Six Simple Rules to Budget Successfully

CoinCoach is a fantastic app, however, the secret to true financial success is combining it with simple to follow rules. Even if you don’t use our app, these rules will still be able to help you. That being said, our goal with CoinCoach is to help you automate these rules and also help you find ways to optimise your finances for free.

Happy mother and daughter with piggy bank

1. Allocate all funds

2. Plan for unexpected expenses

3. Improvise, adapt, overcome

4. Pay from the past

5. Goals for the future

6. Reward yourself

1. Allocate all funds

2. Plan for unexpected expenses

3. Improvise, adapt, overcome

4. Pay from the past

5. Goals for the future

6. Reward yourself

Rule One

Allocate all funds

This simple rule helps you begin to get out of any debt you may have. Moreover, it’ll let you be confident when you’re spending as you’ll know that you’ve allocated each pound, euro, dollar etc. You’ll have the power to be in complete control of your money.

That's great! So how does it work?

Similar to Zero Based Budgeting, rule one requires you to allocate each pound, euro, dollar etc. This is often referred to as “giving every dollar a job”. This doesn’t mean that you should spend all your money that comes in. It means you should pay/allocate all your money to your pre-determined accounts/budgets.

An over simplified example could be; with a salary of £3,000 each month you could allocate £850 for rent/mortgage, £150 for utilities/bills, £400 for groceries, £200 for entertainment, £600 to pay Tax and £800 allocated to savings.

This oversimplified example shows that, as you stick to your budget, your account will grow as you allocated funds to your savings.

TL;DR for rule one of your budget

1. Make some money
2. Allocate all your money (including savings if possible)
3. Stay within your budget

Why this rule works

By removing the guess work from spending, you are able to spend stress free because you’re simply sticking to your plan. This means fewer moments are spent worrying about the decision you’re making, meaning less decision fatigue. You’ll also spend less time feeling guilty, all you have to do is stick to your plan.

Want to automate this for free?

Click the button below to pre-register your email for our free app and we’ll let you know when we go live

Rule Two

Plan for unexpected expenses

This rule will help you protect yourself from events that have historically blown your budget. It’s easier than you may think to stop unexpected expenses from crippling your progress. Following this rule should help you work towards never needing to take a small loan or use your credit card again for such expenses. Imagine not needing to be stressed about unexpected expenses.

Amazing, how does it work?

This is an easy rule to implement. Simply look at or think back to your previous unexpected expenses, then break them into a monthly amount that’s manageable. This will remove the stress in the future and help give you peace of mind. Allowing you to spend less time worrying and more time on the things in life that make you happy!

TL;DR for rule two of your budget

1. Look back at and total your large unexpected expenses
2. Divide the total into a monthly amount to work into your budget from Rule One
3. If/when such an expense occurs, pay it with peace of mind.

Why this rule works

By breaking up unexpected expenses and making them manageable monthly amounts you free yourself up from stress. This allows you to look to the future and focus on your goals and ambitions, while keeping fully informed and your day to day spending based on your current needs.

Want to automate this for free?

Click the button below to pre-register your email for our free app and we’ll let you know when we go live

Person wearing hat looking at green fields, trees and mountains

Rule Three

Improvise, adapt, overcome

With this rule you will increase your budgets ability to remain flexible, reducing the chances of breaking your total budget. Sometimes you may go slightly over budget in one category, this rule helps you improvise, adapt and overcome any overspending in real-time. Thus, helping you stay flexible and keeping your total budget on track.

How does this rule work?

Overspending in a particular category can happen to anyone for many reasons. When this happens to you, you can simply adapt. It’s simple, if you overspend in one category, you can allocate money from another category to keep your total budget on track.

For example, imagine you budgeted £200 for the category of Eating Out and you overspent, your total has just increased to £215. You adapt quickly by reducing the category Shopping budget by £15 and moving that to Eating Out. Eating Out’s category budget is now budgeted at £215 and Shopping’s budget is now £15 smaller. This helps keep your entire monthly budget on track without the need to panic or stress.

TL;DR for rule three of your budget

1. Find the categories where you overspent
2. Shift money budgeted from other categories to offset it
3. Spend more time on the things in life that bring you happiness

Why this rule works

At the end of the day we’re all human and none of us are perfect! As long as you are willing and able to stay consistent with Rules One and Two you should be able to stay on track. Don’t forget, if needed you have the power to improvise, adapt and overcome!

