I think everyone can agree that a budget plan is a good thing. Almost everyone attempts a budget plan at some point in their life. I highly doubt that anyone gets it perfect the first time (we certainly didn't!) but like anything in life, you just keeping moving toward your end goal, making adjustments and trying again. Eventually, you tweak it enough to where it works well for you. Then you keep researching and tweaking to see if you can make it easier, better or more efficient. We're in the tweaking for efficiency stage. If you're struggling to get your budget plan to work, or just need some tips on how to make it better, I can tell you the solutions to some major budget busters that almost everyone experiences at some time. If you're still new to the concept of a budget, but want to learn more, head over here to get step by step instructions on how to create a budget (just do one step a week until it's completed).
Problem #1: We're Both Spending Money and it's Too Hard to Keep Track of What the Other Person is Doing.
Solution #1: This is pretty common because when you allot $200 into a category and you're both spending money in that category, it's hard to know exactly how much is left in the budget plan if your spouse is spending as well. If you're at the stage where you make very few unplanned purchases in a week, this can be solved by a quick text to the budget holder (whoever is in charge for logging purchases into the account). For categories like entertainment and eating out where you both commonly spend, you can use a cash envelope system and just split the cash between two envelopes (we love the cash envelope system but found it difficult to do “right” (using cash in every category), so we just started using cash for the things that we normally buy in person (like groceries and eating out), then leaving categories like “presents” and “home supply closet” in the bank account since we likely will buy those things through Amazon.com or Target.com.
Solution #2: You can also try an app like Goodbudget (there are many similar apps, but I chose this one based on its high reviews and the fact that I've used it and liked it). As long as you both remember to add the amount into the app, and add it into the proper “envelope”, you can keep track of spending between two people easily like this. If you're new to doing this, set a reminder on your phone to go off once during the day so you remember to update the app with purchases made today.
Solution #3: An even easier way to handle this is to assign a person to be in charge of spending in a category. For example, I'm in charge of spending the $500/month in groceries, and my husband is in charge of spending the money for fuel, car repairs, and his clothing. If for some reason, I'm at old navy and see an amazing deal on Men's jeans, I can just call or text him for permission to spend some of that money, and then he can log the charge in whatever way he'd like to keep track.
Problem #2: I Forget to Add Things and Then Have to Adjust the Budget Constantly.
Solution #1: The secret to a great budget plan is the research time you put in before you make the budget. Our first few budgets, we forgot things like haircuts, diapers, vacations, and more! It's hard to think of every single thing you'll need to spend money on in a month. The solution to this will take an hour or more, but it will make sure that this never happens again and greatly increases your chances that your budget will be a success. First, sit down and pull up your online bank statement (or just your recent transactions). Choose the last calendar month (from the 1st to the end of the month). Grab a scratch pad and paper and log every single transaction into a category as you go. I make up categories as I go along, so when I find a transaction that I feel deserves its own category, I start one). This will take at least an hour, likely more. Make sure that you add in clothing and other categories that you think you won't need. People will often leave things like “clothing” or “entertainment” out if things are tight. But your categories aren't just for this month, they're forever. Do you plan on never purchasing another article of clothing? Just create a clothing category and add up your spending in that category from last month. You can set your balance to zero, but it's better to have it in the budget. Often we say self-sacrificing things like “I'm not spending a dime on myself this week!” but then end up spending $50 in the Ulta clearance sale in a weak moment. I'd rather you budget in a reasonable amount, then nothing. By using your last month of spending, it's highly unlikely that an unexpected need will come up.
