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Budgeting shouldn't be scary.
It's just a decidedly unfashionable term for organizing your money in a way that helps you cover expenses, avoid consumer debt, and save a portion of your income to fund whatever goals you're working toward.
To make it all less confusing to keep track of, three financial planners told Business Insider they use a method called "bucketing."
1. Make a list of your fixed expenses
Luis Rosa, a CFP who founded the financial-planning firm Build a Better Financial Future, said you can start off by making a list of your fixed expenses, including housing costs and other recurring monthly payments, and variable expenses. Rosa suggests including savings in your expenses column.
2. Separate your savings goals into different accounts
Next, put "goal-specific money" — think: funds for a vacation, wedding, or down payment on a house — in various "buckets," Rosa said. "By breaking them up into different accounts or buckets, you get to keep better track than if you lump all the money together."
These accounts can be held at the same bank — Ally makes it easy to open up new accounts and label them with different savings goals — or even separate banks, to keep temptation to spend to a minimum.
3. Calculate how much you can afford to put toward each savings goal
After separate accounts are set up, decide how much you can afford to contribute monthly to each goal. Remember: Think of savings, at least for your highest-priority goals, as an expense, even if it's just $10 a month.
Andrew Westlin, a CFP at Betterment, said bucketing money into different accounts helps him "clearly see what portion of my assets will be used for each objective — my emergency fund, retirement, and money set aside for a sabbatical in a few years."
Westlin added: "I'm not an obsessive planner, so I even like to put extra money each month into a 'just because' bucket — I could use it for anything, and that freedom is exciting for me."
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4. Set up automatic contributions
Take the effort out of saving entirely and set up automatic contributions, whether through your payroll direct deposit or from your checking account.
There's something to be said for separating savings into a different bank account, or even several, and saving automatically. I opened an Ally account a few years ago with a small initial deposit strictly to build up my emergency fund. After a year of automatic contributions, my account balance nearly doubled. Since my checking account lives at a different bank, I was rarely tempted to dip into my emergency fund, and it just kept growing. Out of sight, out of mind.
Anjali Jariwala, a certified financial planner and certified public accountant at Fit Advisors, told Business Insider she also sets up automatic monthly contributions to different "cash buckets," either a checking or high-yield savings accounts, to fund different goals.
5. Track your progress
Rosa said he likes bucketing because it makes tracking savings progress even easier.
"This also helps with the motivational aspect of staying the course," Rosa said. "Some days when you ask yourself 'Why am I working so hard?' you can see how much progress you've made toward a future goal and it reinforces the behavior. You're more likely to stick to your goals if you can track its progress."
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