Can’t keep your budget? It’s OK, we can’t either. If you asked me, I’d say we’ve always created a budget, but we haven’t always kept the budget.
Don’t get me wrong, I love budgeting. I have spreadsheets, reminders, and an in-depth system for categorizing transactions in Mint. I set aside time each month to go through all of our personal finances and see how we did the month before. I’m what Dave Ramsey would call the nerd, not a free spirit.
Here’s the thing, though: I’m married.
I didn’t really keep a budget before marriage, but after I started reading personal finance books and blogs, I realized it was important for us to try out a few different budgeting methods. That’s where the confrontations about money began. I was the nerd, and when it came to money, she was the free spirit.
Why You Need a Budget
Rule #1 of personal finance success is: Spend less than you earn.
To spend less than you earn, first you have to know how much you will earn next month. Once you know how much you will earn, you can determine how much you can spend (ideally building in some savings or “paying yourself first”). A budget helps you spread out that money across the various things you will need to buy next month.
So, after your bills and investments, you’ve got some money to spend on groceries, restaurants, clothes, gifts, furnishings, etc. Sitting down and saying, “I’m only going to spend $X on groceries this month” helps you make sure you won’t spend more than you earn. It’s the only way to stay out of debt and the only way to grow your net worth.
This is all common sense, though, right? You likely tried to make a budget already. The problem is, you just can’t seem to follow it.
Why You Don’t Keep Your Budget
We know it’s important, but we forget about it. We might even spend our time daily or weekly categorizing our expenditures and tracking our spending. A lot of us are chronic categorizers who are bad at budgeting.
Consider these six reasons why you’re probably not keeping your budget:
- You have too many categories.
- You don’t have any categories because you’re not tracking your spending in the first place.
- You track spending, but you didn’t make a budget.
- You didn’t plan ahead so your budget didn’t work (. . . wait, when is Mother’s Day again?)
- You’re so stressed out by the idea of budgeting that you give up before you started.
- Finally–if you’re married–you didn’t discuss it with your spouse.
That last one has always been my biggest problem. Every time we talked about money in our house, things got heated up. My wife does most of the spending (groceries, kid’s stuff, house furnishings, etc.), and I do all the tracking and categorizing. As a result, she feels attacked when I bring up the “B” word.
We’ve had to cope with this in a lot of different ways. We’re certainly not perfect, but we have tried a few alternative budgeting methods that work for us.
In a sense, we haven’t given up on budgeting, we’ve (actually I’ve) just taken on a little more relaxed approach. I was overreacting and more focused on perfect spreadsheets than a perfect marriage. I had to convince myself that it’s all right if the spreadsheet isn’t perfect. There is nothing wrong with having a “Shopping” category that includes all my old categories of clothes, books, kid’s stuff, games, etc. (I told you I’m a nerd.)
As a result of these tweaks in our budgeting approach, we’re a much happier couple. We’re not perfect, but we have a plan, and it works for us. Some of these alternatives have helped us work through our financial differences and put us in a position that we are in today: debt free and saving for our financial goals. But most of all, they have helped us better communicate about life and money.
3 Alternative Budgeting Methods
1. Give yourself an allowance.
When my wife brought this up, I was kind of surprised. I was worried she would think I was treating her like a kid. She didn’t think of it that way. Instead, having an allowance with no categories was freeing for her.
I still track everything in Mint and categorize transactions, but I trust her not to go over the spending limit we’ve set. This gives her the freedom to save a little on clothing one month so she can buy something for the house instead. Or she can decide to hold off on a kids’ purchase until the following month because she knows she needs to make one more grocery stop.
She tracks her spending and makes the call on where to put the money. I double check to make sure we’re not missing anything as the month goes on.
You can literally set the money aside if it helps. I like Gail Vaz-Oxlade’s “Magic Jar” idea a lot. You could easily determine this allowance, take the money out of the bank, and put it in the jar.
2. Use the Envelope System for Key Expenditures.
We’ve toyed with the idea of using Dave Ramsey’s envelope system. We know a lot of people who have found success with it. The problem is, we’re not big on carrying cash. Carrying around envelopes seems like just one more thing to lug around in addition to the needs of our three kids.
But, when we’re really worried about overspending in just a couple of categories, the envelope system works. I picked this up from Ramit Sethi’s book, I Will Teach You to Be Rich. He suggests using the envelope system on the kinds of purchases that are really challenging. So, instead of a big, complex budget, focus on a few things like dining out, clothes, or coffee and apply the envelope system. I don’t spend money that often, but the envelope system helped me a lot on several types of purchases.
Take work lunches, for instance. Typically, I bring lunch with me to work, but sometimes I forget or we run out of Lean Cuisines in the freezer. Having an envelope of cash to spend on work lunches curbed my overspending. If I forgot my lunch and the envelope was empty, I headed home for some free grub instead. It was small, but it made a difference mentally and helped me plan ahead to avoid over-spending on food.
3. Build in Some Play Money
This, for many people, is the one saving grace in their budgeting system. Budgeting can make you feel restricted and unable to spend money on the things you love. Sometimes that’s true, but budgeting can also provide the opposite feeling.
You shouldn’t have to feel guilty about every purchase you make. A budget should make you feel good about what you spend, especially if you know how much you can spend.
Instead of feeling guilty about rounds of golf and girls’ night out, build in some play money. Set aside $100-200 in your budget as “play money” or “fun money.” Just because you keep a budget, it doesn’t mean you can’t continue to have fun. Set aside some fun money and put it toward an extra pair of shoes, a trip to the spa, or that new book you’ve been wanting to read.
Give yourself a break and a little extra money to live a happy life.
Most of all, don’t let budgeting ruin your day or ruin your marriage!
(photo credit: Images Money)