Basics - Establish a Spending Plan

Say the word budget and most people get scared. They immediately are overwhelmed with feelings of constriction. While this is simply not true, I prefer to think of mine as a spending plan.  It's truly about telling your money where to go instead of wondering where it went.  

Each month before I get paid I make a plan for all the bills that are due before the next paycheck and filling my buckets.  What are buckets?  These are also known as envelopes or sinking funds.  Think of it this way:  Every year I buy a season pass to the local amusement park and each year I would charge  the expense on my credit card as if it was unexpected.  Today, I  set aside a portion each month.  When it's time to pay, I never even miss it.  This same type of process is done for everything from toiletries to my two kittens' vet care.

While all of this sounds hard to do, it's simple after the first month and it provides stress relief because the money is already spent filling the buckets before you actually spend it physically.  The only part of this that's up for debate is if a bucket continues to have excess in it at the end of the month then what do you do?  You have a few options:  1) reduce the amount put in monthly 2) blow it 3) do not put anything in for one month and redirect that money elsewhere 4) continue to add for a larger event.  I do a combination of those things depending on the bucket.  The kitties' bucket continues to grow as you never know what'll come up.  The restaurant bucket I blow by taking my wife out for a special night when we have extra.  The clothing budget has a cap.  Once it's reached I redirect the money elsewhere until we spend some out of the bucket.