Hi friends! Happy NEW YEAR! Today I’m talking about something that has become near and dear to my heart over the last half of 2020. It’s not the sexiest of topics, but it’s important. So, today let’s talk about budgeting.
Most of us probably have some goals for the year ahead, and I would guess that at least a few of those goals revolve around finances. Am I right? Over the last couple years I felt convicted to button up our finances in some way, but time and time again and method after method that we tried, nothing really stuck.
My husband’s background is in economics and finance, and he manages a large dollar spend at his work. So we put him in charge of creating a system that worked for our family. We had tried services like You Need a Budget (YNAB) and Mint, but we didn’t really love either service or stick to using it regularly.
In our relationship, I am the spender and Joe is more of a saver. I am also in charge of spending most of our monthly budget (since I grocery shop, shop for the family’s clothing needs, pay the bills, etc.) and this system has provided me with much needed accountability while leveraging Joe’s awesome spreadsheet skills and ability to analyze the data over time.
Last summer Joe created a budget spreadsheet (leave your email HERE for a copy!) that we have been using ever since! It’s worked really well for our family and has been a system we can and have stuck to. Here are a few tips we have found helpful in creating a budget and sticking to a system.
Give Yourself Time
Joe went back an analyzed/categorized every purchase from March – August before we got serious about budgeting. It allowed us to see where our money was realistically being spent (not just what we thought we were spending) and areas we could cut down on/improve.
If you don’t want to go through months of old transactions, you could use the first three months as a learning period, tracking each transaction and then use the first three months to get an average for each category. Then, you can adjust your budgeted amount based on how much you think you can/want to cut.
Adjust Your All or Nothing Mentality
I had an idea in my head that budgeting meant living without anything extra or fun. But a budget can be anything you want it to be! Without a budget, our family’s finances have no focus, but with a budget there is actually MORE freedom. I can buy the pair of jeans or the shoes for the kids knowing it fits within our family’s budget for the month.
The important thing is that your budget matches your goals and values. For us, eating out is not a high priority in this season, so we hardly spend anything on dining out. But health/wellness/clean home care and personal care products are of high value, so our personal care category is higher.
Spot and Eliminate Accidental Spending
Going through all our old transactions showed us we were getting charged for services and things we didn’t even need anymore! I’m embarrassed to admit we found over $100 worth of auto draft transactions that weren’t even needed anymore.
Make a Realistic Budget
Don’t try to get down to a budget that is as low as possible. (Anyone else struggle with an all or nothing mentality?) Set a budget that seems doable to start, and then work your way to your goal budget. I knew if we didn’t give ourselves some flexible wiggle room in the budget it would be hard to stick to long term.
Set a Meeting Time Each Month
Make a plan each month to go through ALL your transactions and enter them into the spreadsheet together. Trust me, coming from the spender in our family, it’s a painful process at the beginning having all your charges laid bare, but the accountability of knowing we are meeting each month to go through our transactions keeps me on track.
This isn’t to say we are a cash-only family, but for categories in which we primarily purchased in-person (like groceries) and regularly overspent (also groceries) it was helpful for me to move to cash envelope system. I take the full grocery budget out in cash at the beginning of each month and only spend what we have budgeted. When it’s gone, it’s gone!
Make Big Goals
For me, it’s easier to stick to a budget when I’m working TOWARD something. Saving “just to save” isn’t really a huge motivator for me, so knowing we have specific things we are saving for helps me stay on track. It’s easier to move toward something than it is away!
I hope this was helpful in framing some of your budgeting goals for the new year. If you implement using Joe’s spreadsheet this year, I would LOVE to hear about it – tag me @espressoandcreamblog on Instagram showing the budgeting in action! 🙂