Let me start off by saying that I have always been terrible at sticking to our household budget. We write it down, we get gung-ho and ready to go, and then about two weeks later we end up messing the whole thing up. There is always a kid that needs a new winter coat and boots or a pet that needs to go to the vet (or, ahem, a trip to Target) and then, boom, budget is blown. Usually we address this by being real mature, throwing our hands up, and saying ‘screw it’ we will try again in 30 days.
This time around though we have our blinders on and we can see the light at the end of the tunnel. I mentioned in my last money post that we are sticking to a Dave Ramsey style plan. Our debt isn’t that bad but we have never paid much attention to our financial planning and future so now we are ready to put on our big kid pants get to it.
Before I start, let me say that I am not sponsored by any program, heck, at this point in my life I’m not sponsored by anyone, so all opinions are my very own. Also, don’t take any advice from me (just trust me on this) but consult an actual professional who actually knows what they are talking about. Here are some of the things that I have learned along our bumpy budgeting path and maybe you can take a few ideas away with you:
- Keep your eye on the prize:
This one is #1 for a reason. Know your goals. Ours right now is to fully fund retirement, college, and pay off our house as quickly as possible. We have stuff that we want to do besides work to pay a mortgage. Having the safety net of our paid for nest will allow us to do some things with our work and life that we wouldn’t otherwise be able to do. So focus on your goal. Write it down, stick it on the wall. Want to save up for your first home? Take a clipping of your favorite listing and tape it to the fridge. Look at it everyday as you are getting ready for work. Tape it to the dashboard of your car so you see it before you go into a store or restaurant.
- Make a budget that you can edit and that you keep handy:
I love Excel. I am a total nerd and colorful spreadsheets with complicated calculations that change when you hit enter make me ridiculously happy. Whatever works for you, use it and make it editable. Write it in pencil on a napkin, write it on a pretty chalkboard wall, write it on a whiteboard. Your budget will fluctuate throughout the month because there WILL be things you can’t foresee and so you adjust to make it work. Sit down with your partner (do not make a budget until you are both on board or it will be fruitless) or just
yourself if you are single a few times a month (we make it a weekly date) and make sure everything is on track.
- Update it immediately:
When you use some of your money, get a receipt or write it down. As soon as you get home, empty your pockets and your purse and put these receipts into your budget. There are also great online tools and (FREE!) apps like Dave Ramsey’s every dollar tool (again, not sponsored) that can make your budget go with you. I find that my old fashioned spreadsheets on my PC work best for us.
- Make it $0 at all times:
On my spreadsheet I have all of our line item expenses on the left. At the beginning of the month I put in estimated expenses in the budgeted column. As the bills come in, I update the amounts to reflect the actual costs. Then I type in that same amount in an actual column as they are paid. So for instance: for electric, lets say I estimate $150. My bill came it at only $89.10. Yay! So I change my budget from $150 to $89.10 and my actual to 89.10. The difference is calculated on the right. On the right side of the spreadsheet, I have our monthly income listed. Under that I have our total budget (the totals of all those amounts on the left side of the list). That is subtracted from our total income and then I have an amount +/- of what is left over of our income. Make sense? As I update our budget (remember it is a living/changing thing) I make sure to allot any extra to one of our goal line items on the left. Whether it be paying extra on a bill or putting more in savings. Also, if that number goes into the negative then I know that I have to change amounts in other areas and live on less somewhere to make it work. I add my envelopes onto the list in a different color and break it down by each shopping trip. That way I can track where our dollars are going. This is how our brain works, you do what works for you.
- Try to think of all contingencies:
It is easy to forget all the little things that you ‘need’ to do throughout the month. Hopefully we all know shelter, warmth, food, and basic clothing but what about haircuts, field trips, lunch money, kid activities, school supply donations (is it just me or is there is a signup genius every week)? Don’t forget these little things because they can throw a wrench in a beautifully perfect budget.
- Shopping/decorating/renovating is not an emergency:
Home renovation is high on my list of personal priorities. I have been living with a 1960s, brain matter colored bathtub for 12 years, people. Is it a necessity? No. Do I really need to fix it? No. Do I need to change it before I finish my more important goals? Yes!!! Wait, I mean no. Tchotchkes from Target are not a necessity. A new scarf is not a necessity and no reason to blow a budget. I am a work in progress and I will stay strong. If you have to just stay out of the stores then do it. I go to the park and walk if I want to get out of the house or see friends. I can go to the library if I want something new to do. They have tons of movies, music, books,
magazines, eBooks, audio books, etc and it is FREE!! Stay strong.
- Think about future needs:
We will need a new car eventually. My husband’s beloved commuter beater is rusting and sounds a little weird, the taillights leak rainwater when you open the trunk. It is a good car though and it has been dependable no matter what it looks like. Our good, nice family car isn’t getting any younger and is ready to be tagged into commuter car status as soon as the beater dies. So one day we will need a new car. Because we don’t want to be tied to debt or payments anymore means we need to save cash. Putting aside a little bit every month (think of it as a make believe car payment) will hopefully help us to get a newer vehicle when we need it.
- Cash is king:
You spend less money when you use cash. It has been studied and smarter people than me say that it is so. Use paper money when you buy things. Sure, the kid at the checkout will look at you weird when you hand him
green pieces of paper, he may even have to ask his manager what it is, but use it anyway. When you have to pay cash for items, something happens in your brain. It is hard to hand it over. You will shop less and buy less impulse items when you have real money in your pocket. I frequently put items back from my grocery cart that I don’t really need just because having them isn’t worth handing over that extra $20 bill.
- Credit cards are shiny and pretty but aren’t good for you:
They really aren’t. I have had a credit card on my person at all times since I was 16. How do you live without one? People today just simply have them, lots of them, and continue to survive because of them. But do we have to? I had two. Never carried a balance, we paid them off every month. There was no harm in it, right? The problem is that we were thoughtless of our spending because we didn’t need to think about it for a whole month. Sure, we could afford the bill, we never went TOO crazy but we didn’t NEED to afford the bill. Why pay for your stuff 30 days later? It was a huge bill that we waited to come in every month and we never seemed to have extra money because of those bills. One has been cancelled and cut up, the other one is tucked away in a difficult-to-get-to place until we get our emergency fund where we want it to be. We have a spit&handshake agreement that it will not be used unless someone is sick can’t get emergency medicine without it.
- Discount shop to make it all work:
I can’t say enough about consignment stores. They are popping up on every corner and for good reason. They are local (spend/buy local, people!!) and they are personal. I know my consignment lady by name. I take my kids stuff into this smiling, pleasant person and she sells it and gives me money. I take that money and get the things that my kids need as the grow. It is a good system. Since we are always looking to downsize our possessions, I don’t mind one bit that we usually get less than we give. Plus, my kids have gotten some cool, name-brand stuff that I would never spring for at a normal store. Don’t overlook Goodwills, thrift shops, and yard sales either. You can get some GREAT tuff for even better prices. Halloween costumes, cool retro furniture, kid clothes and coats, the list goes on and, let me tell you the secret, if you are selective and don’t buy the first thing you see you can get some really nice things for really nice prices. My whole wardrobe (minus socks and underpants – ewwe) comes from the Goodwill and most people would never guess. There is a whole nation of people with too much out there tossing stuff to thrift stores that they never got around to using. Buying ‘used’ instead of new is not only good for the planet it is good for your budget as well.
What do you do to help keep you family on track? What do you struggle with? Head over to my Facebook page and start a discussion.