Solution #2: If you find yourself breaking the budget plan for “wants” or temptation, you need a different solution. If the budgets been done, you've decided not to spend any money on eating out this month, and then you get invited out to dinner, that's a different story. This is up to you. You have two choices. If you don't really want to go, but feel obligated for some reason then just tell them that you're saving money and you're saving up for (Insert something cool here). We do it all the time. I have zero interest in hanging out with people who don't respect my family's dreams and goals. You don't need to spend money on me to be my friend, I won't spend money on you to be friends with you. That being said, there have been plenty of times we've broken the budget for Pizza nights out with friends, movies or fairs. At the end of the day, I would suggest that you rate the experience, your financial situation and what it's worth to you to go. I think there's a fine balance between saving for future dreams and enjoying some experiences today. We live just once. While I wouldn't condone frequent unbudgeted dinners out , if your best friend want to meet for lunch and she's giddy with excitement to see you, by all means, go spend the $10. Take it out of your grocery budget and then move on. Just don't make it a frequent event (or budget it in as a frequent event if it's important to you).
Problem #3: I Spend Every Cent in a Category the First Week and Then Have Nothing Left Later When I Need Things!
Solution #1: First off, let me tell you my number one trick to budgeting. Always budget more into a category than you actually need. Not a ton more, just a little more. This completely alters your frame of mind. If I have $300 in a month to spend on groceries and I'm constantly stressed about how I'm going to make my food dollars stretch for that, then shopping will not be fun. If I buy one giant carton of ice cream, I'll know that I've blown my budget. Then we get into “Screw it! I've already blown the budget. It doesn't matter anymore” territory. We end up spending considerably over the budget. If I budget in $500 instead of $300, then I know that I can easily come in under that amount and my mind frame is “ooh!!! I bet I can come in $200 under budget!!! Then we can put $150 to savings and spend $50 on a date night!” I'm already mentally calculating what I'll do with my savings. This makes shopping fun and invigorating and leads to excited calls to my husband (who has been well-trained to respond appropriately) saying “GUESS WHAT! I'm $30 under the weekly grocery budget!”
Solution #2: Sometimes though, if you're just getting into a budget plan, you're not really sure how much you'll need and when. So if you budget $50 for home supplies (we call this our stockroom), then you go out on the 1st and buy pens, paper, a cute notebook that's on sale, paper towels and light bulbs, you may not realize that by the 31st, you'll run out of laundry detergent, toilet paper and dish detergent. As you continue to do the budget, you'll become VERY familiar with how much things cost and when you will normally need to buy things. You don't need to wait for that though. If you use a cash envelope system, grab a pad of post it notes and make notes of things you will need to buy with that amount this month (kind of having a budget for your budget). Stick it right on the cash envelope. For things like groceries, divide the amount equally between the weeks in the month (remember that some months have 5 weeks in it). If you don't use a cash envelope system, use a notebook to sketch out a plan for your purchases. If you have $60 in the clothing budget, sketch out an idea of how you'd like to spend that $60 to get the most benefit from it. For example, snow pants for your toddler from the thrift store for $7, new jeans for you (thrift store) for $9, a dress for a wedding at the end of the month for $34. This “budget within a budget” isn't a concrete plan, just an outlook.
Solution #3: Automate everything that you can! We automate almost everything. Our stockroom is purchased online through Targets Subscribe and Save (5% off), combined with the Target Red card (5% off) and shipped right to the house for free. It's set up to send us a new shipment right about the time we run out so the amount never really changes. This makes it easy. The only categories that we really need to ration are entertainment, personal. Groceries. And clothing. For those, we just stick to the above two solutions.
Problem #4: I Plan to Eat at Home, But Then Things Come Up and We Have to Eat Out:
Solution #1: First, decide what the source of the problem is. Are the things that “come up” a failure to plan (like not thawing freezer meals, not grocery shopping, or lack of energy to cook), temptation (wanting to go out with friends), or lifestyle (unexpected overtime, shift changes etc. that get in the way of your dinner plan). Each of these have the same basic solution which is to have a black up plan. Even better? Have several back up plans! I use several back up plans for my menu planning.
Back-Up Plan #1: I keep the ingredients for one or two super quick pantry meals that can be made in under 15 minutes in the house at all times. Things like spaghetti and meatballs, chicken and cheese quesadilla (using canned chicken), and macaroni and cheese (from scratch- this recipe only takes 15 minutes and is our favorite). So if I forgot to thaw the meat, or if I have no energy to really cook, I can whip one of these up.
