Don’t you just hate when people start talking about “budgeting.” I mean who ever wants to delve into that topic? (Except for my friend JaNae – she could talk finances all day. It’s inspiring.) For the rest of us, the word budgeting can bring on feelings of stress. And guilt. And a desire to buy something before the budget starts. The word budgeting can make you feel that you should be spending less money, tightening your wallet, never traveling, and eating every single meal at home. Or at least that’s how it used to be for me. But financial freedom is knowing what we spend our money on and why. Change your budgeting mindset with these six EASY steps to guilt free spending.
Money is for Spending…Just Not On Everything
I’ll admit, I’m a pretty good spender, as far as it goes. I can forgo eating out for lunch, I shop smart for groceries, and I have only bought one pair of shoes in the past year. I am proud of how low maintenance I can be.
Until it comes to those things that I love to spend money on. Things like travel, dinner out, or a new snuggly blanket. These have come to feel like needs. I used to update our budget to try to cut each of these parts out of my life – only to overspend again and again. It was frustrating, discouraging, and usually just caused me to stop tracking/budgeting altogether.
Here’s the thing. And this is going to blow your mind. You can spend your money. What??!!!!! Yes. I’m here to let you know that it’s okay to spend your money, and that you aren’t a terrible person if you don’t invest 90% of your income after paying basic bills.
The point of budgeting is not to cut off all spending. It is to track your spending, and help you to keep your goals. The moment you make a goal, you know what you can and should spend in each area. And your goals should include those things that you admittedly will always spend money on. After all, life is for living – and very few of us are good at living without spending a little money.
Determine Your Priorities: What Do You Most Want Your Money Going To
Usually when people start talking about saving money, it tends to be about investments that will offer financial freedom in old age. This is important, and something I’m passionate about. This should always be a priority. However, it is not the only priority.
Living is its own investment and offers unique rewards. We all live in different ways. Everyone finds joy in different things, but almost all of those things take money. (Except for those of you who literally just find joy in saving money. Congrats to you.)
Consider your priorities when it comes to money.
What motivates you to go to work?
What do you look forward to after a long day or week?
Is it a spin in your fancy new car? Is it the latest Apple gadget? It is a hot meal prepared and clean up by someone else? Think about it, and list out your money-spending habits by how much joy they bring you. This will help determine what your particular budget looks like (after all of the necessary bills get paid).
We drive a beat up 2000 Toyota Corolla. It’s old. It’s loud. And the ceiling fabric is disintegrating. But, Ryan bought it with cash 12 years ago…so we keep driving it. I’m proud to have never gone into debt for a car.
BUT, that doesn’t mean I never spend money, or that spending money on cars is bad. I simply spend money differently.
We both thrive when visiting new places, and we get out of town every chance we have. And we don’t travel cheaply. We tried do do things inexpensively one time in New York City. We skipped the plays, the fun restaurants, and even the Statue of Liberty. I know – lame. We won’t make that mistake again. We have decided that we are willing to spend extra money on this part of our life. It is simply a higher priority on our list than a new car.
Start Actually Tracking Your Expenses: Know What Your Money is Doing for You
In spite of many attempts at expense tracking, I got to the point where I had to admit that I never actually knew where our money was going. I knew we were avoiding debt, and being careful-ish, but I also knew that things were slipping through the cracks. I needed to try something new.
You’ve heard of those Premium budgeting apps right? The ones that cost money in order to save money? I’ve mocked them, because they are just the type of thing I proudly steer clear of.
Well, after 3 years of not actually tracking anything, we decided it would be worth the investment. We signed up.
I started using YNAB. I love it. It stands for You Need a Budget and it’s a fantastic budgeting, planning, and expense tracking tool. You get an extra free month with this link, so you can try it out and see if it’s a good fit for you. (There are plenty of other options, this is the only one I have personal experience with.)
