I’ve written before that I’m going to be conducting a ‘Life Energy Experiment’ in November. For everything I buy, I’m going to ask if the value and fulfillment derived from that purchase are worth the ‘life energy’ (time, work effort) spent. Say I earned £10 per hour, it would take a whole hour of my ‘life energy’ to earn the money to pay for a £10 item. That’s going to make me think a whole lot more about what I buy. Follow my experiment using the hashtag #LifeEnergyExperiment and feel free to join in!
Different approaches to money management
I have been thinking (and reading) about money for a few months now. There are some great ideas and minimalist approaches to managing money that are well worth a read. Check out caitflanders.com, daveramsey.com and posts such as this from The Minimalists.
Set up two accounts
One thing that definitely works for me is something I haven’t seen anyone write about in the books or blog posts I’ve read. You may have come across it or even tried it yourself.
Instead of trying to manage all of your bills and monthly outgoings from a single account, set up two accounts. The first account is the one we use to pay our regular bills (via direct debit and standing orders). We never have to worry about remembering to make these payments, as they happen automatically. Each payday, we transfer the required amount of money into that account and let the technology do the work. We monitor the account, but we don’t have to watch our spending, as we anticipate the bills that are to come and make sure there’s enough money in there to cover them (plus a bit more).
The second account is where the money we’ll need throughout the month sits. This money is for our actual spending e.g. our weekly shopping, groceries, fuel etc. For this account, I establish a flexible, monthly budget in anticipation of the expenditure we’ll have during that period.
Concern yourself with your discretionary spends
Keep on top of your finances
Ask me for a copy of the dual account budget spreadsheet
If you’d like a working copy of the spreadsheet we use, just drop me a line via my contact form and I’ll send it to you. You can paste your own amounts into the relevant cells and set up your budget for the month. Add in new columns to expand your categories, but make sure the totals all add up. There are lots of ways to manage your finances and some great apps, if you prefer to work that way. If you’re new to budgeting, however, maybe this ‘dual account’ approach will be of use.