Need a Realistic Budget? Make One According to Your Spending Habits

September 14, 2009 by Christine Rochelle

Budgeting

Make a budget. That’s what everyone tells you to do when you’re trying to save a buck here or there, but no one tells you exactly how to do it.

Back in the 10th grade we learned all about balancing checkbooks — something I’ll admit I still don’t do — and how to create a budget. Usually, these budgets insist that your spending habits can be divided into a few groups. There’s a category for your monthly bills, one for your debt, and then the last one is always just marked “entertainment.” This vague “entertainment” category was always jammed pack with the majority of my spending habits. From a night out with my friends to Broadway shows to train tickets back home to Jersey, piling all of this into one category just never worked.

To help break down your budget in a way that’s more personal, Thrive has created a system called “behavioral budgeting.” Basically, instead of stuffing your entire life spending into one category, you can break it down to fit your needs. It allows you to make a budget based on your behaviors, whether it be a category for sports or theatre, rather than trying to follow a cookie cutter system made for anyone.

“The way we have been taught to think about budgets is actually rather abstracted,” said Matt Wallaert, Lead Scientist at Thrive. “We’re trying to guide your behavior by looking at the numbers that sit on top of them.”

It works by using your past behaviors, or spending, as a means to create a better monthly budget to suit your needs. If you’re more about cooking for yourself rather than going out to eat, that will show up in your budget. Don’t stress about having to have the same spending behaviors every month though to stick to your personalized budget. If you spend more or less money on food, the system will self-correct and let you know how any behavior affects your spending for the rest of the month.

In addition to creating a more personalized budget, Thrive is also looking into using a calendar system so you can spread your money out over the month. So if you budget $100 for dinners, you can figure out how to make that money last.

“That’s the next step…[putting] those actions on a calendar, along with locking them down to what you can actually afford and adjusting as you decide [if] you want to save more or less,” said Matt.

This new type of action-oriented budget is especially helpful to those who don’t feel that they need to change their lifestyle in order to save a dime. Whether you’re into gaming, sports, or traveling, Thrive can help you still maintain your lifestyle without putting your wallet at risk.

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