Today’s money management tip comes courtesy of my new workbook Financing Your Life, scheduled for release on April 30.
Money Management Tip: Macro- and Microbudgeting
Before you work on the details of your budget and the individual categories that it holds, you must decide what increment of time your budget will cover. Some individuals like to create microbudgets that cover a very short period of time because it makes the restrictions of the budget seem much more approachable. You might want to create a microbudget for every day, week or month depending on how overwhelming the concept of living on a budget is to you.
Along with any microbudget you decide to implement, you should also have a macrobudget that gives you control over the bigger picture. Your macrobudget may cover a quarter or a year, or even five years. Essentially, it gives an overview of the goals you hope to accomplish within that long-term period. This gives you direction for those microbudgets as they fit into the overall design of your macrobudget.
The ultimate goal of the microbudget should be to allow you to accomplish all that you set out to do in the macrobudget. For example, let’s say you want to reduce the balances of your credit cards by 10 percent, which, on your macrobudget, equaled a $1,000 reduction. If your microbudget is monthly, you’ll divide that number by 12 and get about $83 per month.
What are some of the ways you make budgeting easier to take on?