top of page

SPA: A Better Way To Budget

I am a huge fan of a budgeting methodology I call SPA. It stands for separate payment accounts. The idea behind SPA is to make budgeting easier. Easier is better because easier means there is a greater chance you will stick with it long-term. SPA is all about separating your cash outflows into at least two different accounts.

The first account will pay all your recurring expenses, including debt repayments. This first account is 100% automated, and thus little monitoring will be necessary. Money goes into it automatically via direct deposits, and money is automatically transferred out for savings, bill pay, and all other fixed (recurring) expenses.

The second account can be a checking or a credit card. Be warned though if you have an impulse buying problem, avoid credit cards. So for this second account, this is where all your swipe transactions occur. Anything that is variable throughout the month including, food, gas, groceries, eating out, entertainment, shopping, etc will be charged to this account.

The beauty of SPA is now all you have to do is watch one number, the balance within account #2. Once you hit your limit, or are quickly approaching it, you know you will need to decrease your spending in order to not go over budget before the end of the month. So if account #2 is a checking account, then at the beginning of each month, you will deposit the allotted amount into this account, preferably you make this automated as well. If account #2 is a credit card, then you simply watch the balance, make sure you do not go over, and then pay it off at the end of the month.

Let's look at an example...

Joe makes $5000 a month, his fixed expenses come to $2500, his savings is $500, therefore, he has $2000 left over for variable expenses. His goal is to watch account #2 to make sure he does not exceed this amount in the course of one month.

Here are some additional instructions for setting SPA up.


Open at least two checking accounts or one checking and one credit card (avoid credit cards if you have a hard time with impulse purchases).


Separate out your expenses between recurring (i.e. fixed*) and Swipe (i.e. variable**)


  • Review your fixed expenses (including debt payments), and see if there are areas you can cut expenses.

  • Determine an amount for monthly emergency savings if you do not have adequate savings already (rule of thumb is 3-6 months).

  • Determine savings goals for those things that are important to you (travel fund, new car fund, new home fund, etc).

  • Determine an amount for monthly retirement savings (Rule of Thumb 15%, or more depending on your retirement plan).

  • After factoring in the above, determine what’s leftover. This amount is for variable expenses.

  • Make sure this variable expense number is reasonable. Not too big to allow for too many impulse buys, and not too little where you can only buy rice and beans for food.


  • Have all incomes direct deposited into Checking #1.

  • Have all recurring savings automatically pulled from Checking #1.

  • Have all fixed expenses paid from Checking #1.

  • Have all variable expenses (i.e. swipe transactions) charged from account #2.


  • Set up automatic bill payment for your Fixed expenses to come out of checking #1.

  • Set up your automatic monthly savings to come out of checking #1.

  • Set up monthly transfers from Checking #1 to account #2 based on budgeted amount for variable expenses. Have this transfer automatically on the 1st of every month if you are using a checking for account #2.


  • I recommend TrueBill for account #2 monitoring. It's available in the App Store.

  • In the App, setup alerts to notify you when your spending hits 25%, 50%, 75%, and 100% of your monthly allocated amount for variable expenses.

  • Your goal and primary focus is to stay below this number every month.

  • You should only need to monitor your fixed account (account #1) every once and awhile.

  • Login to the app at least once a week to check your spending behavior for account #2 and see which categories you may be spending too much in.

*Fixed expenses include all recurring expenses, subscriptions, utilities (quasi-fixed expenses that fluctuate mildly), rent, etc.

**Variable expenses include all “swipe” transactions (i.e. generally cash, credit or debit).

This would include grocery, auto fuel, eating out, personal care, shopping, etc.


I hope this helps! Please comment below.

205 views0 comments

Recent Posts

See All

5 Financial Tips for Newlyweds

A few months before our son’s recent wedding, I sat down with him and his fiancée and talked about (what else?) money. I’ll be doing the same soon with the younger of our two daughters and her fiancé,


bottom of page