Try This Financial Planner’s 1-2-3 Budget Rating System
We all know we’re supposed to save more money. And that sounds great ’til you try to do it. Money sometimes has this quality of magically expanding and contracting in invisible ways—so even if and when there’s extra cash coming in, for a lot of us there never seems to be any left to save for big financial goals.
Well, guess what: You, too, can save money, and you can do it with this amazing trick I learned from Certified Financial Planner Shannah Compton Game, host of the “Millennial Money” podcast. While she was sharing the ins and outs of financial planning with me I had the chance to ask her all my burning financial questions. Like, how do you save if there’s never anything left over?
The key is identifying already-spent money that could have been spent better.
I hear you. You’re not buying fancy coffees that you can easily cut from the budget. But Game promises everybody has something they can do. “All of us, whether we make millions or a small amount, there’s ways we can find money in our bank account,” Game said. “I know this because I’ve done this with every [income] dollar amount.”
And she does it herself, with a weekly ritual. Some people might go over their budgets once a month, but 30 days is a long time, she said. “For me a month doesn’t work. I’m a big fan of weekly and daily.” So what’s her trick? It’s as easy as 1-2-3.
Try this 1-2-3 budget rating system:
Every Sunday afternoon at the same time, Game looks at where she spent her money during the week. And “other than things I have to pay,” she said, “I give everything a 1, 2, or 3 rating.” Yep: a rating next to every discretionary dollar spent. She assigns a “1” rating to purchases that didn’t make her feel good, a “2” rating to things that felt “sort of good but indifferent,” and a “3” for dollar amounts that she would spend all over again in a heartbeat. “Three is ‘I felt fabulous when I bought this thing’,” Game said.
That system helps her review her spending in a fresh light. For the things she rated a “1,” Game asks herself: “Could I conceivably not spend [money] on that?” This tier is where people might find things like subscriptions they don’t remember, or fees they’re paying their bank. If you review your low-priority spending and decide it’s something you would rather do without—then do without. Game recommends cancelling the subscription or cutting out the habit and redirecting that money to a savings goal. Next, you can look at your 2’s to see if they can move to 1 or 3, and make decisions based on that.
“I literally do this process every week,” she said. “It helps me really zero in on where am I spending my money that I feel good about, and that I don’t want to cut out.”
Game says she used the trick all of last year, and that she was able to save more money than she ever has in the past.” To stick with it, she suggests doing it at the same time every week: “It takes 15 to 20 minutes and is super easy.”
“Even if you’re living paycheck to paycheck you can find money,” Game said. “Really, if you’re paycheck to paycheck that is exactly the time you should be doing these things—looking at your money weekly, and trying to spot trends.”