Many people have become accustomed to completing monthly budgets, but that is often the extent of their financial planning. However, using only a monthly budget can work against you and your financial goals.

Completing a weekly budget can help push you toward those goals and provides several other benefits.

Why Have a Weekly Budget?

As you get into weekly budgeting, you will probably find several additional benefits, but the following are some you can expect:

How To Create a Weekly Budget

Weekly budgets are not hard to do. With a little time and commitment, you can create a weekly budget that will have you reaching your goals in no time.

Consider the Big Picture

In order to create an effective weekly budget, you should start with your big picture. Ideally, you already have long term, midterm, and short term financial goals. If you do not, you need to start there.

Ask yourself where you want to be financially in six months, a year, five years, ten years, by age 70, and so on. Common goals typically revolve around purchasing a house or car, paying off debt, retiring with plenty of money in the bank, going on vacation, buying a new laptop or TV, and upgrading your phone.

Take a look at your goals. What can you do in the next year to reach them? If you owe $10,000 in debt, you can maybe aim to pay off $2,000 this year. That seems like a daunting task. If you divide that total by 52 weeks, though, you only need to manage $38.46 at a time. Unless you make a lot of money, attacking every financial goal you have at once is not a good idea. It’s hard to get any traction when you spread your resources too thin.

The best idea is to prioritize those goals, and then create a plan to attack the most important or urgent ones first. Let’s say that some of your goals are to buy a house, save for retirement, and pay off debt. All are excellent goals, but not all should be prioritized the same.

Eliminate Debt

For instance, paying off debt can increase your credit score. A higher credit score improves your chances of getting a home loan as well as attaining a lower interest rate. Yes, buying a home is important, but paying off debt first can provide you with much greater results when home buying. Therefore, debt should be your first priority in this case.

Well, what about saving for retirement? I believe that you should always work towards savings, but it can be hard to save a lot when you are trying to pay off debt. The answer, I think, is to put most of your effort toward the debt but put up a little in savings- even if it’s just $5 a month. This way, you are making headway with your debt while inching your way toward retirement. After you have paid off your debt, try to increase the amount you save.

Create an Emergency Fund

No matter what other goals you have, your first priority needs to be building an emergency fund. Your emergency fund, or rainy day fund, helps to keep your head above water in the case of unforeseen issues. Even if you cannot meet any other financial goal this year, be sure you work on that one.

Set Realistic Goals

Once you have prioritized your goals, pick one or a few that you want to focus on in the coming year. Now, take your goals for the year and divide them by 52 weeks. Important note: It is great to challenge yourself, but if you only make $20,000 a year and your goals amount to $40,000, you are setting yourself up for disappointment. Remember, challenging but realistic is key.

Determine Yearly Expenses

This step is important for many reasons, but the biggest is that it helps you factor in those once a year or few times a year expenses- the ones we easily forget since they are not due constantly. These include things such as:

Make a list of all of these in addition to anything else that is an irregular expense. Take some time to think about it. Very little is as annoying in finances as slaving over a perfect budget just to find you left something out. After you have the list, do something your future you will thank you for: Add each of those expenses into your calendar, personal budget planner, phone notifications- anywhere to help you remember them. That way, you will know when something is about to be due to prevent any late fees.

Next, determine the amount of each expense. This does not have to be exact. Just use your best estimation. You will then divide those amounts by 52 to determine how much you need to put up each week. Let’s say you normally spend $500 on Christmas. If you divide that by 52 weeks, you get an answer of $9.62. For simplicity, we’ll round that up to $10. Instead of having to come up with the full $500 right before Christmas, you can start putting away $10 each week, which is much more doable.

Break each of your yearly expenses down in weekly totals. Label an envelope for each yearly expense. Every week, take the small amount out of your check and put it away in your envelope. That way, when you need the money, it’s already there.

Before you move on, add your yearly expense weekly totals and yearly goals weekly totals together. For this exercise, we are going to use the $38.46 needed for debt from the goals section and the $10 needed for Christmas. At this point, we need to make $49.46 each week for these two categories alone.

Determine Monthly Expenses

Now, let’s get into the more familiar territory- the monthly expenses. These will include items such as:

Do yourself a big favor and pull out all recent bills and receipts from purchases you have made in the last month or two, at least. It is typically not the planned expenses but the unplanned ones that can throw our budgets off track in the blink of an eye.

Spending $1 each morning on coffee and $2 at the vending machine five days a week does not seem much- until you realize that it comes out to about $70 a month- give or take a little depending on how many days you work. That is nearly the amount of some people’s electric or water bills, so it needs to make it to your budget. Take some time researching and recalling any unplanned money you normally spend and add that to the list of your monthly expenses.

