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12/15/2009

The Art of Microbudgeting

 

 

If you’ve used micro budgeting before it was probably on a long vacation.  Perhaps backpacking through Europe, perhaps a trek across country or maybe just a week long spring break venture.  Vacation or not, microbudeting is an excellent way to keep your spending under control.

 

Most folks create a monthly budget because most bills (electric bill, cell phone, rent and mortgage) are paid monthly.  But the monthly format is hardly set in stone.  Why not make a budget for a week?  Or a day?  Even a night of just a few hours?  This is the essence of microbudgeting. 

 

When I traveled to Viertnam I had a budget of about $100 per day.  Why not do the same in your every day life?  Set a daily budget be it $20 a day, $40 or whatever.  As you go throughout the day subtract in your head every time you buy a coffee, hit the vending machine, or take a cab home.  If you go over by $10 one day then next day’s budget is $10 less.  Or if you conserve on Thursday you are more than welcome to splurge on Friday.

 

Some folks make microbudgeting easy on themselves by leaving their house with their ID and the amount of their daily budget in cash.  No credit cards, no ATM cards.  When the cash is gone that’s it.  (Yeah yeah I know, what about emergencies?  Well doing this for a day or two isn’t going to kill you.  Before you do it, tell a coworker your plan and that if emergency breaks out you might need an emergency loan.)  Once you’ve weaned yourself off the plastic you can start carrying it again.

 

The key to budgeting is not writing it but sticking to it.  Sometimes trying to stick to a budget for a month is tough.  Try instead sticking to a budget for just a few hours and see how well you do.

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I think micro-budgeting is a great idea. It is easier to manage one day than an entire month. I am going to Europe for 17 days next week and I am putting a certain amout in 17 enevelopes, one for each and when the envelope runs out, no more spending for me!

Microbudgeting is a great way to manage your finances on a daily basis. Allotting a budget for the whole day can help control your spending habits since you have limited funds to spend for the whole day.

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