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Budgeting for Lazy People

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In matters of budgeting, there are two clear camps of consumers: them, and the rest of us.

They are the people you ask to calculate what everyone owes when there are more than two of you dining out. They know exactly how much they spent on ATM fees last week, last month, and last quarter. They balance their checking accounts down to the penny. Daily.

The rest of us? Well, we swear that tomorrow, we really are going to sit down and make a budget. It's not that we don't mean it -- it's just that we have issues with following through.

The secret to setting up a budget you'll actually follow
If nothing else, remember this one simple budgeting rule: Spend less money than you make.

Now that you've memorized that line, let's fine-tune that advice. Procrastinators, you can rejoice: There is such a thing as a budget that you can stick to. What's the secret? Take every shortcut possible. 

Since money advice is our full-time jobs, we've been through the budgeting process enough to spot the corners that can be cut and the steps that can be skipped. The Fool's Lazy Budget still requires some prep work (hey, we aren't miracle workers), but we've streamlined the process so that you can start seeing results right away. After all, we don't want you to set up a budget, only to abandon it a few weeks later.

The purpose of this budget is to come up with a system to govern everyday spending. We're leaving out housing, insurance, and the all-important savings categories for now.

So let's start corralling your cash flow, Fools:

Step 1: Take a snapshot of your spending
Every budget starts with sniffing out your spending habits and determining exactly where your money goes on a day-to-day basis. Don't skip this step: After all, if you don't know how much you're spending and on what right now, you can't decide where you want to spend and on what from now on.

You can do this the hard way -- tracking your spending for three months, inputting every expenditure in a 218-category spreadsheet, then spending nights poring over the data -- or you can do it the one-step way.

The one-step way it is! For those who do most of your spending on one credit card (paid off in full each month, right?) or with a debit card, review the raw data your bank provides on your monthly statement, and come up with general categories for spending areas in which the amounts you shell out make you shudder. It's even better if your financial institution provides a year-end spending summary, with your weak spots fully graphed in four-color bar charts.

If most of your spending is done with old-fashioned cash, go about your business as usual for one week -- just write down all of your expenditures. Then project the results over four weeks. Now you have a rough idea of where your dough goes. As stated above, pinpoint the big categories where your overspending occurs.

Step 2: Plan your next shopping spree
After you get over the horror of your daily spending, the next step is to go on a virtual shopping spree. Sorry, this trip doesn't involve a pit stop at the food court; it's more like a cerebral trip to the mall of your future.

  • Grab a piece of paper, a pencil, and a snack.
  • Make a list of what you need to buy or do over the next three to six months. These could be physical purchases (like new tires for the car, airfare for the family vacation) or financial plans (such as paying off a credit card, maxing out this year's IRA or adding to your emergency fund).
  • Do the same for planned long-term (one to five years) purchases.

Voila! You have a "spending plan" (so much nicer than the word "budget," don't you think?). Meaning every time you whip out your wallet, you have a tangible list of money goals to help drive your spending decisions and propel you financially forward. Bonus points to those who make a laminated wallet-sized version of the list for everyone in the family.

Extra credit: If you've got time, repeat the same exercise, only focus on the emotional uses of your money: List five uses of your money that will positively affect your life in the near-term and the long-term. Then, list five uses of your money that will add little to your quality of life in a decade or more. This touchy-feely step may seem odd, but thinking about what you really want to do with your money can greatly affect your plans for spending and saving it.

Step 3: Do some simple division
With your money goals in hand, pencil in how much each item on your "wish list" is going to run you on a monthly basis. Simply divide the total amount for those new tires by the number of months until you need them. Magic, no?

Step 4: Set up a no-brainer savings system
With your targeted spending plan in place, it's time to direct your money toward your goals. If, in the past, you've been derailed by daily expenditures or surprise "can't-live-without" purchases (ahem), here's an instant fix: Hide your money from yourself.

That's right: The best way to save your money is to keep your cash out of spending reach by diverting it to a separate savings account -- one different from the checking account you use for everyday expenditures. (We can help you figure out the best place to park your short-term cash, too.)

You've already figured out the monthly amounts you need to sock away, but, don't worry -- there's no need to bother remembering to move your money from your checking to your savings account month after month. Tell your bank to do the work for you.

Set up automatic recurring cash transfers from your main checking account into your separate savings account. (Though you can set it and forget it, we do recommend checking in to make things are kosher every once in a while.)

With your savings on autopilot, all that's left to do is stay out of your own way. Ah, but that can be much easier said than done, which means going into spending triage mode...

