Budgeting is so important, but so hard to develop as a habit.
You can faithfully crunch numbers once a month, only to find out you’re consistently spending more than you planned. I know, because it happens to me. That’s why I find breaking your monthly budget into a weekly budget can be really helpful.
Why a weekly budget helps
For me, figuring out how much money I have available in a week is much more manageable than a whole 30 or 31 days.
While it’s true a lot of our expenses recur monthly; most of these expenses, like our rent, mortgage, or car payment, are fixed.
Unless you really have an income shortfall and don’t earn enough to cover your monthly bills, it’s not these fixed costs that blow our budget—it’s the variable, sometimes discretionary spending like groceries, clothing, gas, and entertainment.
For example, if you set a budget for the month of, say, $150 for dining, and blow more than half of that on a nice dinner the first week of the month, it can be really tough to keep track of how your lunches out the next couple of weeks are eating away at that budget.
But if you break that $150 into approximately $34.60 per week, you might see that your dinner the first week meant that you would have to go the next week spending only half of your budget, or $17.30, on any weekday lunches or takeout.
Another benefit of having a weekly budget is making weekly, rather than monthly, credit card debt payments or savings contributions. Doing this can actually save you (or earn you) additional interest. Although the amounts are generally small, weekly contributions are also helpful psychologically, as you can begin to see your continuing progress towards your financial goals that much sooner.
How to create and use a weekly budget
Sometimes breaking down monthly fixed expenses into weekly amounts can be a little annoying, but doing so can be a good exercise in seeing where your money actually goes. If you’re paid weekly or bi-weekly, breaking monthly bills into weekly amounts can also help you set aside funds from each paycheck to go where they’re supposed to.
Just in case you forgot the shortcut for changing monthly amounts into weekly amounts, multiply the monthly figure by 12 and divide by 52.
Even if you don’t break down your regularly occurring monthly bills, you need to break down the money you have left, after your monthly bills, debt repayment, and savings. This is the money you spend on everything from food to gas to entertainment. After all, these are the areas in which we are most likely to overspend.
There will be times when you’re going to go over an amount on your weekly budget. For example, if you only fill up your car three times a month, one fill up will be more than your weekly gas budget. That’s OK, as long as you subtract the difference from the following week. Similarly, you can roll over any money you don’t spend into the following week.
When you do this with a weekly budget, you begin to see very quickly how each purchase is a trade-off. Will you want a nice dinner this Friday, or a couple of take-out dinners next week? Do you want to drive down to see your friend 100 miles away this weekend or pop around town going shopping?
Summary
Learning to budget is hard. But, cutting your large monthly budget down into a weekly, or even bi-weekly budget can show you just how much you spend in any given week and can make managing your money a little easier.