I bet you thought I forgot, didn’t you? Last week I wrote about my non-traditional budgeting system. And I promised that I’d spend some more time talking about budgeting and grocery shopping. I had a few things to say between then and now, but I promise you I didn’t forget. Because here we are!
You might have an overall plan for your money each month – and it might be a fabulous, well-designed and realistic budget – but even the best plans can go awry in the implementation. It’s SO EASY to get off track by a latte here, a birthday gift there, or a giant electric bill. When you spend so much time looking hard at your financial situation, crafting a budget, and getting mentally on-board with the idea of discipline, having things sideline your plans can be really discouraging.
The solution is to adopt some strategies that minimize your chances of getting side-tracked. Yes, emergencies will happen. But beyond that, a few simple techniques can help you plan for those annoying little budget-busters: days when your kid comes home with a note for field trip fees, you get an unexpected water bill, or your week is crazy and you need to get take-out for dinner.
Personal Money – I’ve mentioned this before, and it’s because it’s one of my best tips. Those $5 and $10 swipes of the debit card add up fast, and if there’s two of you doing it, it happens twice as fast. Assign an amount of personal money that you and your spouse are allotted each month. At the beginning of the month, take it out in cash. Put it in your pockets, and use that money for personal purchases – coffee, clothes, getting your nails done…you get the idea. When the money’s gone, it’s gone until the beginning of the next month. Spend freely but wisely, my friend! This can be $5 or $5000 – there’s no right or wrong amount, as long as the amount is reasonable within your larger personal budget.
Use Cash – Along the same lines, commit to taking some budget categories out in cash each month (or week) and never using your card for them. This works best for small, frequent purchases that are tough to track and add up quickly. Categories that lend themselves well to the cash-based system are our monthly allocated amount for restaurants/take-out and weekly grocery shopping. You might have other categories that work well using this strategy. The best part about using cash is you get a visual reminder (an empty wallet!) when you’ve spent all the money you’ve budgeted to that category. It keeps you from overspending in that area.
Use Multiple Savings Accounts – We pay our car insurance every six months in full, because we get a discount. The same is true of our annual life insurance bills. Our various utilities aren’t monthly – they’re every 2 or 3 months and honestly I can’t ever remember when any of them are coming. At least once a year all of the bills come in the same month, which is probably in December when we’re also buying Christmas presents. We’ll call that Budget Armageddon.
My solution is to pretend the bills come monthly anyway and make a payment into a separate savings account specifically allocated for that category (my bank lets me easily add savings accounts for free). For our insurance fund, I add up the cost of our annual car insurance and life insurance bills, divide that amount by 12, and make a monthly payment of that amount into the “insurance” savings account. That way when the big bill comes, I’ve got a big chunk of money just waiting to pay it.
The utility bills are a bit of a different animal. I pay a monthly amount into a “utility account” but since those bills fluctuate with the seasons, I’ll adjust my monthly amount if it looks like I’m getting too far ahead or behind. It’s really nice to have that when the summer gardening water bill or winter heating bill comes rolling in.
Build In Margin – Things happen. Your son comes home with a birthday party invite and you need to buy a gift. You’re about to host a BBQ and you realize the grill’s propane tank is empty. Small things wear out in your home and need to be replaced. Include a little “miscellaneous” category in your budget to cover these annoying little expenses that don’t necessitate a category all their own.
Maybe even take it out in cash.
These little tips will help keep your budget on track when it jumps off the spreadsheet and into real life. Remember, you did the hard work of creating a budget. Now do yourself a favor and stick to it so you can see results!