I was talking to my friend Dustin the other day and he offered some insights into the unique way his family budgets. I liked it so much that my family switched over immediately.
Dustin uses a simple method he calls the Harvest Budgeting System.
What is Harvesting?
In case you’re totally ignorant and have never heard of a farm, harvesting is the process of gathering mature crops from the field. Basically, harvesting is when you pick the apple, corn, or whatever you happen to be growing from the ground. You pick it when it’s ripe and sell it at markets or eat it yourself.
What does that have to do with budgeting? Everything.
Harvesting a Budget
In the harvest system, you set aside this month’s income to pay for next month’s budget. This way, when you sit down to budget you know exactly how much money you have and can plan out the month without issue.
This method is great for several reasons:
- There is no guessing for budgeting irregular incomes.
- 1st of the month payments are un-stressful, because you know you have the money for all your expenses.
- If your emergency fund runs out, you have an extra month’s buffer as an emergency fund for your emergency fund!
There is only one downside to this method: you have to cut back briefly to build a one-month buffer.
Building the Harvest
The only reason not to use the Harvest Budgeting System is if you don’t think you can get ahead a month. Here are some tips for getting ahead:
- Sell some stock. If you have some non-retirement account single-stocks floating around that are worth one month’s expenses sell them to start your Harvest Budget. With less risk in your budget you can invest more money into stocks in the future.
- eBay and Craigslist. Sell some junk you never use like books, old video games, movies, furniture or anything else you don’t need any more. One person’s junk is another’s treasure and that treasure could be enough to build up your harvest budget.
- Cut back for three months. Look over your current expenses and see if there is anything you can temporarily cut, do so until you can build up your harvest. In most cases this will take less than three months.
- Use the Christmas Bonus. With Christmas around the corner, a lot of us are looking forward to bonus. Instead of spending the bonus frivolously, why not throw it into your harvest budget and use that to get ahead.
What is unique about the way you budget? If you don’t budget, are you considering using the harvest budget to relieve stress and get control of your money?