Do you have a monthly budget? How often do you go over budget? If the answer is “More often than not,” something isn’t working. It’s not necessarily your fault. There are a lot of circumstances where a monthly budget doesn’t make sense, but monthly budget planning seems to be the default.
But there is a solution. If you’re struggling with your monthly budget, a weekly budget template may be the answer you’ve been looking for. Our simple budget template will help you reach your financial goals on a weekly basis. But why should you scale down a four-week budget into just one micro-budget? We’ll explain why and tell you exactly how to adopt this system below.
A Lot Can Happen in a Month
Budgeting is a cornerstone of personal finance. We can’t reach our financial goals if we don’t know our actual income, how much money we have going out, and what we’re spending on unnecessary expenses.
To that end, most of us keep a monthly personal budget or a family budget. But a lot can happen in a month. By the end of the month, we might find that we overestimated our cash flow or underestimated our expenses. And for some of us, we start the month with the best of budget intentions but things go off track somewhere in those 30 days.
This is especially likely to happen when you throw the other responsibilities you have into the mix. You have a family, a job, a social life, and tasks around the house. When life gets in the way,that budget you made on the first of the month can get lost in the noise of your daily life.
This is the inherent problem with only making a monthly budget. The span of time is too long to allow you to quickly catch overspending and correct it. Your discretionary spending (your spending aside from bills and rent) can go off the rails quickly and you can end up putting some of your expenses on a credit card.
But when you use a weekly budget template, you can see a problem and head it off right away. If you have trouble controlling your spending, a weekly budget is the tool you need to reign things in.
Other Factors That Throw Off a Traditional Monthly Budget
1. A Fluctuating Income
If your income fluctuates, budgeting may feel like the bane of your existence. One in five Americans are contract workers and in 10 years, contract workers and freelancers are forecasted to make upalmost half of the American workforce. About half of those workers report having income that varies month to month or seasonally.
With an unpredictable income, a monthly budget is nearly impossible. How can you budget that far out when your cash flow isn’t consistent? A weekly budget planner is much more realistic because you’re not trying to forecast so far into the future.
2. Fluid Expenses
Where do even the best money managers among us run into problems? It’s not fixed monthly expenses like housing, car payments, and health insurance premiums. What throws off a monthly budget are things like food, childcare, and entertainment expenses because the amount you spend on them is fluid.
3. Large Annual Expenses
Another sticky area when it comes to a monthly budget is large yearly expenses like holidays and property taxes. You know when those things happen, but when you budget so far out, they have a way of sneaking up on you. But when you switch to budgeting on a weekly basis, you can spread out the expense over a longer time, lessening its impact.
Monthly budgets can be thrown off by urgent, emergency expenses that you can’t predict like a car repair or home repair. If an emergency happens in the first week of the month and you aren’t resetting your budget until the last day of the month, you won’t be able to make vital adjustments to your other expenses to account for your extra spending.
Let’s Get Our Hands Dirty
If a monthly budget isn’t working for you, it’s probably due to one of the many reasons above, not because you “just aren’t good at budgeting.” Even the best budget planner will fail when the system is stacked against them.
Let’s make this easy with a simple weekly budget template. You can use this budget worksheet to compare your total income, budget, and actual expenses. Rework it each month to ensure you’re on track.
To use it: Click the link above, then click on File in the top left corner. Next, click Make a Copy to download it into your own drive for easy access.
How to Use the Weekly Budget Spreadsheet
To come up with the numbers for your budget, track your expenses for a week. This will help you actually see where you spend your money instead of where you hope to spend or where you think you spend.
Fill in the spreadsheet with your actual expenses for one week in the following categories:
- Housing (rent or mortgage plus taxes and insurance)
- Transportation (car payments, gas, insurance, tolls, etc.)
- Utilities (heat, electricity, etc.)
- Subscriptions (cable, Netflix, internet, cell phone, gym, etc.)
- Medical (co-pays, prescriptions, etc.)
- Entertainment, dining, and travel
- Other discretionary (hobbies, personal care, etc.)
- Debt payments (credit cards, student loans, etc.)
- Savings (emergency fund, savings, etc.)
- Investments (retirement, other long-term investments, etc.)
