Sometimes it can feel like you’ve got a lot of balls in the air, money-wise. In the midst of all this juggling, how long can you keep your eye on your budget?
About a week, says behavioral economist Dan Ariely.
Even though many popular budgeting programs are set up to help you allocate your money by the month, monthly budgets are not setting you up for success. You’ll gain greater control by budgeting weekly.
A month is way too long for us to keep our financial impulses in check, says George Friedman, CEO and founder of Qapital, a banking app that offers tools for customized saving. A better time span, he says, is a week.
“It is a manageable amount of transactions to look at,” Friedman says. “It is very clear this is the way to go since it is so easy to see previous weeks’ expenses and compare your progress from week to week.”
Since Qapital rolled out a weekly spending target tool on their site in November, Friedman says users’ engagement with their budget has increased by 30%.
Here’s why and how to put yourself on a weekly adult allowance.
1. You can better anticipate and examine weekly expenses
The strongest evidence of the benefit of a weekly schedule is that even people who are paid bi-weekly have less money the second week than the first, according to Ariely.
Even though many of your mandatory expenses (bills, utilities and rent) are due monthly, discretionary spending (the part of your spending not going to bills or rent) occurs more frequently and can get out of control quickly.
2. There is a lower volume of transactions
There are far fewer transactions during a week than during a month of spending. That makes looking over your expenses much easier, less tedious, and more manageable.
Weeks are a more readily comparable unit of time, too. Plus weeks come around more often than months and provide more opportunities for you to tweak your budget.
3. How to set up a weekly spending allowance
To use the weekly spending target on Qapital, you can set up the Qapital Visa Debit card, either by having your paycheck deposited there, or moving your discretionary money in on a weekly basis from your own bank account.
Based on your spending patterns, Qapital will set up a weekly spending target for you. The average is about $ 300, says Friedman.
Your discretionary spending will be tracked and you’ll get tips on Sunday evening about ways to curb your spending and stay under budget.
You can do this on your own, too, by moving your weekly discretionary income on a prepaid debit card each week.