Why I Never Worry About Money

In 1994 I earned about $9,600 working for a non-profit. It was good experience. And I managed to live on $800 a month with relative ease. In the spring of 1995, I got my first software job. My salary was $30,000 dollars. Finally, I was earning real money.

Fast forward to the end of 1995 and I was facing a credit card bill I couldn't pay off. I was officially in debt. How had I lived on so much less without any debt? What went wrong?

One evening visiting my parents I shared my tale of woe with Brian, a family friend. He offered to help and invited me to his house that weekend. On Sunday we sat down at his kitchen table where he showed me something that changed my life: a binder.

The binder contained sheets of graph paper separated by colored dividers. Brian, who earned over 10 times what I did, kept track of his spending in this binder. His system was very simple. Each divider represented a category of expense. One for groceries, one for eating out, one for vacation, etc. Each time he was paid he allocated a portion of his pay to each section of his binder.

For example, on payday Brian adds a positive entry in the groceries section for $200. Each time he buys groceries he debits the amount he spent from that section. When the balance is zero, there is no money for groceries anymore. He does this for every section, each time he gets paid.

What makes this system so effective is the focus on how much money you have in each section instead of how much money you have in the bank. That way you can always see exactly what you can afford to spend on any one expense. And you always have enough for your fixed expenses.

Brian then set about creating a budget for me so that I could have my own binder. He asked me questions about my spending and made suggestions about what categories I should use. He cautioned against categories that were overly broad or overly granular. The key was to find the right balance. I think we ended up with about 10 categories that looked something like this...

  • Cable

  • Car Expenses

  • Car Insurance

  • Car Payment

  • Clothes

  • Electricity

  • Entertainment

  • Groceries

  • Rent

  • Vacation

I would save whatever was left.

I went out and bought a binder and started doing exactly what Brian recommended. It was arduous keeping receipts and entering everything by hand but after a few months I had paid off my debt and felt on top of my spending.

In a short time I abandoned the binder in favor of spreadsheets and then software that I wrote myself. The software evolved to the point where I just opened it every day, looked at how I was doing and closed it again. Transactions downloaded from my bank automatically and most of them were automatically placed in the right categories.

But support from banks and credit card providers for downloading transactions using OFX has proven very spotty and my custom software stopped working for me. For a period of a few months I stopped tracking expenses using Brian's system. It was alarmingly stressful and we did overspend significantly.

So, a couple of years ago I switched to software called You Need a Budget (YNAB). I prefer the software I wrote myself, but YNAB works using similar enough principles that I've been happy with it.

Decades later, I still track my day-to-day spending using this method. It is virtually effortless, reduces friction in family discussions about money, and allows me to splurge confidently when the urge strikes. I highly recommend it.


Some readers may have recognized that this is essentially envelope budgeting without the envelopes. In a virtually cashless society, actually keeping money in envelopes makes very little sense but the principle is the same. Where most budgeting is based on a principle of spending with a goal in mind, envelope budgeting just asks that you put a set amount aside in an envelope whenever you get paid. And, most importantly, for any given category of expense, only spend money from the designated envelope.

© Nick Simons