Scott Pape's bullet-proof technique for sticking to a budget

My failproof budgeting technique is (drum roll, please) ... to not use budgets.

The truth? I've never been able to stick to something as rigid as a budget, and I don't expect you to either.

Look, I've helped thousands of people with their money and I can tell you that the conventional wisdom espoused by finance experts - "Get on a budget! Track your spending" - is dead wrong.

Using willpower to force yourself to stick to a rigid budget, day in day out, just doesn't work. In fact, it's the opposite.

If you really want to win, you should ditch tracking everything and instead keep things simple.

Couples who bank together, stay together

According to Relationships Australia, the No. 1 cause of break-ups is fighting about money.

If you're married you should share the same bank account - and the financial decisions that go with it. How do you get your partner on board? Well, money talk goes better with garlic bread and wine!

Schedule monthly date nights devoted to making money decisions together so that you can make regular progress and stay on the same page.

Set up your money buckets

As I've said, budgets suck. Instead, you should simplify things and focus on three money "buckets": Blow (your spending), Grow (your long-term investing) and Mojo (your emergency savings).

The deal with the Blow bucket is spending more money on the stuff you love and less on the stuff you don't. Better yet, I want you to actually allocate some of your pay packet to guilt-free splurges for stuff that'll put a smile on your dial.

Here's how to set up your Blow bucket. Whip out your phone and apply for:

• 2 x everyday transaction accounts - call them "Daily expenses" and "Splurge" and get a fee-free ATM card for each (it's easier if you get your "Daily expenses" card first, then simply open another account for "Splurge").
• 2 x online savings accounts - call them "Smile" and "Fire extinguisher" and link them both to "Daily expenses".

Then calculate 60% of your take-home pay and keep this in your "Daily expenses" account. This is how much you should be spending on bare-bones living expenses (think mortgage/rent, groceries and bills). If it's more than 60% look at ways to cut costs.

Next I want you to put your money on autopilot so you'll never have to worry about it again.

Set up an automatic transfer of 10% of your take-home pay from your "Daily expenses" account to your "Splurge" account (for short-term splurges like shoes, booze and lattes).

Then set up an automatic transfer of 10% of your take-home pay from your "Daily expenses" to your "Smile" account (for longer-term splurges like weddings and holidays) and 20% to your "Fire extinguisher" account (for paying off credit card debt, saving for a home deposit or making extra mortgage repayments).

Mojo, baby

If there's one thing that will act like a financial firehose it's having savings on hand. We Barefooters call it Mojo - a high-interest online savings account with three months of living expenses. To avoid temptation, keep it away from your day-to-day banking - I even have it with another bank altogether.

When you open your separate Mojo account, set it up with an initial $2000 deposit. And if you don't have a spare $2000, look around your house and see what you can flog on Gumtree.

This is an edited excerpt from Scott Pape's bestselling book, The Barefoot Investor: The Only Money Guide You'll Ever Need. Available now.

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