So, I re-read the Total Money Makeover over the last couple of days. I decided to make up a budget. I hate budgeting. I’m not a person who accounts for every penny spent. But, what I did do was figure out how much money we have coming in when, which bills will get paid with which paycheck, allot our walking around and grocery money, and earmark the rest for savings. No matter how much money we have coming in each paycheck or each month, I always allot the same amount for us to use during the pay period. It gives us consistency and makes it easier to plan what we can and can’t do. Part of that amount is our allowances – the money we’ve set aside for no-questions-asked personal use for my husband and me, to be spent on whatever we want. Part of that money is the grocery money (which I finally decided to put a cap on). We tend to just go out and buy whatever appeals to us grocery-wise. That’s going to stop here and now. Lists, grocery circulars, coupons, and a spending limit enforced by use of cash only will keep me honest. We’ll certainly stock up if I see a great deal, but it’s going to have to come from somewhere else, not savings.
All this means that our savings fluctuates some every paycheck. I know that common wisdom is to pay yourself first, but the way I figure it, we are doing that by giving ourselves X amount of dollars every paycheck and no more. It forces us to live below our means and ensures that we have at least some savings every check.
One of the things Dave Ramsey joked about was his wife’s feeling of insecurity when it comes to money. He doesn’t blame her for it – she watched him lose a fortune and took that ugly ride with him – but he joked that their emergency fund had an emergency fund. Mine does, too. We have our three months of expenses laid by, but we also have that $1000 bumper that he advised be the initial emergency fund. That’s our overdraft protection so that we never have to use our overdraft protection. That’s where the money comes from for vet bills and car repairs. It gets built back up as soon as possible after it gets used. But, this way we never have to break into our real emergency fund. That one is for big emergencies only – job loss, hospital bills, that sort of thing.
I stunk at trying to budget traditionally, where you account for every penny. I just couldn’t make myself budget $7.62 for clothing every month and sock it away in it’s own little category until I need it. Then, if I needed money for something not in my budget, I had to juggle mini-accounts to try to steal from Peter to pay Paul. That’s just a big bag of Nope. As it stands now, I’ve budgeted $250 for groceries. A nice round number. None of this $7.62 nonsense. That money will get spent on groceries. If I have some left over, it gets thrown into the family money and we may be able to get pizza delivered one night because of it. I don’t have to worry about pennies and I know that, even if we spend every bit of our money for the pay period, I have been able to put money in savings. I have room built in to the budget – a big pile of family money that isn’t earmarked for anything in particular – to deal with the need for clothing, or dinners out, or birthdays. There’s enough to see us comfortably through the pay period and absorb most normal expenses. Anything unusual, emergent, or an agreed upon splurge, gets money from the bumper fund if we don’t have enough from the family money.
It’s a pretty lazy system, but it works for my pretty lazy mind. Little piles on money vaguely aimed at certain functions with lots of room to switch things around as needed, that’s my system. But, I have started writing it out.
Pay: X amount,
bill A: X amount,
bill B: X amount,
general spending: X amount,
individual play money: X amount,
savings: whatever’s left (and I make sure there’s always something).
That individual play money is important, too. Even if it’s $20 for two weeks, there needs to be some money that you are allowed to just blow. Vending machines, a few cups of really expensive coffee from a coffee shop, lunch out when you just can’t stomach the leftovers from last night, or that book that you’ve really been looking forward to. You need to be able to do some of that stuff and not have to feel guilty for it. Otherwise it becomes severe austerity and that’s impossible to stick to. Just make sure it’s a set amount and that it’s one place where there is no wiggle room. There’s no going over your limit there.
Anyway, that’s the way I budget. I pay the bills and allot what’s left to various things. It may not work for everyone, some people really can do that watching every penny thing and I am deeply impressed by them. I’m hoping to get that grocery money amount down in the future and we’ll be able to reduce the grocery budget and add that to savings. That’s what I’m hoping, we’ll see how it goes.