Back-Up Plan #2: We also have the option of “packed dinners” for unexpected overtime etc. My husband, keeps ready to eat soup and plastic spoons in his work car, along with a box of cliff bars. This covers him for both shift extensions and in a pinch can make a somewhat decent dinner. We also ALWAYS have several peanut butter and jelly sandwiches waiting in the freezer (the secret is to put peanut butter on both bread slices, then jelly in the middle so it doesn't get soggy). These freeze beautifully and are always a lunch or dinner back up.
Back-Up Plan #3: Another, less popular solution is eating out with intention and purpose. If the problem is temptation and it keeps happening again and again, don't fight it! Or at least, don't beat yourself up about it. I'd rather you budget and schedule a way to eat out within reason than to blow your budget all the time when you give in. Check out this article about how we eat out for less than the cost of cooking at home. It may be easier to say no to eating dinner out all the time if you know that you'll be able to go out on Friday and Saturday night for dinner. Remember, we're looking for a total transformation that is sustainable over time. If you currently (or in the near past) eat lunch out every day, order dominos 4x a week and have fast food routinely, you're not going to start making every single meal at home right now. Concentrate on small gradual changes.
Problem #5: It Takes Too Long To Update! If It's Not Updated, Then I Just Assume That I Have More Money Than I Do.
Solution #1: The easiest way to fix this problem is cash envelopes. In fact, you'll never have to deal with this problem again if you switch to cash. Don't let cash scare you, even when we use cash envelopes we still use the debit card to pay for some things, like fuel (I'm not unbuckling 2 kids to drag into a gas station so I can pay cash) and our stockroom (which is automatically done online). A cash envelope system just means that when you determine the amount in each budget category, you then fill envelopes up (or you can use a cash envelope wallet like the one below) with your cash. Each envelope should have a registry for it, so you can deduct purchases and have a tally of how much the envelope contains.
Solution #2: If you know that cash envelopes aren't for you, and you're willing to put in the time to adjust your budget, you can track your budget online, but you need to have a consistent routine of checking it. I use the free program Calendar Budget and think it's completely amazing (they aren't paying me to say that, but I wish they would). The Calendar Budget program is easy to use, imports bank transactions to make it easy and lets you project out your spending and income to see how todays decisions affect your future. When I first started calendar budget, I updated it every single morning right after breakfast. It took 5 minutes or less. Now, I do it weekly and it takes 10-30 minutes (the actual balancing and projection take about 10 minutes, then I take care of tasks like calling people for rate reductions, cancelling a free subscription before I'm charged etc). Once you spend about an hour getting calendar budget set up, it makes the process really easy! I had used a pen and paper calendar system that I had created myself for years when my husband told me about Calendar Budget. They created a program that works exactly like my pen and paper budget, except it's easier to update, and saves loads of time. Keep in mind, if you dread doing the budget now, it's because you're leaving it for too long unchecked and creating a bad experience every time you suffer through an update. When you update it frequently, it'll be one of the best parts of your week and you'll feel like a huge success.
Problem #6: I’m Trying to Track Categories, But I Make Purchases in Several Categories (Like Groceries and Household Stuff) at One Store (Like Target).
Solution #1: Categories are really just to help you track progress. You don't need to use the same categories as everyone else. Track the categories in the manner that you spend them. You can combine common categories. Rather than budgeting $50 in stockroom and $400 in groceries, just budget $450 for stockroom and groceries if they're commonly purchased together (for example, if you buy both groceries and stockroom stuff at Walmart). On the other hand, feel free to separate commonly combined categories (“Utilities” drives me nuts, I track each utility separately). Categories are simply a way to collect information to help you. Other categories that may make more sense to you if you track them together are groceries and dining out, stockroom and groceries, entertainment and personal money, and fuel and car repairs.
What do you think? Are there solutions or problems that I've missed?
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