[{"@context":"https:\/\/schema.org\/","@type":"BlogPosting","@id":"https:\/\/www.timemanagementplans.com\/managing-time-and-money-more-effectively-with-tiny-budgeting\/#BlogPosting","mainEntityOfPage":"https:\/\/www.timemanagementplans.com\/managing-time-and-money-more-effectively-with-tiny-budgeting\/","headline":"Managing Time and Money More Effectively with Tiny Budgeting","name":"Managing Time and Money More Effectively with Tiny Budgeting","description":"The old adage “time is money” has never been truer for millions of Americans.\u00a0 We live in a highly monetized society.\u00a0 We equate time with money in ways our grandparents would not have recognized.\u00a0 Everything we do is organized into microtasks and micropayments because we want to spend as little time as possible on any...","datePublished":"2017-11-12","dateModified":"2025-06-04","author":{"@type":"Person","@id":"https:\/\/www.timemanagementplans.com\/author\/mark\/#Person","name":"Mark","url":"https:\/\/www.timemanagementplans.com\/author\/mark\/","identifier":2,"image":{"@type":"ImageObject","@id":"https:\/\/secure.gravatar.com\/avatar\/131cfccbaaff5083caadb2ebb178119fe605ab5a0bdcf4a00e7f2ec170a49434?s=96&d=mm&r=g","url":"https:\/\/secure.gravatar.com\/avatar\/131cfccbaaff5083caadb2ebb178119fe605ab5a0bdcf4a00e7f2ec170a49434?s=96&d=mm&r=g","height":96,"width":96}},"publisher":{"@type":"Organization","name":"Reflective Dynamics, Inc.","logo":{"@type":"ImageObject","@id":"https:\/\/www.timemanagementplans.com\/wp-content\/uploads\/time-management-plans-blog-logo.jpg","url":"https:\/\/www.timemanagementplans.com\/wp-content\/uploads\/time-management-plans-blog-logo.jpg","width":600,"height":60}},"image":{"@type":"ImageObject","@id":"https:\/\/i0.wp.com\/www.timemanagementplans.com\/wp-content\/uploads\/tiny-budgeting.jpg?fit=720%2C360&ssl=1","url":"https:\/\/i0.wp.com\/www.timemanagementplans.com\/wp-content\/uploads\/tiny-budgeting.jpg?fit=720%2C360&ssl=1","height":360,"width":720},"url":"https:\/\/www.timemanagementplans.com\/managing-time-and-money-more-effectively-with-tiny-budgeting\/","about":["Systems"],"wordCount":3051,"articleBody":"The old adage “time is money” has never been truer for millions of Americans.\u00a0 We live in a highly monetized society.\u00a0 We equate time with money in ways our grandparents would not have recognized.\u00a0 Everything we do is organized into microtasks and micropayments because we want to spend as little time as possible on any one activity and we want to pay as little as possible.How to manage time and money effectively using the Tiny Budgeting system.This environment comes from having the opportunity to do so many things we’re constantly looking for ways to squeeze more things into our lives.\u00a0 But the more things you do or buy the more money you spend.\u00a0 Whereas dear old granddad might have thought that paying for 5 hours’ labor on a 3 hour job was a bad idea, you might feel like buying 3 things when you can get 5 is a bad idea.Put another way, some personal budgeting specialists advise their clients to think in terms of “how many hours do I have to work to pay for [X]?”\u00a0 In fact, I have read some very interesting budgeting plans that equate everything with hours worked.\u00a0 In my opinion, that overcomplicates matters.\u00a0 Although most of us have some say in how much we earn per hour, it’s not like hourly income value can be adjusted up or down on the fly.\u00a0 It takes time to increase your income.\u00a0 It’s easier to waste time with frivolous matters, thus reducing your income.The relationship between time and money is intuitive.\u00a0 Some people would say there is a strong correlation between time and money, although I feel that is misleading.\u00a0 We don’t want to be distracted by abstractions because the time-and-money relationship is already an abstraction.\u00a0 Let me establish a few definitions and then we’ll look at how Tiny Budgeting helps you manage both your time and money.Concepts Relating Time to MoneyYou have an income.\u00a0 Maybe you work a regular job.\u00a0 Maybe you do contract work.\u00a0 Maybe you have a trust fund that pays you a stipend.\u00a0 Whatever the source, you have an income.\u00a0 In pure accounting terms we usually divide our income into monthly segments.\u00a0 You make\u00a0X dollars per month.You have\u00a0active income and\u00a0passive income.\u00a0 Active income includes every dollar you are paid in exchange for selling something, either your time and service or something you own.\u00a0 Passive income includes every dollar that is paid to you in interest, or that accrues as a result of increases in value in things you sell.\u00a0 If you purchase an oil painting for $100 and sell it for $500, you make a $400 profit.\u00a0 If any of that $400 was due to the fact that you held the painting for 5 years then that would be\u00a0passive income.