3 Ways to Improve Your Budgeting
Have you heard the saying, “the best teacher is experience?” When learning a second language I was often told by other language learners that I would have an easier time learning from a teacher who had to learn the language as I did and not from a native speaker. I was also told that I would acquire the language much more quickly when given the opportunity to experience it every day in a foreign country than I ever would in a classroom setting. I found both of these assumptions to be true for me. It was not something that came easily for me and I really had to work at it!
I find that learning how to budget can be like learning a foreign language for some of us. It doesn’t always come naturally. It is an acquired skill that many people have to work at. It requires self-discipline, consistency, and planning. The planning part I’m good at. I like to plan how to spend my money. I have had to learn how to plan to save my money as well…and how to find a system that works for our family.
Finding a program or a spreadsheet that fits each individual or family’s needs can be challenging. I have several family members who keep excellent financial records in Quicken. I found the program to be cumbersome and overwhelming. My husband grew up in a family where a pencil, a pad of paper, and self-discipline were all you needed to keep a budget. (I will note here that my husband is frugal and practical when it comes to budgeting.)
About a year and a half ago my husband graduated from grad school and we moved on to “normal” life. We already had 4 kids a few weeks after he started his first job and we had learned to live on very little. His good brains blessed us with student stipends that paid most of the bills and kept us from having to take out student loans. So, the money we had each month was all we had. If the dishwasher started on fire or the furnace broke, (both happened and more of course!), we dipped into our tax refund or our parents heard the news and a surprise check came in the mail. When there were big upcoming expenses, I would teach a class or transfer videos onto DVD to make a little extra money as needed. Otherwise, we were a one income family (and still are). We tag-teamed and kept a simple spreadsheet tracking our expenses and paid the bills. That was really it.
It seemed that once we actually had money to SAVE and to work with, I was much more willing to work at the budget. I also wanted to keep better track of where our spending was going…but still not willing to commit to any fancy programs. I found this spreadsheet here and have been using it *faithfully* for a year and a half. We modified it a bit to fit our needs. (I downloaded A LOT of spreadsheet templates and liked the simplicity of this one best.) I love that I can see where my money went each month and make a better plan for saving.
Beyond this spreadsheet however, I have found…
Three things that have helped me to stay on top of the budget:
1) Plan for anticipated expenses:
Even though I like to plan ahead, for some reason I never took the time to really plan for anticipated expenses. I would mentally remind myself that I needed to leave room in the budget in January for my daughter’s birthday, but I didn’t always set aside a specific budget for the birthday nor include it in the budget so I would hold myself accountable.
During this past year, in each month’s spreadsheet, we’ve included a category for anticipated expenses. Included in this category are birthdays, date nights, oil changes, school supplies, clothes (when seasons will be changing), dentist and doctor visits (one can usually predict amounts for regularly scheduled visits), etc. I started small with this and then after reviewing the past year’s list I found I can predict the following year’s forthcoming expenses more accurately. Of course…there will always be unexpected expenses and surprises, but that is not my focus here. :)
Once I have spent that portion of the budget and purchased or paid for my anticipated expense, I strike out the text. (Like crossing off your list. Still visible, but done!)
If you are married, chances are you both want to be involved in the budget on some level. I try to handle the majority of the budgeting in our family since I do most of the spending. :) Every family is different when it comes to this part, so I recommend finding the right fit for you and your spouse. Based on my experience, I find it extremely helpful to communicate often, perhaps at least weekly, about the status of the budget.
One of my favorite inventions of this decade is Google Drive/Google Docs. (How did I survive without it?) Our budgeting spreadsheet is saved as a Google spreadsheet which is available to my husband and I simultaneously anytime of day. (Note to self: good idea to save a copy on your hard drive.) We both work at entering our own receipts. If I notice my husband hasn’t entered any in for the week, I ask for his and put them in. Since he’s not much of a spender, it usually takes less than a minute. :)
3) Record receipts & transactions manually:
For those of you with unlimited funds or who are already amazing record keepers, this post is probably not for you. For the rest us…there is something that clicks in my brain when I type in the mortgage payment for the month or the grocery receipt for the week. I’m at least 10 times less likely to make unplanned purchases when I am aware of what I’m spending.
I always ask for my receipt and don’t let the cashier put it in the bag. The receipts go straight to my wallet, and then onto my keyboard until they are entered in. I take a few minutes after each shopping trip, after an online purchase, or when a bill arrives to enter the numbers into our spreadsheet. I remember several times (before I attacked the budget) when I waited until the end of the month. I found my budget didn’t do me much good and I felt overwhelmed at all of the receipts staring up at me.
I had plenty of new year resolutions that I did not conquer last year, but I am happy to say that budgeting was one I did conquer. I kept a dedicated and accurate budget in 2012. Now, my personal action item for the year with respect to budgeting is to become a better saver. ;) Please share your tips! How to you plan to SAVE money this year?