- Other (any other expenses not covered)
After that week, think through your goals. Your goals should inform your priorities and how much you want to spend where. For example:
- Do you just want to get a handle on where your money goes?
- Do you want to get debt free?
- Do you want to save more?
- Do you want to invest more?
Now, you’ll create a budget based on your actual spending and your goals. If you’re struggling with this step, here’s an easy formula: the 50/30/20 method.
The 50/30/20 Method
Allocate 50% of your take-home pay to necessities like housing, transportation, utilities, debt repayment, groceries, and medical expenses.
Allocate 30% to discretionary expenses like entertainment, eating out, clothing, and subscriptions (cable, gym, Netflix, etc.).
The remaining 20% of your budget is for your financial goals. If you have high-interest debt like credit card debt, use this portion of your budget (in addition to the portion allocated for the minimum payments in the 50%) to accelerate that debt repayment. If you’re free of high-interest debt, this money goes to your savings. This could be an emergency fund, investments, and medium range goals like saving for a home or starting a business.
Divide these monthly expenses by 4 to get the numbers for your weekly budget.
Keep Tracking Your Spending, Then Make Adjustments
No matter what method you use, keep track of your spending every week. Are you staying within the 50/30/20 outline? Are you making progress toward your goals? Are you overspending, and need to adjust certain categories? Because you’re micro-budgeting, you can more easily see and correct problems in your budget.
It may take a few weeks to settle into things. You may overspend and need to dial it back the next week. That’s okay — budgeting is a long-term proposition. Few people get it exactly right from day one.
At the end of one month, ask yourself: Am I spending money in the areas I wanted to? Why or why not? Life happens, and so you may have spent more money than you expected in certain areas. No worries — just reset your goals and budget as needed and keep going.
2 Reasons to Use a Spreadsheet Instead of an App
There is no shortage of online budgeting tools available today. But sometimes technology makes somethinga little too easy and too hands off. Here’s why physically inputting your spending onto a spreadsheet will help you be wiser in the long run.
1. You’re Forced to Confront Your Expenses
You’re very removed from your actual total expenses when your budgeting process is just tapping a few buttons on your phone. You don’t have to enter in the $87 you spent on lunch last week or that you pulled money out of your emergency fund to buy concert tickets when a program just downloads that for you. With budgeting apps, you’re not confronted with just how much you’re spending on unnecessary expenses.
By using this weekly budget spreadsheet, you’ll be face to face with your weekly spending. Even if your money management skills are on point, you may have one pesky budget category you consistently overspend on.
This spreadsheet template will help you see exactly where your money is going on a weekly basis.
Micro-budgeting forces you to be mindful about your spending on a weekly basis. And when something is at the forefront of your mind on a regular basis, it gets more attention.
2. You Can Pay Off Debt Quicker
A weekly budget template can also help you accelerate debt repayment and savings goals.
Let’s walk through an example. Say you owe $25,000 in student loans with an interest rate of 7%. Over a 10-year repayment period, you’d make monthly payments of $290 and pay a total of $9,833 in interest. If you instead pay $145 toward your student loans every two weeks when you get paid, you’ll save $1,185 in interest and pay off your loans 13 months early.
By paying biweekly, you get the benefit of paying 26 payments of $145 (for a total of $3,770) instead of 12 payments of $290 (for a total of $3,480) each year. But, because you are doing so as you get paid, you won’t notice the difference (but your savings will over time!).
In the case of saving, when you save more often, you increase the power of time in the form of compounding interest to work in your favor. So if you typically put $100 a month into an investment account, don’t wait until you save up the full $100 to put it into your investments. Instead, put in $25 on a weekly basis. Make this change and watch your financial goals get closer.
Make the Switch
If a monthly or bi-weekly budget is working for you, there’s no need to mess with a winning formula. But a monthly budget doesn’t work for everyone for a lot of valid reasons. Yet people still cling onto the practice. Why?
Just because you’ve always done something doesn’t mean you have to continue to do it, especially if it’s not working for you despite your best efforts. Maybe it’s not you, it’s the monthly budget.
Break up with that long-term budget! Make the switch to a weekly budget template so you can track your goals more closely. Happy budgeting!