Debit budgeting: how to ‘save- up’ without saving

So, not quite an exciting and sexy a topic as a free lip gloss offer, but today I wanted to talk you about ‘debit budgeting’- this isn’t an actual term, its just what I’ve decided to call it! If someone does find there is a real name for it, let me know 😉

What is this debit budgeting you speak of, I hear you ask. Well, it’s a technique I use quite a lot to help me plan for planned but not necessarily regular costs – I’ll give you an example:

This is not me…

Every 3/4ish months I know I need to go and get my hair sorted, and I make my 100 mile trip to the hairdresser (this really is a whole other story- money related of course). I get almost the same thing done each time, so I know it will cost me about £75.

£75 is quite a chunk of your salary to lose in a month, especially if that month is the same month as your Gran’s 80th Birthday party, or Christmas, or your MOT is due, isn’t it? This is when most people start to reach for the credit card, or hit their overdraft. Never the less, I realise if I don’t want to continue to look like an overgrown mess it’s a cost i’ll just have to suck up – or is it?

No, not with good planning and debit budgeting. We all pay some kind of direct debit each month, be it a phone contract, a subscription fee such as Netflix or some other boring bill. For the most part, we don’t notice them slide out of the account, or even if we do- we accept its going to happen. The principle of debit budgeting centres on you having at least 2 accounts ( I have around 5, for all different purposes), and you setting up a monthly transfer from one to the other, debiting yourself.

Also not me…

So, if we go back to my hair maintenance routine as an example, I don’t want to lose £75 in one pop, so I will set up a regular debit of £25 a month to leave my account and go in to another. By the time my mop is due for a refresh, I’ll have the money sat right there for it, every time, without effecting the rest of my money for the month.

You can apply this technique to whatever you like, I’ve found it works just as well as saving up for a new phone – or anything you need. If you really don’t trust yourself to not transfer it back, debit budget into your partner’s, or Mum’s or best friends account. You’ll thank yourself for it in a few months time.

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