Rule Four

Pay from the past

Getting ahead by one month or more allows you to use old money when paying. This rule helps you break the cycle of living pay cheque to pay cheque. When you’ve built up a month reserve (or more) of funds you can begin to use your “old money” to pay for current expenses. Thus, you become able to pay from the past. It may take some time to reach this point, but it’ll be worth it and dramatically reduce stress while letting you focus on getting on with life.

That sounds great, how does it work?

By staying consistent with the earlier rules you should be noticing you are able to regularly spend less than you earn and be able to know what you will spend on in advance. This means that you should begin to build up at least a 30 day safety net over time. As a result, you’ll be able to cover this month’s expenses with last month’s money. You could even expand it over time to be more than just a 30 day safety net.

As you reach and dominate this rule, you open up the door to some great next steps in rules five and six.

TL;DR for rule four of your budget

1. Be consistent with rules one, two and three
2. Build up reserves over time
3. Pay from the past and enjoy greater peace of mind

Why this rule works

Having reduced stress and peace of mind has numerous benefits. By not living pay cheque to pay cheque, you free up your energy, mind and time. This will give you room to grow and focus on the future. Consequently, You’ll be able to begin the process of achieving your dreams, whether that’s a house, car, extra classes or activities for you kids or a super yacht!

Rule Five

Goals for the future

Once stability and growth is achieved via Rules 1-4, Rule 5 will help you to think ahead, begin planning and achieve your financial life goals. This rule helps you capitalise on that breathing room you’ve created by growing beyond it. It is now that you can truly look to the future and the future will be bright!

Exciting, how does it work?

Adding a goal or multiple goals into your budget means that over time you’ll be gradually getting closer and closer to achieving them. This rule is similar to Rule Two, but instead of saving up for those unexpected expenses, you’re saving up for things you really want. Moreover, by being consistent with the previous rules and regularly spending less, you’ll be able to reach your goals without adding any stress (Hey! That rhymes!). So, all you need to do is work out what your goals are and how much they would cost and then break them down into smaller amounts. You can then gradually achieve those goals without going into debt or stress.

Our Founder personally likes to set 3 goals. He likes to choose an amount to save (goal 1), then match that amount and invest it (goal 2) and finally match it again and then use it for Rule Six (goal 3). For example, you could aim to save £1,000 then invest £1,000 and then build up another £1,000 for Rule Six.

TL;DR for rule five of your budget

1. Stay consistent with the previous rules
2. Divide the cost of your goal(s) into a monthly amount to work into your Rule One budget
3. Achieve your goals!

Why this rule works

You don’t have to make any painful changes to make this rule work for you. It’s nice an easy to put into motion, especially once you’ve got the first few rules down. Using this rule also means you can have peace of mind knowing that you are advancing towards your goals consistently.

Want to automate this for free?

Click the button below to pre-register your email for our free app and we’ll let you know when we go live

Lady holding hundred dollar bills and phone on yellow background

Rule Six

Reward yourself

This is our favourite rule, however there is a reason it’s the final rule. This rule will help keep you motivated through Rules 1-5 and should help keep you consistent and repeating the process. Remember to reward yourself within reason, if you can’t afford a super yacht as a reward, it may have to wait until next time!

Sounds like it'll be my favourite, how does it work?

Once you’ve achieved the Rules 1-5 you can afford to set a goal of rewarding yourself. This is important to motivate yourself throughout the process. Especially because the process is ongoing, After Rule 6, you can rinse and repeat Rules 1-5, it’s always nice to have something to look forward to each time you go through the process.

TL;DR for rule six of your budget

1. Achieve and be consistent with Rules 1-5
2. Reward yourself in a way that doesn’t set you back
3. Rinse and repeat to give yourself an excuse to reward yourself

Why this rule works

Rewarding yourself appropriately after following Rules 1-5 will also help create a positive feedback loop. Our founder has used this through some tough times and having a light at the end of the tunnel can truly be helpful.

Want to automate this for free?

Click the button below to pre-register your email for our free app and we’ll let you know when we go live

Be notified when we go live! Sign up below!

(We promise to only send you relevant emails!)

Be notified when we go live! Sign up below!

(We promise to only send you relevant emails!)

Be notified when we go live! Sign up below!

(We promise to only send you relevant emails!)

Enjoyed reading?

Share this article
Share on twitter
Share on facebook
Share on linkedin
Share on whatsapp
Share on telegram
Share on reddit
Share on email