Richard Quinn | July 27, 2020
YOU MAY HAVE heard me say this before: I don’t think people need to budget if they have an effective spending and saving system.
Recently, a reader of my blog challenged me on that point, arguing that you need a budget to ensure you’ll have enough to pay off your credit cards in full.
Au contraire, as we say here in New Jersey.
You may also have heard of the envelope method, where some people place money in envelopes for specific expenses. I follow that approach. But instead of envelopes, I use bank accounts—six of them to be exact, which I designate with letters A through F.
I also embrace technology to help with saving and bill paying, and I leverage credit cards to garner rewards. You see, I’m not your stereotypical senior citizen.
Don’t worry: I don’t pay bank fees. The accounts are all linked and always hold sufficient combined balances to get free banking. My income is from a pension and Social Security.
My pension arrives on the first of the month, while our Social Security benefits get deposited on the second and fourth Wednesday. When that happens, this happens:
Checking account (A). Receives pension deposit.
Checking account (B). Receives a set amount from account A to cover all ongoing monthly bills.
Checking account (C). Receives a set amount from account A that my wife uses for her monthly expenses. Things like clothes, nails, haircare, gifts and donations.
Savings account (D). Receives the Social Security checks. These are segregated because we try to live on my pension alone.
Savings account (E). Receives a set amount each month from account A and is designated my wife’s savings.
Savings account (F). Receives a set amount from account A and is designated my savings.
Don’t get me wrong, none of this is really my money or her money. While these accounts have specific purposes, we aren’t so inflexible that we don’t move money from here to there if it’s necessary—but it’s also rare. I’ve been known to pay for my wife’s hair salon visits from account A. Similarly, account C has bailed me out on occasion.
Read the rest of my story about budgets, bills technology at the link below: