You can automate your budgeting with the Money Management System.
Budgeting is like dieting. Neither is ‘fun’, but they are both good for you. Just like diets, what budget works for one person may not work for someone else. The key is to find a process that works for you. The Money Management System (MMS) is a way to automate your budgeting and ‘force’ yourself to manage your money. The MMS uses automation and simple technology to help you improve your behaviors with money and make your money work for you.
At its core, the Money Management System gets you to prioritize everything into four categories: Must, Should, Could and Won’t. This system has been used for time management for decades, but now will help you prioritize your spending. Additionally, you will focus on ensuring your safety and security. The bottom line is every penny you make will have a job. You will first take care of Safety and Security, then MUSTS (basic needs) and then if you have money left over you will move onto your SHOULDS and COULDS. WON’Ts include all those things we need to stop wasting our money on.
Five components of the Money Management System:
Safety and Security Fund – 10% of your take home dedicated to your safety and security. The first $1k will be used as an emergency fund, then the rest will be used for your consumer debt, as debt robs from your security. Once your debt is paid, you work on a fully funded emergency fund and other safety and security functions. This is your grandma’s rainy-day fund.
MUSTS – All of those things that keep a roof over your head and/or you are legally required to pay. Housing, utilities, transportation, healthcare, and minimum payments on your debts. If you can shut something off and still have housing and transportation, it isn’t a MUST.
SHOULDS – Includes all of those things you SHOULD pay but are not required for living. Include here your internet access, cell phone, life and disability insurance, and sinking funds for repairs. Any extra money you have per month goes to pay off your consumer debt. Focus on one debt at a time.
COULDS – If you have no consumer debts, this is where you start enjoying your money and planning for the future. You need a balance between savings and investing along with living your life. At this point you should work with a Fiduciary, Fee-Only, CERTIFIED FINANCIAL PLANNER to design a comprehensive financial plan including investment advice.
WON’TS – List all of those things you need to cut out of your budget. Look for those things like eating out, shopping, memberships, recurring charges, and everything else that is eating away at your hard-earned money.
For more information about the Money Management System and how to use it to control your finances, download the manual below.