Last month I tried something new, I started budgeting!
I’ve always had a mental budget where I have a general idea of how much my husband and I spend in certain categories. We make sure not to spend more than we have, but having an actual spreadsheet budget was entirely different.
I’ll admit my timing in starting a budget wasn’t ideal. Going over budget in December happens to many people, particularly those who are just starting out. However, I’m glad I tried it instead of waiting until January to get started!
Budgeting is a big step in working towards our financial goals and a tool that helps our money work to work for us. It can do the same for you!
I learned a lot in my first month of budgeting, so let’s get started so I can share these learnings with you!
Life is Expensive
The more expenses I listed in our budget, the more I realized how expensive life is.
Sure, I knew this before, but there’s just something about seeing all of your expenses on a spreadsheet that helps you visualize your money moving throughout the month and just how many transactions take place.
Budgeting ≠ Broke
Having a diet doesn’t mean you’re trying to lose weight, and having a budget does not mean that you’re broke! A diet is simply a breakdown of what you eat, and similarly, a budget breaks down your spending and saving habits.
Budgeting tends to have a negative connotation. Why? Because people are more likely to budget when money is tight, therefore, ‘only poor people have budgets’.
In actuality, budgeting is one of the best things you can do to better yourself financially!
Sticking to a Budget is Hard
This is an obvious one, but sticking to a budget is extremely difficult!
I’m the type of person who likes to stock up on frequently used items when they’re on sale, particularly with groceries and toiletry products. In many cases, I’m just a sucker for a good sale!
In order to stick to your budget you’ll have to adapt. Learn to say no to some things, follow the step-down principle for others, and so on. Small changes add up to big savings, so just remember that you can do it!
Sometimes Going Over Budget is Inevitable
As much as you try, it’s impossible to budget each category 100% correctly, down to each dollar. Sure, you have some fixed costs (mortgage, insurance, car payments, etc.), but others are variable (gas, groceries, clothing, etc.).
In a typical month, however, you can make up for an overage in one category if you’re under budget in another.
I had a lot more areas go over than under in my first month (which is expected), but I will tweak our budget each month as we go to estimate the monthly costs as accurately as possible.
You Can’t Budget for Everything
Unfortunately, life likes to throw all sorts of unforeseen expenses at us. Whether that’s in the form of car repairs, medical bills, or another increased expense, they’re called unexpected for a reason.
For this reason, I chose to build in an ‘other’ category as a buffer. I also chose to partially ‘pay myself first’.
Partially paying myself first meant I had a safety buffer but still earned interest from our budgeted savings! Right after payday, I transferred 80% of our monthly budgeting savings to our high-yield savings account (one of my favorite financial finds!) and put the rest in our normal savings account.
At the end of each month, I’ll transfer over the rest plus anything left in the account. In the case of unforeseen expenses, that buffer will be there for easy access.
Keep it Realistic
When we’re ready to try something new we often have a lot of motivation and are ready to get rid of all unnecessary spending and bad habits immediately.
When you’re choosing what to cut and change in your new budget, it’s important to keep things realistic! Cutting your monthly spend on clothing back to $0, or even $50, will be a brutal shock if you’re used to spending $150 on new clothes every month.
In order to avoid that shock try to keep changes realistic, little by little, and don’t be hard on yourself if (or when) you go over budget a bit!
Make Sure There’s Some Fun Money
Along with not quitting cold turkey on any categories in your budget, make sure there’s some fun money in there too!
Life is meant to be enjoyed, not just endured. So whatever spending category feels like a reward to you—a restaurant meal, manicure, new shoes, etc., make sure to budget for something you can look forward to.
It’s a Little Addictive
If you’re anything like me, budgeting can be a little addictive and stress-inducing. It’s not necessarily a bad kind of stress, but it can be at times.
I find myself frequently checking our banking apps and budgeting spreadsheet—as in multiple times a day.
Over time I think I’ll chill out a little more (although if I’m honest with myself, when am I ever chill?), but in the early stages budgeting will be a little more involved until I get used to it and it becomes a regular habit.
Visuals Help
I created my budget using a template from Google Sheets. I tweaked it to fit our current accounts and goals and then set up our first monthly budget.
Near the end of the month, I thought it’d be helpful to add a pie chart to visually show what categories we’re spending the most in, and it’s been nice to look at the breakdown that way! I highly recommend adding a chart or two to your spreadsheet to make it easier to digest.
Update as Needed
There’s no such thing as a ‘one-and-done’ budget. You will have changes in the categories you’re spending in, the amount you spend, monthly income, savings goals, and even the look and functionality of your spreadsheet.
As you create and update your budget each month, you’ll start tweaking these little items and will make your budget your own!
Find Your End Goal
An easy way to stay on track with your monthly budget is to find your end goal and keep it in mind to motivate you throughout each month.
Since we’ll be moving into our new house later this year (that we built ourselves!), we’ve been trying to save up for a bigger emergency fund that will cover three months of expenses once we’re in our house as well as additional funds for home projects, property tax, and moving expenses.
That goal is highly motivational to keep us on track! We’re looking for areas to save money in, finding ways to stay within our spending budget, and (so far) are on track for our savings goal.
Have Regular Check-ins
Budgeting is something everyone has to be on board with in order for it to work smoothly, so make sure to have a regular check-in with your spouse to see how the budget is looking!
How often you check in together is up to you. I’d recommend at least once at the end of the month to finish up the month’s budget and make one for the next month, but a mid-month check-in or weekly check-in would also be beneficial.
I check on our budget and banking apps daily to see where we’re at so I’m not hit with any surprise charges, but you will find the frequency that works best for you!
List Your Irregular Monthly Expenses
I highly recommend putting together a list of irregular monthly expenses so you can reference your list and account for those expenses when putting together your budget each month.
Here are the irregular expenses we included on our list:
- Gifts and holidays
- Car maintenance and registration
- Tuition
- Annual memberships and subscriptions
I created our irregular monthly expense list by month, so it’s easy to see which expenses typically fall in January vs July, and so on.
Anytime you’re surprised by an irregular expense, add it to the list so you’ll remember for future budgets.
Make Your Money Work for You
If your budget is tighter than you’d like and there’s nothing left to cut, look for other ways to earn more money so you can make your budget fit your needs!
As we’ve been saving up for some of the expenses that come with moving and setting up our new house, we’ve made a few financial goals that have helped us save even more!
My two favorite tips at the moment that I wish we’d implemented earlier are to (1) open a high-yield savings account so your money earns a higher interest rate each month than a traditional savings account, and (2) get a cashback or rewards credit card if you don’t have one already.
We love and highly recommend our Chase card as you get 1.5% cashback on everything. You also get a $200 bonus and 5% back on gas and grocery for the first year! It doesn’t get much better than that—especially for a card without annual fees.
Money is a limited resource, so make sure to use all of the perks to your advantage!
Don’t Get Discouraged
Budgeting is hard work, and you’ll go through a big adjustment period as figure out what works for your family.
If you go over budget in a lot of categories, don’t beat yourself up! Figure out where the overspending came from, find a solution, and try again next month.
You will mess up, but you will improve and get to where you want to be. Just give it time!