\u00a0 The rest would be\u00a0active income.Another form of passive income is any revenue you earn from a business venture where you are not actively involved.\u00a0 Maybe you are an investor.\u00a0 Perhaps you run a Website that carries advertising and you’re paid commissions.\u00a0 If the work is performed by others and you are paid an override, that is passive income.When we relate time to money, we almost always mean “active income earned per period of time”.\u00a0 Your time is valuable only because you use that time to generate money.\u00a0 If you don’t need to do anything to earn an income then your time is not directly associated with your income.Conversely, the time you spend doing things may cost you money, either lost income opportunity or because you are paying for the use of someone else’s property or services by time.\u00a0 If there is a cost per time associated with any of your activities, including making money, then you must deduct that cost per time from your income per time.That leaves you with\u00a0profit per time.\u00a0 The “per time” can be denoted in\u00a0per hour,\u00a0per day,\u00a0per week,\u00a0per month, or\u00a0per year denominations.\u00a0 It’s up to you to decide how you want to manage the numbers.Tiny Budgeting doesn’t really care about\u00a0Income per Time but it does care about\u00a0Cost per Time.\u00a0 The cool thing about Tiny Budgeting, though, is that it is a very flexible system that adapts itself to whatever your circumstances are.\u00a0 If you have to manage your budget on the basis of\u00a0Revenue per Time then Tiny Budgeting accommodates that requirement.What Is Tiny Budgeting?In the simplest of terms, Tiny Budgeting is the practice of dividing your expenses into “must pay for” and “choose to pay for” categories.\u00a0 These are\u00a0Necessary or Vital Expenses and\u00a0Optional Expenses.\u00a0 The standard practice in Tiny Budgeting is to assign four types of expenses to the Vital category:Housing (primary residence only, rent or mortgage)Transportation (only what you need, not for recreation)Food (only what your family eats, not charitable donations)Utilities (power, water, sewage, trash collection, etc.)Every other type of expense falls into the Optional category.\u00a0 They are Optional because you don’t need those expenses to live.\u00a0 You may have rational reasons for obtaining credit cards (such as a need to build your credit so you get a home mortgage).\u00a0 Placing an expense in an Optional category does not mean it is frivolous, even though some people say these are unnecessary expenses.\u00a0 In real life you have\u00a0Permanent (Vital) Expenses and\u00a0Temporary (Optional) Expenses.Tiny Budgeting prioritizes your income according to type of expense.\u00a0 So, for example, you will always allocate enough money to pay a Vital expense but if you come up short on income you can be flexible about which of your Optional expenses are paid on time.\u00a0 With Tiny Budgeting your goal is to pay off as many Optional expenses as you can, as soon as you can.\u00a0 But this system works great for people who don’t have large incomes.Of course, it falls to you not to incur expenses you cannot pay for.\u00a0 You may have an emergency expense, such as an unexpected car repair.\u00a0 Tiny Budgeting teaches you how to accommodate expenses not under your control.Finally, Tiny Budgeting also teaches you how to save money.\u00a0 Because Tiny Budgeting treats your income and expenses in a business-like way, it follows a standard business practice of increasing assets and owner’s equity.\u00a0 Assets are everything you own.\u00a0 You may borrow money to acquire some assets.\u00a0 That borrowed money becomes a liability.\u00a0 After you deduct your liabilities (what you owe) from the value of your assets (what you own) the remainder is your Owner’s Equity.The goal of Tiny Budgeting is to increase your assets and decrease your liabilities regardless of how much money you make.Why Is It Called Tiny Budgeting?The “tiny” part is due to the simplifications you employ.\u00a0 Budgets look smaller when we group things together.\u00a0 You have three parts to a Tiny Budget plan:Vital ExpensesOptional ExpensesSavingsThis does not look exactly like the traditional accounting formula of Assets – Liabilities = Owner’s Equity.\u00a0 This breakdown actually comes from specialized accounting reports.\u00a0 Tiny Budgeting simplifies the book keeping so that you don’t need to learn a lot of terminology.\u00a0 It’s “tiny” budgeting because it’s a quick, easy to learn method of managing your money.How Tiny Budgeting Helps You Save MoneyLet’s talk about the saving of money first.\u00a0 I’ll relate that to saving time before we move on.In the Tiny Budgeting method\u00a0you pay yourself first.\u00a0 In other words, whenever you are paid (passive or active income), you immediately set part of that money back.\u00a0 You don’t spend any money until you have made a virtually untouchable deposit into savings.