Once you are sure you have it all written down, determine how much you spend on those things for the month and then divide those totals by four. For the sake of our example, we are going to say that the monthly total comes out to $2000 each month, or $500 each week.

Breaking It All Down

It is now time to put it all together to form a workable weekly budget.

Weekly Budget: Step 1

First things first, you need to make sure your totals are in line with your income before you make your final budget. Add together the weekly totals from your goals, yearly expenses, and monthly expenses. In our example, the total would be $549.46. If I make at least $550 a week, my totals are doable, so I can move into the next step.

Weekly Budget: Step 2

What if I only make $450 a week, though? What, then? Well, I have to slice my budget down by $100 and make some tweaks.

If you find yourself needing to make some changes, it’s best to do it now before going any farther. Take a look at every expense you have listed. Be ruthless and mark off anything that is not necessary or that propels you toward your goals. For instance, if I am paying $50 a month for a gym membership that I don’t use, I should cancel that membership. That would already have me cutting out half of what I need to cut.

Next, take a look at those yearly expenses. While some of them are necessary, such as auto maintenance, others may not be. Even if they are necessary, you can likely cut down on your totals.

Let’s take Christmas for example. Above, we planned $500 for Christmas, which brought us to a weekly total of just under $10. If we could cut down what we spend on the holiday to $400, that brings our weekly total down to about $7.70. You might be saying, “Yeah, but that only cuts the weekly total down about $2.” Yes, that’s true, but you have to look at the bigger picture. You can go through each of your expenses, slice a little off the yearly total. Each small slice impacts your weekly totals.

In other words, if you can shave a couple of bucks off of each of your weekly expenses, nothing is suffering. $400 is still a good amount for Christmas- we would just have to be a bit more selective with our holiday spending. By now, you should have subtracted anything that is not necessary and shaved a little off of each remaining expense. If you still need to cut more, it’s time to dig into your monthly expenses a little deeper.

Call your Internet provider for a cheaper rate, cut some of your cable channels, call around to different pharmacies to see if your prescription is cheaper elsewhere, get insurance quotes- do anything you can to cut back on monthly bills. If you are willing and committed, there is usually always some wiggle room in your budget.

If all else fails and your income is still not enough, revisit your goals. Can you make any tweaks there? In our example, we are aiming to pay off $2,000 in debt, making our weekly total a little under $39. If we need to cut down farther, we could adjust the goal to $1,500 this year, or $28.85 a week. We would still be making progress but cutting back $10 on the weekly totals.

Weekly Budget: Step 3

After your weekly income either meets- or preferably exceeds- your weekly totals, you can finalize your weekly budget.

Choose Your Spot: You need to decide where you will keep your money put away. The envelope system works wonders when used effectively. You can get your money from the bank and split it into the necessary envelope. So if you need to put away $7 each week for school supplies, you bring your money straight home and put your $7 into your envelope labeled “School Supplies”. When it is time to school shop, you have a stash of cash ready to take care of it.

For those that do not like dealing in cash, most bank accounts provide a digital envelope system. They give you the ability to label several smaller accounts that you can split your money between. You can set it up in such a way that on payday, the correct amount of money automatically goes into the correct category. When you need it, you just transfer it to your checking account for quick access. This is actually one of the best and worst parts of this capability. As it is so easy to access, you might be tempted to spend your money on the wrong things.

For instance, if you have $100 set aside for Christmas but see a TV on sale for $99, you can easily transfer the $100 to your checking account and buy the TV. Without willpower and discipline, this convenience can work completely against your goals.

For the rest of us, the best way to save money is to make it more difficult to get to. This is one reason the envelope method works well. If you see that TV but your money is in a physical envelope at home, that means you actually have to drive to your house to get it and then go back. The inconvenience may not stop everyone, but it at least gives that person time to consider the purchase more carefully instead of impulse buying.

For long term savings, like for retirement or buying a home, consider a savings account that is not connected to your checking account. Having one in a completely separate bank is probably the best idea. Below you can take a look at some of our favorite options:

You might also consider putting that money away into a mutual fund or something similar.

Conclusion

Your weekly budget is now complete, but don’t just put it to the side and forget about it. Be sure you check in with it each week to gauge your progress and fix any potential issues.

Also, while the weekly budget you just created should be great for your current life, we cannot overlook the fact that things are always changing. You will likely need to adapt your budget several times throughout your life. Be prepared to make those changes when necessary.