The year 2020 has taught us to expect the unexpected. Think about budgeting for the coming year with this in mind.

There’s no reason to set a budget for the whole year, he said.

Abigail Sussman,

Associate Professor of Marketing at the University of Chicago. In a year’s time, it’ll really be 20 years. The timing’s not right now.

Enter microbudget. Instead of setting a budget for the year or even the season, try structuring your spending and savings plan on a much smaller scale.

This approach has a number of important advantages: You will be able to better control your cash flow, execute your plans more easily and return some of your original energy when the new year arrives. That’s how it works.

Small budget

Choosing a calendar that fits your budget – for example B. a month, a pay period or even a few weeks for a major event or purchase – is the key to your success.

Try to budget one salary after the other, he said.

Alice Krauss,

Chairman of the East Bay Financial Planning Association. Refresh your plan each new pay period to set limits, as long as you pay out at the beginning of each cycle.

We tend to think on a monthly basis, but salary budgeting can be very useful, she says. This way you can see in advance what is left and what you need to save for the next time your tyres explode.

Small-scale budgeting also means that you pay more attention to each individual transaction, which is sometimes lost in the larger-scale presentation of the annual budget.

Lots of people spend too much: lots of small options, Mrs. Kraus said.

With this system of frequent review, the cumulative effect of these small options is easier to see. It’s harder to sweep things under the carpet, she said.

Advance less than

If you are already dividing your budget by pay period, experiment with weekly, or even daily, parts of the budget on the days before a major purchase.

This smaller scale allows you to see how much I’ve already spent this week, and it allows you to make course corrections in real time, said Ms

If you have many questions: Where does all my money go for the weekend or why can’t I stay within my budget? This more modest approach may shed light on some problem areas. A budget per day can help limit some impulse purchases; a budget per week can show you how little you use the recurring subscriptions you expect at the end of each month.


Once your micro-budget has been determined, you have some room for manoeuvre in your planning to adjust your plan. Not only can you view your costs directly, but you can also see immediately what changes you want to make.

Don’t miss the big pictures, he said.

John Beshears,

Behavioral economist and university lecturer in business administration at Harvard University. If you restrict yourself too much, you will miss important events. If you’re too broad, it’ll be too intimidating.

By regularly setting aside money for emergencies, tax time and other longer-term financial events, such as saving for a house or paying off debts, you can be sure that you have the money when you need it. Automatic fume cupboards can do most of the work here.


Notice when small things sting, but also be careful when small victories do well. These little moments of pride will keep your engine running.

If you look at the monthly amount, the $10 saving doesn’t seem very important, Ms. Morgan said. Kraus. But if you think about it every day, you see your daily habits and where your money goes.

Ready to do more?

Click here for six weeks of simple exercises for personal finance in difficult times.

Fresh start energy

The psychological numbness of 2020 has also robbed us of the fresh start that tends to fill birthdays and the beginning of a new year with something special. This feeling usually reinforces our intentions and helps us to stay true to our goals.

This year is difficult because there is no new beginning, he said.

Katie Milkman,

Professor at the Wharton School of the University of Pennsylvania and author of the upcoming book How to Change : The science of knowing how to get from where you are to where you want to go. Every day is the same as the day before. We missed the new beginning that usually makes us younger.

Fortunately, a smaller budget automatically gives a few less options to restore that new start. A fresh start gives you more freedom and brings back the tension we have associated with the great events of the past.

I hope the New Year’s celebration is still felt – it’s a big part of our culture, Professor Milkman said. I’m glad we have him.

Email Julia Carpenter at [email protected].

Changes and Additions Alice Kraus is chairman of the East Bay Financial Planning Association. In an earlier version of this article, his last name was misspelled as Krause.

Copyright ©2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8

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