\u00a0 A deposit is touchable if you are sure you’ll need to spend some of that money within 30 days.\u00a0 The goal of Tiny Budgeting is to only make untouchable deposits into savings.\u00a0 That may mean depositing only $10 per pay period than $25.\u00a0 You save what you can, not what you hope to.Although it helps to have a savings account with Tiny Budgeting, that is not really necessary.\u00a0 As I mentioned above, Tiny Budgeting is highly flexible.\u00a0 As long as you decide on a way to put money aside so you don’t spend it, you’ll be okay.Tiny Budgeting is not counting on interest or market valuations to grow your wealth.\u00a0 Tiny Budgeting counts on\u00a0your deposits to grow your wealth.And this is where Tiny Budgeting relates to how you manage time.\u00a0 You cannot take your personal time to a bank or a stock exchange and invest it.\u00a0 You only get so much time and that is it.\u00a0 You cannot grow your time.\u00a0 So using a Tiny Budgeting method for managing your time means that you “bank time” out of your monthly calendar before you allocate time to anything else.In other words, when you sit down to decide what your next month looks like, decide how much time you need for yourself.\u00a0 You could draw up a calendar that uses a 24\/7 breakdown (8 hours for sleeping, 2 hours for eating, etc.) or you could just draw up a calendar that uses a daily breakdown.\u00a0 It doesn’t matter.\u00a0 In fact, you can do it both ways at the same time.\u00a0 You know you’ll work about 5 days per week so you’ll just decide what to do with the hours on your two day “weekend” (which could be days other than Saturday and Sunday, depending on your work).Using a Tiny Budgeting method, you can organize your monthly calendar so that your days off fall close together.\u00a0 You can also integrate holidays and vacation time into the calendar.\u00a0 Most people already do this naturally.\u00a0 We’ll come back to this below.How Tiny Budgeting Helps You Manage ExpensesAlthough you must always pay your Vital Expenses on time, the objective behind Tiny Budgeting is to avoid paying fees and unnecessary interest.\u00a0 Fees cover everything that goes wrong: overdrafts, insufficient funds, late payments, “convenience” fees, rollover fees, etc.\u00a0 If a company you do business with wants to increase its profits from your relationship, it will find a way to charge you fees (and interest) if it can.Tiny Budgeting is the knight in shining armor that kills those dragon fees that eat you alive.After you have paid yourself (savings) and your Vital expenses, you must take whatever money is left over and decide how you’ll pay your remaining expenses.\u00a0 I should note that while you don’t pay for all of your food in advance, you should do your grocery shopping as seldom as possible (buying in bulk if you can) and set aside an allowance for eating out.Your Optional expenses may cost less than the money you have left over.\u00a0 If that is the case then pay everyone on time and deposit the rest of your money into your savings.For people with fixed or limited incomes, those Optional Expenses get out of control very quickly.\u00a0 When you have to choose which expenses to prioritize, you have three strategies:Pay the highest interest rate accounts firstPay the highest balance accounts firstPay the most expensive accounts firstTiny Budgeting prefers the third method.\u00a0 An account’s expense consists of the interest and fees it charges you.\u00a0 You may be paying less interest on a small balance but because you were late you’re accumulating late and rollover fees.\u00a0 You have to take those fees into consideration.Also, if a creditor automatically debits your bank account when you have no money in there, you have to associate whatever fees the bank assesses with that creditor’s account.\u00a0 In other words, if you pay a $35 late charge and a $30 overdraft fee (assuming your bank pays the debit for you) plus $2 interest on an account, that account cost you a total of $72 that month.If your highest interest rate account only charged you $40 interest for the month it was not your most expensive bill, the $72 interest + fees account was.If your highest balance account only charged you $60 interest for the month it was not your most expensive bill, the $27 interest + fees account was.Budgeting systems that prioritize bills by highest balance or highest interest rate cost you money.\u00a0 You should be prioritizing by the secondary costs of the bills.\u00a0 You have a\u00a0principal cost, which may be money you borrowed or the basic cost of service, and you have a\u00a0secondary cost, which consists of the interest + fees.You need to avoid secondary costs on your Vital expenses.\u00a0 You want to reduce the secondary costs on your Optional expenses as much as possible.How Time Expenses Affect Our LivesWhen you are managing your time, you incur\u00a0time expenses in several ways.