Step 5: Stop mindless overspending
Life is full of temptations. (According to the rundown of my annual credit card spending, "merchandise/retail" is my temptress.) You can stay strong, grasshopper, with nothing more than a few envelopes and a ball-point pen.

The "envelope" method of budgeting will instantly structure your everyday spending. It's simple:

  • Come up with a reasonable weekly amount you'll allow yourself to spend in your biggest categories. (Those are typically "food" (or, depending on your lifestyle, get more specific such as "lunch," "family dinners out"), "entertainment" (e.g. happy hours, movies, tabloids to pass the time), "transportation" (gas, parking, taxis, public transportation), "apparel/services" (dry cleaning, bangs trim, cute shoes.)

    For guidance, consider that the four biggest budget categories for typical American household are housing (34%), transportation (18%), food (13%) and entertainment (4%). Of course we encourage all Fools to be better than average, so if you can spend less of your budget on these big categories, huzzah.
  • Create envelopes for each of those categories.
  • Put the allotted amount of cash to cover a week's worth of expenses into each envelope. (You don't have to carry the entire wad with you every day, but do make sure you don't cheat with extra visits to the ATM.)
  • Once the cash is gone, so is your weekly stipend.

As with all of our lazy budget shortcuts, feel free to add or subtract layers of complexity, depending on how much detail you can stand. But don't tax yourself too much: Remember that in dollars-and-cents (and sanity) terms, sweating the big stuff before all else will save you the most coin. Plus, it will leave you plenty of time to procrastinate about stuff besides your finances.

Read/Post Comments (28) | Recommend This Article (176)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 04, 2008, at 3:35 AM, prginww wrote:


  • Report this Comment On August 19, 2008, at 2:08 PM, prginww wrote:

    LOVE The title - my guess is most people are lazy when it comes to budgeting. I think you hit a key point about thinking what you DO want to spend your money on. Then next time you grab your wallet to buy something, you can see how spending that money on a trinket (or whatever) actually takes money away from what you DO want to buy. Smart tip!

  • Report this Comment On October 30, 2008, at 12:51 PM, prginww wrote:

    Great article except for one point: the small stuff will kill your budget. Most people know where their big purchases or spending goes, it's the latte's, snacks and "oh why nots" that cause the cash to vaporize. But sticking to the cash stipend will help deal with that, as long as you can keep disciplined!

  • Report this Comment On January 13, 2009, at 2:51 PM, prginww wrote:

    i've been using the "envelope" method for a couple of months now. it really works! i don't carry and credit/debit card or check book with me anywhere. i've already saved up enough to buy a ticket from denver to maine (no small fare!). i think most people don't understand how fun it can be to watch your savings grow and how proud of yourself you'll be when you look in the envelope at the end of the week and there's still money in there. what a way to get control!!

  • Report this Comment On January 20, 2009, at 3:35 PM, prginww wrote:

    I've been doing the cash only for 2 years now, and especially with my kids, I give them an alloted amount each month which they must divide up into giving, long term investing, education needs, and then they have an everything else for the month catagory. I don't really look at this as allowance, but what I would be spending anyway, and let them learn how to manage it. I have cut my spending down immensly and they love it and feel like they have some control over their personal lives in finance.

    I am now going to take the "everything else" amount and put it into 4 enevelopes, 1 for each week, thanks for that tip, should be even better in learning how to budget and the game of saving, they are doing great for 12,14, and 16!

  • Report this Comment On May 04, 2009, at 10:21 PM, prginww wrote:

    I used to hate budgets too. But I also hated spending money I didn't have. I dumped my credit cards except for one for EMERGENCIES. Cash or debit card only now.

    I also looked carefully at "regular" expenses and decided to dump my AT&T phone for a prepaid phone. Got a Tracfone for 30 bucks but it was kinda-sorta free since it came with 30 bucks worth of air time.

    Now I budget my phone use by buying the amount of time I want, up front. I also got a double minutes card which makes it an even better value.

    There are some expenses that can be "managed" and those are the ones to budget.

  • Report this Comment On July 19, 2009, at 11:01 AM, prginww wrote:


  • Report this Comment On July 19, 2009, at 1:52 PM, prginww wrote:

    These are very good steps to controlling spending; however I think the percentages are not accurate for most people in the lower end of earning power. Also, I budget based on what I actually bring home not what I make. With taxes almost getting close to about 2 weeks a month, does not leave much to spend; what I am saying is we are working to pay taxes (federal, state, city, and county; count it all.) Also, the percentages change if you are single and not a dual income budget.

