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5 Things You'll See in Every Flexible Budget

Jul 08, 2024

Your budget should be flexible enough to match your real life ups and downs.

Too often, we get trapped into budget tools that don't match the unique rhythms of our money.

  • Rent is due on the 1st, but your paycheck doesn't get deposited until the 4th.
  • The trip you've been looking forward to is finally here, but you end up spending a lot more on travel food than you planned on.
  • You stop at the gas station for a quick snack on the way home from work, but you don't have a "snacks" category in your budget so you forget to keep track of those purchases.

Building flexibility into your personal budget is crucial for navigating the unpredictable twists and turns. By allowing room for adjustments, unexpected expenses like medical bills, car repairs, or even a new kid's lunchbox before school starts can be managed without totally derailing your money plan. A flexible budget reduces stress because you're better prepared to handle the uncertainties when they pop up.

Here are 5 things I see in flexible budgets that help people confidently manage their money.

1. A Budget Buffer

A budget buffer is income in your current pay period that is not yet assigned to anything. This buffer can absorb those small things that wreck a budget that was overly-planned: afternoon iced coffee, an extra pack of diapers when you thought you had more in the closet, or sending your kids to the pool with a few bucks to get a snack. I typically recommend keeping $50-$75 per week unallocated in your budget to use as your budget buffer.

2. Personal Spending Cash

The fact that you have it is SO much more important than the specific amount. Kyle and I currently each have about $50 per month for our personal spending cash. It’s our no-questions-asked money that can be used for whatever we like. As a natural spender, mine is usually spent before the week is over on an iced coffee, a new shirt, or an Amazon purchase for home decor. Kyle is naturally a saver, and he usually lets his personal spending cash build up over time to spend it on larger things like concert tickets or music gear. The important thing is that each adult has their own spending cash, and that they have the freedom to spend it on whatever they'd like. 

3. Know Your Plan B and Plan C

Odds are, you’ll need to use your back up plans pretty regularly. Life playing out completely differently than the budget you made a few weeks ago is NORMAL. 

You're not a mind reader, and you can't see into the future. It does not mean your life has more twists and turns than others, or that your budget efforts were in vain, or you did anything wrong. It means you’re human. ❤️ At the very least think through and write down what you will do if an unexpected expense pops up. Will you:

  • reduce a few spending categories?
  • pull money from a sinking fund?
  • use your emergency fund and adjust the budget to refill it?
  • work an overtime shift?

Knowing plan B and C before it's needed makes the crisis feel more like a minor hiccup.

4. Planning Farther Out than a Month at a Time

When you are only planned 30 days in advance and wait until the end of one month to even write a plan for the next month, you have very few options for flexibility. Let's say it's  the 25th of the month, and you realize that next month's car insurance premium is due, which will make your expenses exceed your income? If you're like me, you might need to take a minute for a guided breathing session to calm those nerves. Now, if you learned this same piece of info 6 pay periods in advance, you could’ve easily spread that expense across a few pay periods and eliminated the frustration. Don't let things that aren’t a surprise feel like a surprise.

5. Over Plan Your Bills, Under Plan Your Income

I've budgeted my own finances in detail for 8 years, and I've built budgets for hundreds of other households. Most incomes are variable, not static. Most expenses are variable, not consistent. If you have a set paycheck that never changes and a bunch of set bills that never change, you are in the minority! Get comfortable with over-planning for bills and under-planning for income so that when you’re wrong it works in your favor.


Flexible Budgeting Helps You Reach Your Money Goals

Building flexibility into your money management plan will save you some headaches, some heartaches, and and even some backaches from carrying the weight of your money stress around. A great place to start is my Pay Period Budget Template. A monthly budget ignores the fact that sometimes your expenses are due before your paycheck is available, but a pay period budget is built around your unique pay schedules so that your money doesn’t feel like a mess. You can use the tips I recommended here with the template to create an accurate & realistic plan for getting the most out of your paychecks.

If you've wasted enough of your time, sanity, and money on budgets that don't work, then don't let another paycheck come and go with little or nothing to show for it! Grow your net worth and your peace of mind with a budget system that's personalized for you. Get the Pay Period Budget template today.