Wednesday, July 1, 2015

Budgets Part 3: Sticking To A Budget

Part 3 of our budgeting series involves sticking to your budget. This is easier said than done, and nearly everyone struggles with it at some point. It's hard to turn down an invitation to something because it's not in the budget. It's hard to not buy the perfect gift for someone because it's not in the budget. It's hard to not get that really cute thing on sale at Target because it's not in the budget.
But it's so worth it in the end.

There are several methods for sticking to a budget. Some people use only cash. Some people save receipts and track expenses daily. Some people hide all the money in a different account and just give their husband a weekly allowance. Or maybe that's just me. I've spoken to many people over the years about how they stick to a budget, and everyone seems to have their own way of doing things. If it works for you, go for it! You may even need to try out a few different systems before you find the perfect fit.

For us, keeping money from my husband is essential. It just burns a hole in his pocket and he'll buy everything in sight. I have my little detailed budgets and schedule of when the bills are due and I have every paycheck planned out before the month even starts. He gets hungry at work and buys 3 sodas and a giant bag of beef jerky. If I want bills to get paid, he must not be a part of it. He understands this, and freely admits he shouldn't be allowed to manage money. Your home may be a more equal partnership, this is what works for us.

It doesn't matter how you track expenses, even if you just keep a running tab in your head. As long as it helps you stick to your budget and works for your family, go for it! We love Mint for tracking expenses, and we can use it at home or on the go. Try out a few different apps if you aren't sure, most of them are free.

Some tips for sticking to a budget:
* When you get paid, immediately pay any bills that are due. If you go straight to the grocery store, decide to wait until Monday to pay bills, or go buy that new gadget you wanted, you will be less likely to get everything paid on time and on budget.

* Decide before payday, preferably before the month begins, what each paycheck will go to. We know rent will require more than one paycheck, so we must plan to save some from the prior check. We know utilities are due mid-month, so that paycheck pays all those bills. This leaves the second week's paycheck for groceries, savings, rollover accounts, and insurance.

* Have written goals not just for savings or debt payoff, but for big ticket items you want to buy. We needed a new computer, but our toy fund wasn't enough to cover it, and all the required accessories for setup. So we wrote out a plan to take $10 off our "fun" budget each week to put in the toy fund. We agreed on the computer specs we needed, a budget for the entire purchase, and a time frame to get it done. When it came time to purchase it, not only did we have the funds, but we knew exactly what we needed and wanted and could shop around a bit for sales and get the best deal. We did the same thing with our vehicle purchase, and really anything over $100 we need.

* Set a limit on purchases you can decide on alone. We have agreed that anything over $100 must be decided on and agreed upon together, in advance. No splurging on big ticket items keeps our spending under control. In our earlier years of marriage, the limit was $20. Find a limit that works for you and your budget.

* Never pay full price if you can avoid it. Shop sales, search for coupons, wait for Black Friday or tax time deals on big purchases. Before you go grocery shopping, print out coupons or download them to your store's shopper rewards card. Just spending a few minutes online adding coupons to my Kroger Plus card saves me about $20 a week on groceries. That's $80-100 every month for browsing online! Check out my other tips on saving money on groceries.

* If it can wait, let it wait. This obviously doesn't apply to everything, but some things can be put off. We really need a couple beach towels for vacation, but this week's budget was already tight. We decided we could work it into next week's budget and give ourselves a little breathing room. If we tapped our entire vacation fun with this week's check, we'd be too tight in other areas.

* Think long term as well as short term. We budget for the entire month. But we also further break that down into weekly budgets, and extend it out for 3 to 6 months so we can better plan for the future. We have a goal of buying a house next year, so we have to plan long term savings. But if we neglect to budget each week's paycheck, we would either blow too much and get behind on bills, or pay all the bills with one check and have nothing left for food or gas. If you get paid every two weeks, budget for every two weeks if that makes it easier. We get paid every week from employment, and once a month from disability. We factor both into our monthly budget, but we ignore the disability for most of the month as we use it solely to pay rent. It even stays in a different account.

* Use multiple accounts if it makes life easier. Once you've opened up one bank account, the hard part is over. Opening a second account typically doesn't require getting all that information again (assuming you stick with the same bank). We only had to sign a piece of paper to open our 2nd, 3rd, and 4th accounts with our main bank. Now we have different accounts for bills, savings, hubby's allowance, and rent. This is too complicated for some people, but if it would make life easier to keep rent money separate for the month and just set up automatic transfers for it- then do it!

* Keep track SOMEHOW. Write it down, save receipts, download an app (there's hundreds available!), track it on a computer, print off a spreadsheet and put it on the fridge. Just do something to track your goals, progress, and spending for the month.

*Set up budget meetings. You can choose to do weekly, bi-weekly, or monthly. But set aside a time to sit down with your partner, go over the budget and any upcoming expenses. This is a great time to check in with goal progress and plan major expenses.

* Challenge each other. See who can spend the least this month, the winner gets a special prize. See who can go the longest without buying ANYTHING. This obviously wouldn't include bills, but you'd be amazed what you can live without, especially if you get to gloat to your partner. (Again, maybe that's just me)

* House shop before retail shopping. When I'm on an organizing spree and looking for something for a specific job, I first shop around the house. Can I reuse something in the garage? Could that old box in the attic be a secret treasure? Look for things around the house you could use instead of buying something new. If you must buy something, check thrift stores and consignment shops before paying full price.

* Above all, realize that budgets are ever-changing. You will never have the perfect budget. Food prices go up, income fluctuates, and expenses change over time. You have to be flexible. This is where budget meetings come in handy - you can discuss the changes and the best way to handle them. Re-evaluate your budget every few months to make sure it lines up with your actual expenses.

* And finally, don't get up. If you fall off the wagon or get off track, just hop back on! You'd be amazed at the peace that comes with being able to pay everything and still have money leftover for fun things. It's never too late to start or get back on track.