Reflections on the 4S budget
We don’t like budgeting, as we have shared before. But we know that establishing healthy spending and savings habits is the best way to start building confidence about money. So we tried to reimagine that in a way that feels less burdensome and discouraging.
We won’t go so far as to call it fun. The 4S budget doesn’t taste like candy. It’s more like the money equivalent of a salad that’s not so bad after all. We might even order it again!
The meaning behind 4S
Our budgeting method is named after four key ways to use money: Save, Spend, Splurge, and Share. Here’s why these four are the money verbs that matter.
Save: This is the first “S” because it’s the most important. Saving money means keeping money. Whatever you want to do—invest, buy a car, get out of debt, go on vacation, get a tattoo—you need money to do those things. The more money you’re able to keep, the more things you can do. In budget terms, this means income (money coming in) is greater than expenses (money going out).
Spend: Everyone needs some basic living expenses. Even if you’re frugal, you have to spend money on food, clothes, rent, cleaning products before your mom comes to visit, etc. The critical part is understanding the difference between this and the next category.
Splurge: Aim to splurge rarely but consciously, in a way that makes you feel good about using the money you’ve earned. Yes, it should indeed bring you joy. 🙄
Think you might try not splurging at all? It’s hard to sustain that kind of self-denial for very long. Be kind to yourself. You can have nice things. As long as your income is greater than your expenses, you can (and should) splurge a little.
The other thing about splurging is that one size doesn’t fit all. Is a plane ticket a splurge? If it’s a trip to the beach, probably. But if you’re visiting a friend who needs help or making an effort to go to a job interview in person, you might think about it differently. The key is to set your own definition of a spend vs. a splurge, and then stick to it.
Share: It may seem like sharing doesn’t belong in a budget. But the truth is, giving stuff away makes people happy. Don’t knock it ‘til you’ve tried it. It’s science!
How to use 4S
For the past few months, we’ve been trying to put these ideas into a method that we can use. We wanted it to be simple enough and quick enough to repeat on a monthly basis. Honestly? It’s been harder than we thought. But we’ve figured out a few ways to make it easier.
Use one payment method for each “S.” Picking one debit or credit card exclusively for each category not only makes the accounting easier, it also helps with mindful decision making. “If I get lunch today, would that be a spend or a splurge?” Then use the appropriate card.
Get the total for each “S” for each calendar month. After using one card per category for a few months, it’s easy to go log on with the bank and see what the totals are from the first day of the month to the last. That sets a baseline for how things are going.
Compare to the 50/30/20 rule. This common budgeting rule of thumb suggests that 50% of income should go to needs (spend), 30% to wants (splurge) and 20% to savings (save). With a few months mapped out, we could see whether we actually lived up to that or not, and plan accordingly to adjust our targets. Sharing is a much smaller category, but one that still feels good to measure.
Check progress. Knowing the targets for each category and each payment method makes it easier to check progress during the month, by simply logging on and looking at the current month. 14 days but only $20 left to splurge? Whoops. Time to trim a little, and maybe retarget for next month.
This kind of budget does assume some things: that expenses exceed income, that credit cards are paid in full and on time, and that debt (which goes in the “Save” category) is manageable. Where all of those are true, 4S might be one way to alleviate budgeting pain. After all, we do love a good salad.
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While we were working on this project, I got laid off. I thought, “Great, now I have to find a new job and my budget will be wrecked.” I did, but it was. This humbling experience was also a reminder that no month is standard and no plan is foolproof. I do what I can. After that, I have to learn to let go.