Introducing the Lazy Budget
Everyone hate budgets. They are a pain in the ass to create, a pain in the ass to update, and an even bigger pain in the ass to stick to. But most everyone agrees that they are necessary to not only stay on track financially, but to achieve our goals. Budgets are a necessary evil.
We at System Financial have worked hard to figure out the easiest way to automatically create and maintain a budget for our users. We are proud to announce two new innovations that get us much closer to that goal: macrobudgeting and Priority-based balance allotment. Both quite a mouthful.
Budgets, especially the ones automatically generated by the likes of Mint, are unnecessarily detailed. Mint likes to create budgets for expenses as specific as Movies, Clothing, Fast Food, Groceries, and Travel. Using Mint, I’ll receive a email congratulating me for being way below my Travel budget when I don’t travel, and scolding me for exceeding my Travel budget when I do travel. I’ll get a notification that I blew my Groceries budget when I have people over for dinner, but I’m below my Movies budget because, well, I didn't happen to see a movie that week. Budgets like this expect us to spend the same amount week after week, which is not how we live.
For most of us to stay on track, we keep a watchful eye on our bank balance while performing mental math to account for upcoming expenses. This results in extra cognitive burden, which results in extra stress.
Our approach at System Financial is to simply budgets to the absolute bare minimum. For us, that’s just three categories— Bills, Goals, and Spending. Bills are unavoidable and self-explanatory. Goals are money to apply towards paying off debt, building an Emergency Fund, and investing. Everything else—the discretionary spending in our lives like haircuts and gifts and entertainment and dining and clothes—is Spending. We call this extremely simplified budget a macrobudget, and it’s a whole heckuva lot easier to maintain than a traditional budget.
Priority-based Balance Allotment
Maintaining a budget as you spend your money as annoying as counting calories. Luckily, the macrobudget we create for you continually adjusts as money enters and exits your account. This happens according to a set of priorities. Those priorities are as follows:
Priority 1: Bill Money: Regardless of your balance, we will first a lot money for any remaining unpaid bills you have.
Priority 2: Spending Money: As long as money is set aside for your unpaid bills, our second priority is to make sure you have Spending money according to the spending budget you agreed to during Setup.
Priority 3: Goal Money: Any money above and beyond Bill Money and Spending Money is earmarked for the following goals:
Goal Money Priority A: For the credit card with the smallest debt (if user has credit card debt)
Goal Money Priority B: For the credit card with the second smallest debt and so on (if user has credit card debt)
Goal Money Priority C: For topping off a 3-Month emergency fund (if user hasn’t reached the emergency fund goal yet)
Goal Money Priority D: For investing
This way, if a user has little money, we make sure their bills are paid above all. If a user has plenty of money, we are able to earmark money for common-sense goals in the appropriate order.
The simplicity of a macrobudget combined with the smarts of Priority-based Balance Allotment enables the Lazy Budget—by far, the simplest way to create and keep a budget.