How to Use a Weekly Budget Planner for Long-Term Savings
Date: December 12, 2016
Using a weekly budget is a great way to organize your personal finances, particularly if you get paid on a weekly or biweekly schedule. However, monthly bills and extra expenses can inhibit your long-term savings goal if you don't plan ahead.
Manage Monthly Expenses
Dealing with monthly expenses can get tricky when working with a weekly budget because not every month has exactly four weeks. When you divide the 52 weeks in a year by 12 months, each month averages out to just over 4.33 weeks. So to get the proper weekly cost, multiply your fixed monthly expenses by 12 and then divide by 52.
If your budget is particularly tight and you get paid on a weekly or biweekly basis, you'll also find that your monthly bills don't always come at the most convenient time. Your rent, for example, might come out of your account the day before your paycheck comes in. Combat this window of shortage by cutting down on as much discretionary spending as possible until you have enough cash in your account to cover scheduled monthly withdrawals between paychecks.
Focus on Savings
Once you have created a buffer in your checking account to cover monthly bills, begin diverting a portion of your weekly income to long-term savings. A great way to do this is to enroll in a retirement investment program at work. The amounts are deducted directly from your paycheck.
In addition to a retirement plan, you should also have a dedicated savings account to cover emergencies. The amount you set aside can vary depending on your lifestyle, but a good rule of thumb is to set aside three to six months' income. This money should be easily accessible, not locked away, so you can get to it quickly when you need it.
For an up-to-date, simple snapshot of your budget and long-term savings, use Quicken Starter Edition on your desktop or take your savings with you using the mobile app.
Separate “Wants” From “Needs”
Putting your expenses into categories makes them easier to manage. For example, car payments, gas and insurance fall under the "Auto" category, while rent, utilities and other expenses go into a "Household" category. Not sure which option to pick? Quicken Starter Edition can help you sort it out — the 2017 edition of the software categorizes your expenses automatically as soon as you enter them into the software.
Monica Sonnier, CPA in the Greater Salt Lake City area, recommends organizing your finances into three buckets. "The most important first step is to separate wants from needs," she explains. "Real needs like shelter, food, transportation, utilities, etc. always come first in the hierarchy of things to budget for."
What comes second? "Big financial goals like debt elimination and retirement savings,” Sonnier says. Finally, she advises that you "put discretionary spending like vacations and entertainment in the last bucket, only if there is funding left over."
The Advantage of Weekly Planning
The biggest challenge of long-term savings is discretionary spending, such as dining out rather than eating at home, but a weekly budget allows you to examine your spending daily. For example, if you are planning to go out with friends this weekend, setting a weekly budget on Monday will show you exactly how much you’ll have by Friday night, so you might resist eating lunch out during the week. Or, if you’re planning a year-end vacation, start making a habit of cutting out the weekly extras and count that money toward your air fare.
When you break your budget down into weekly goals, it becomes that much easier to save for the long term.