    Single people need to have a roof over their heads and we are a growing entity in the economy. So I would like to see a different article based on single income.

  • Report this Comment On September 09, 2009, at 3:49 PM, prginww wrote:

    These are all great tips. Other good lazy person resources include sites like wesabe and mint to track your finances with those four-color graphs

  • Report this Comment On January 14, 2010, at 1:29 PM, prginww wrote:


    Those percentages are based on averages, so obviously they are going to be different for those on either end of the earning spectrum.

  • Report this Comment On February 09, 2011, at 11:10 PM, prginww wrote:

    If you use a "smart" phone you can look for a free app that allows you to set up imaginary envelopes. Instead of carrying cash, you can give yourself an allotment for and enter your purchases as you make them. The "allowance" is reset each month. It even shows you a bar graph with the day of the month figured in so you can see if you are ahead or behind. Now, if I can convince my wife not to hurry up and spend her remaining allowance before the month is over!

  • Report this Comment On March 30, 2011, at 1:19 PM, prginww wrote:

    scjohnson1: Dave Ramsey is a hack. People act like he invented budgeting and personal finance, but all he did was give it a charasmatic face. Furthermore, his "debt snowball" is a crock. The fastest and least expensive way to pay down debt is to attack the highest interest rates first, not the lowest balances. Getting a quick emotional high from paying off a small debt first is only needed by the weak-willed.

  • Report this Comment On November 04, 2012, at 8:39 PM, prginww wrote:

    All of the article and all of the comments are great.

    If someone has a hard time staying away from the ATM or cedit cards, do this; try just one week where you have NO credit or debit cards in hand. Keep a week's worth of money at home in a safe place. Stuff your wallet with the cash you might need every day. It should all be $1 bills!

    It works this way: when you "need" to buy a new pair of jeans for$90 and you have to count out ninety one-dollar bills, you will quickly realize you no longer "need" those jeans.

    What say Fools?

  • Report this Comment On November 29, 2013, at 4:19 AM, prginww wrote:

    Saving is always a problem for individuals especially the young as making a budget is considered very difficult.Both money and time have one similarity in common.You take your eyes off them and they disappear so quickly one doesn't even know when they left.A good budget helps to slow down the money spending process.Always plan on what you are spending on and its price justifies the need.If not postpone the purchase.The art of postponing delays spending on a want and the need passes away after some time.Spend less than one earns should be the motto so that he escapes from the vicious circle of debt.Always keep an eye on the credit card.One does not keep an eye on his spending using this card and since interest is paid on a compounding rate falling into a debt trap is inevitable.

  • Report this Comment On January 25, 2014, at 9:21 PM, prginww wrote:

    Responding briefly to scjohnson's remark that Dave Ramsey started this idea, I have to interject that my mother-in-law sat down with my husband and me when we were first married 45 years ago and taught us this very method of budgeting, including the envelopes. It was kind of nostalgic and affirming to see this system still going strong and being endorsed by Motley Fools! So, with all due respect, maybe Mr. Ramsey did or maybe he didn't quite invent this method. I think the common sense of it has been around forever. We learned that discipline is key, but you need to have a plan in place to be disciplined with, and this is very structured and doable. We wish young people the best, and hope they'll follow this advice.

  • Report this Comment On September 07, 2015, at 2:49 PM, prginww wrote:

    Thanks, guys, great article, as always. Recently I've read an excellent book, which called "The richest man in Babylon". It's a small book, and I highly recommend it to the people who need some motivation to start spend less and start budgeting.

  • Report this Comment On March 17, 2016, at 4:03 PM, prginww wrote:

    Thanks guys. I found the process of creating a budget and reviewing it against the money I actually spent to be a valuable exercise. It really helped me understand and control my spending habits better.

    I used a free template available here

  • Report this Comment On September 14, 2016, at 8:51 AM, prginww wrote:
  • Report this Comment On September 23, 2016, at 7:35 AM, prginww wrote:

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  • Report this Comment On September 26, 2016, at 11:01 AM, prginww wrote:

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  • Report this Comment On September 27, 2016, at 8:47 AM, prginww wrote:

    Thanks guys. I found the process of creating a budget and reviewing it against the money I actually spent to be a valuable exercise. It really helped me understand and control my spending habits better.

  • Report this Comment On October 05, 2016, at 5:00 AM, prginww wrote:
  • Report this Comment On October 05, 2016, at 5:00 AM, prginww wrote:

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  • Report this Comment On October 09, 2016, at 9:07 PM, prginww wrote:

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  • Report this Comment On November 15, 2016, at 12:19 AM, prginww wrote:

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