\u00a0 One common time expense is the extra time you spend driving to a destination when you are caught in unexpectedly heavy traffic.\u00a0 Another common time expenses is the extra time you spend when something breaks and you have to repair it right then and there.\u00a0 A flat tire incurs a time expense.\u00a0 If you plan to start cooking dinner at 5 PM and realize at 4:50 that the oven must first be cleaned, that is a time expense (unless you change dinner plans).However you allocate your time throughout the month,\u00a0time expenses eat away at your time budget.\u00a0 And unlike financial budgeting you cannot catch up on your time expenses.\u00a0 Time spent is gone forever and it can never be replaced.To reduce our time expenses we must:Always have a planAlways check to see if unexpected delays have developedAlways have a backup planPrepare for emergenciesA backup plan is not the same as preparing for emergencies.\u00a0 If you intend to hold a party outdoors on your patio and it rains, your backup plan is to move the party indoors to the dining room.\u00a0 If the power to your home suddenly goes out you have to use emergency lighting so that you can see in the dark.In the most general terms, backup plans usually depend on changing a venue or taking a different route.\u00a0 Emergency preparedness usually consists of stocking up on certain kinds of supplies (including money) so that you have them if you are suddenly without your normal resources.An extreme example of emergency preparedness is to buy a second car in case the one you normally drive breaks down.\u00a0 An example of a backup plan is to drive your spouse’s car to work if yours must be put into the shop for regular maintenance.Planning ahead saves us time.\u00a0 Anticipating regular uncertainties and including backup or alternative options in our normal plans also saves us time.\u00a0 Being ready to abandon plans and fall back on stockpiled supplies in an emergency saves us time, too.You cannot “earn more time” but you can “spend less time” doing whatever you need to do by being efficient and practical.\u00a0 Wasting time is the privilege of the wealthy.\u00a0 Most of us are not wealthy.How Do You Bank Time?Since you cannot literally put time into savings account and pull it out later, how can we say it’s possible to “bank” time?\u00a0 I admit this is a metaphor, but I believe it’s an appropriate way to describe what I do.Let’s say you know you have to clean out your garage by the end of the month.\u00a0 You give yourself four weeks to find a way to spend an entire day working on the garage.\u00a0 Hopefully it won’t take that long but it’s the practical way to budget your time.\u00a0 And yet, we do a lot of tasks on the weekends that we cannot do during the week.\u00a0 Wouldn’t be great if we\u00a0could put a day of our free time into a bank and withdraw it when we need to get a special project done?The way I manage time for special projects I know are in my near future is that I look for ways to take care of all that tasks I need to complete on that day,\u00a0in advance.\u00a0 It could be as simple as turning to the Internet to buy some things online that I would normally go shopping for.\u00a0 It could also be as simple as going without an hour’s sleep for a couple of weeks while I take care of small tasks.\u00a0 That frees up time gradually for me to complete larger tasks that roll over from weekend to weekend.And since\u00a0time is money I may also save up enough money to pay someone to do some things I would normally do myself.\u00a0 For example, suppose you intend to throw most of that stuff in your garage away.\u00a0 It’s not even worth having a garage sale.\u00a0 If you get an estimate from one of the companies that hauls away junk 2-3 weeks in advance you have time to save enough cash to be able to pay them.\u00a0 So this way you’re\u00a0converting your time to money and saving money.If you cannot free up enough time from your own schedule to get everything done that you need to do, then free up some money so that you can pay someone else to take some of those tasks off your shoulders.In ConclusionTime is too valuable a resource for most of us to waste.\u00a0 Anything you can do to save time, like adopting a fast, efficient budgeting method, is a great idea.\u00a0 And if you can trade your time for money or your money for time, do that as long as you feel you are getting at least equal value or more value in return.Time is the most limited resource you’ll ever have in your lifespan.\u00a0 Until our medical science reaches a point where it can extend our lifespans and our ability to live full, productive lives we have to manage our time very carefully.\u00a0 And managing time well includes managing money well.Learning rules for time management from budget management makes sense, especially when you use a simplified system like Tiny Budgeting.Did you like this article?  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