Your life is filled with routines, but it is also filled with stuff that comes up every month. It’s really never the same month to month, right? Every month seems like an exception when it comes to spending. Every month changes.

Think about the expenses that change every month. Is it really your cell phone bill, or aftercare at school, or your car payment? Nope. Those things stay basically the same. You buy about the same amount of gas for your car, and go to the grocery store and get your hair cut about the same amount. Even your utilities are pretty predictable.

So what does change? The Full Discretionary part of your finances. Yup, the fun money. You have a birthday, you tear a favorite pair of pants, your kid needs a new hockey stick, you donate to a favorite cause, or you replace a microwave on the blink.

That’s why budgets do not work because if you give yourself 10 categories with amounts in them that make sense for one month, they may not make sense AT ALL for the next month. If you say you will limit “eating out” to $200/month, great, then when your best friend comes to visit and… It’s an exception, right?

You get frustrated because these annoying little categories DO NOT UNDERSTAND YOU. Then what? You give up and forget about it. That’s what happens to most people.

Here’s what to do instead. Consider all your full discretionary money in one pot each month. Do not worry about what you’re spending your Full Discretionary money on, just that you DO NOT SPEND MORE than your limit.

Here’s how to do it:

• Estimate how much you spend on fixed expenses (or slightly variable like utilities) each month. Include all recurring bills like violin lessons, haircuts, therapy, etc.
• Get your take home income (NOT PRE-TAX, but the amount actually deposited on payday) for the month and subtract your fixed expenses for the month
• Subtract the amount you want to save each month (yes, you should save each month!) for goals and Annual Needs
• See what’s left. That’s your Full Discretionary pot.
• Track it each month with an app (here is my favorite) or on paper. Each time you go out to dinner, subtract the amount of dinner from your pot
• Stop buying/spending when you hit $0 for the month. It’s very eye-opening!

Remember, you are the adult. You should be able to make decisions about what to buy. That’s the freedom part, the responsibility part is making sure you do not spend more than you have for fun things.