Just in case you’re interested, here’s how I came up with my weekly budget system. It’s been working pretty well so far in terms of keeping me from overspending, and even helping me save.

I started with my monthly income, then subtracted rent and utilities, plus a few other monthly expenses. Then, I figured out approximately how much I needed to spend on food every week, plus a little money for going out to eat/drink. This requires experience with one’s lifestyle, but anyway I was able to estimate mine. Multiply by four, subtract from monthly pay. What’s left of the monthly pay is immediately subtracted by my savings bank when I get paid.

Now, for the actual week-to-week stuff, it goes like this. Every friday I take out my weekly allotment in cash. If I end up needing to purchase something online, using credit, I set an equivalent portion of cash aside for the next week. Additionally, if I go over my limit and have to take out more cash, I write down an IOU on a note in my wallet. Come the next friday, the amount I take out in cash is the weekly allowance minus whatever I owe and minus whatever cash I’ve set aside for credit purchases. I then put the cash I had set aside for credit into my wallet for the next week.

I think an example is needed here. These are not my real numbers, FYI.

Say I make $1200 / month (after tax!). If my rent is $450 and utilities are $50, then I have to pay out $500 a month. $1200 – $500 = $700. Now, let’s say I’m a pretty cheap guy, I never go out to a bar, and I eat ramen every day. My food expenses come to $35 / week. I throw in $10 a week for coffee from PJ’s. Then, my weekly expense for ‘living’ is $45. Multiply by ~4 weeks / month and I have $180. Subtract from my remaining $700 and that’s $520 I can save every month!

Now, say I can’t stand the ramen any more, and I buy a nice, juicy $8 steak, putting me over by $8. I had to take out some cash to do this, $20 minimum from the ATM, so I put an IOU note for $20 in my wallet. Plus, I buy a neat t-shirt online somewhere for $6 (credit). I take $6 cash from my wallet and clip it, setting it aside somewhere. Now, when I reach the end of the week, I started with $45, took out $20 more, spent $53 (don’t forget the coffee), and set aside $6. That leaves me with $6 cash. When I go to take out money on Friday, I can only take out $45 – $20 – $6 = $19. I usually just round up, so I only get to take out $20 that week. I also still have $6 in cash, plus $6 from what I set aside for credit. Total, $32, compared with the normal $45. As you can see, this encourages me not to do stupid things like buy steak I can’t afford.

I do screw up, more frequently than I’d like, and other times there’s stuff that I need that doesn’t fall into the weekly budget. These mistakes and items are eventually covered from the (substantial) saving that’s going on, but it makes me think about it before I pull the money out, especially since there’s a lag taking money out of savings into checking with my banks.