
When I first got out of college, I managed to land a job paying me $25/hr with $0/yr in bills.
I was working full time and even a little bit over.
After taxes, I was bringing home close to $700 every week. I was incredibly lucky and had a lot of opportunity ahead of me.
It would be reasonable, then, for someone to ask me something like “How much money did you put up?”
My honest answer would be $0. I spent every single dime of it. Magic: the Gathering, a new car, eating out every day, every dime that hit my bank account was out of it in a month.
It shouldn’t be surprising for me to say that I never really learned how to save money or invest or anything.
Through some stroke of luck, I managed to talk a friend of mine into getting a house well under market value and have been paying basically pennies for it. It’s not a stretch to say I have received effectively NO punishment for my complete financial irresponsibility. My luck won’t last forever though, and I know that at a very deep level.
How am I not homeless???
But I realized, while trying to scrap together money to replace my tires after one started falling apart on me and somehow didn’t explode (again, lucky) - I’m not immune to financial struggles.
I needed to get something together or I was going to blow up my car and be stranded somewhere.
I tried budgetting and planning my finances so many times and I constantly just started spending outside of my budget limits.
Somehow I never really missed a payment but I was always riddled with fear that I was going to miss something. My anxiety was the only thing keeping me housed. Not an acceptable safety net.
In order to afford therapy, have a safety net, eat on occasion, and keep my house payment in check, I had to develop a plan.
ADP (and probably most other payment systems) has a way to go in and declare what bank accounts your money should go to. Accounts. Plural.
It was time to make my money idiot-proof. Anything less and I would screw it up and die.
Here’s the concept:
I can set up multiple bank accounts for different types of payments with different types of access.
The Bank Accounts
- No debit card
- Youtube Premium
- Debit card that I avoid using at all costs
- No card. At all.
- No way to transfer without going in.
- Not actually savings, this is just for my enjoyment
- Card that I con use fairly freely.
- This account is specifically for mid-size purchases and luxury items, think - my previously mentioned Magic problem.
- Daily-acces card
- This covers food, gas, and other general daily living expenses.
Additionally, my primary bank account has an option to automatically round up any purchase I make and deposit it directly into a savings account. I have direct access to this and can immediately transfer it into my main account, but it’s nice being able to look and see that I’ve managed to save change into $50 when I need it.
A few notes I had to keep in mind:
- I got paid every other week.
- All of my bills were already on auto-pay.
- Any payments that weren’t on auto-pay, I put on auto-pay.
Calculate ALL of my payment amounts and frequencies.
e.g. My car payment was $317.36 per month.
My house taxes were ~$600 twice a year.
Once all of those are calculated…
convert that timeline to my pay frequencies.
e.g. if my car is ~$320 per month, if I put aside $160 every two weeks (my pay frequency), it would cover that cost.
(with some change, always round up here.)
Re-organize my accounts
I opened new accounts at my banks and had cards added or removed as needed.
All of my subscriptions go into my minor payments account, major stuff to major, etc.
I kept my local bank here because my main bank is an online bank that doesn’t support multiple regular/checking accounts.
The only thing left to do from here is go
into ADP and select my bank accounts.
The order is important.
Major payments. This account needs to get its money. This needs to be first, because if I miss a day or two of work and don’t actually get the full amount that I expect in a paycheck, my primary focus is to be not homeless.
Ideally, if I have to cut back into my accounts, this is the last one that I want to cut into besides my house payments and other necessities.
From here, the level of importance is up to the
person, I imagine. You can definitely put a
fixed amount into all of your accounts and then
either put a percentage into a savings account
or just dump whatever is left into the daily
spending account or the savings account.
Personally, what I did was put a fixed $50 into my untouchable savings account and $200 into my “this is for stuff I want” account. Again, I have been very fortunate with this. What I was left with was $250-$350 to pay for gas, food, and other daily expenses. I would often have to dip into my purchases account, but that was always okay since I was still getting all of my payments taken care of on accident every time.
I’m not sure how useful any of this is going to be to anyone. This felt like an obvious way for me to completely remove all financial responsibility from myself without having to actually give up anything. Every time I mention this method to people, they want me to really give them a good explanation and generally… I don’t really know a good way to do that.
If you have any questions, comments, or suggestions - please reach out via my contact information in the sidebar.
I’m happy to provide help where I can or update this with any suggestions that are reasonable. I’m not a beacon of perfection and wonder, after all. I am constantly looking for good people to collaborate with, and if you see any part of this post that truly speaks to you and you want to involve me in any way in anything that I may fit into, please reach out!
As mentioned above, I hope to create a simple
tool that will help to make these sort of
reverse-budgets a lot easier.
Here is a link to the spreadsheet template that I’ve put together that makes this process a little bit more visual. There is an included summary page that displays all of the top 5 spends by price in each kind of account.
You’ll want to make a copy of this spreadsheet to use it for yourself, you not only won’t be able to edit it from that link directly, but you probably don’t want your spending to be public.
This spreadsheet will be updated periodically and may even be replaced as more useful and consistent or versatile options become available.
These are links that are not necessary for doing this process but may be of use for various other tasks. There will be a link for each of these with a brief description here:
- Available here
- Used to make temorary debit/credit cards
- Can separate cards both by bank accounts and to certain/specific merchants
- Good for signing up to trials for various services that may try to charge your card either early or for a higher-than-agreed-upon amount
- Particularly useful when buying items off of untrusted sites
- Available here
- Online bank, easy to set up
- This is the bank that I use that has the automatic savings feature that rounds up to the next dollar whenever you spend any money at all
Adding the Actual Accounts
Below are links to instructions on adding more acconts to payroll systems. If you have a payroll system that isn’t in this list and would like me to add the instructions below, please reach out with either the name of the payroll system your company uses or with a direct link to the how-to process on it.