If it seems a little overwhelming at first, push through. It’s only because it offers so much. Just start plugging in the set income and expenses you know about, and work through the rest later. I recommend watching the videos, explore their learning resources, and if you have any questions, please feel free to contact us!
Budgeting is All About Spending Smarter
The feature that I love very most is that it allows you to set goals for literally every single category you could ever think of. Stop wondering if you will have enough to pay your bills after the extra spending. No more skiwampous spending through the holidays, only to have regrets come January 1 about the state of your savings account.
You can plan for Halloween costumes and candy, neighborhood gifts, Christmas cards, and Christmas gifts for your children. If you want a new car in 3 years, it will calculate exactly what you need to save each month. This is where your priorities come in to play.
The most important thing that I learned from switching to YNAB is that budgeting is not about slashing your spending. Not entirely, at least. Budgeting doesn’t mean no spending – it simply means spending smarter. It means setting goals and being in control of exactly where you actually want your money to go.
Kick Off Smart Spending with these 6 Ways to Start Your Budget
I have compiled a list of 6 things that will help you to not only start a budget – but to want to start a budget.
Don’t wait for the New Year. Enjoy the holiday spending, by knowing exactly what you can spend. These can be done with or without YNAB. (If you are looking for a free option, I’ve enjoyed Every Dollar in the past.)
1. Plan Time for Financial Planning
Set aside an hour for financial planning with your spouse. Set the timer. These are the basics, and you guys will want to be together to decide what is priority – for each of you. A lot of disagreements in marriage come from spouses not being on the same page when it comes to finances. Avoid the strife and get this part done together this together.
2. Be Honest About Your Spending
I’d like to pretend that I will never buy a new pair of shoes again, but the truth is – I will. Make a category for shoes, and plan ahead.
Stop telling yourself this is the last time you will ever need to buy Shampoo and Conditioner, or that you won’t go on a trip for a year. People don’t get over spending habits overnight. And like I said – spending habits aren’t necessarily bad. If you plan ahead, you won’t be as likely to overspend.
3. Determine Your “Out of Control” Spending – and Cut Back
Cut back on those categories that you realize are out of control. Are you spending $600 a month on clothes. Accidentally. Again and again. Maybe look at your closet and decide how necessary that is. If that is your habit, set a new goal that is, at least, less than $600.
Try spending only $300 on clothes. (Actually, spend less. I mean, if you really need to spend $300 a month on clothes, could you at least let me know what you are doing with the rest of your clothes to make room in your closet? I have and always will love hand-me-downs).
4. Don’t Have Any Extra Money Floating Around – Assign Your Money a Job
Give every single dollar a job. Floating dollars are spent dollars – because it takes away the accountability. I cannot carry cash around, because I know that literally no one but the store clerk will ever know how it is spent.
If you use a credit card, only spend what is accounted for in your budget.
If you spent from your bank account – make sure it has been planned ahead.
And if you have any extra money after all expenses and priorities are accounted for (which I hope you do), put it into a savings account.
5. Know What You Are Saving For
Speaking of savings accounts, make these specific. This was one of the best things I did.
We used to just have a general savings account, an emergency fund, and a car fund. But, as we started breaking down our plans for the future, we realized that we wanted to save for our kids futures – missions, marriages, school, etc. We also considered things we wanted to do to fix up our house. And that we would need to replace our air conditioning unit someday. You get it.
By specifying our savings accounts, down to the nitty gritty detail (which YNAB makes so easy) we have found actual, real-life joy in saving.
For some reason, saving for the distant future can seem so…distant. It’s not a goal right in front of you, and I think we all tend to hope things will just work out. But when you realize how many things you are actually saving for, and how soon you will need it, you might just be okay with wearing what’s in your closet.
6. Plan For The Lame Things You Don’t Want to Spend Money On
For some reason, most of us love to spend – but only on certain things. My money can flow willingly into the hands of a lovely restaurant and I’ll never look back. But the next week when I need the inevitable oil change at the same price, I become stingy as can be.
You don’t have to enjoy paying for oil changes, car registration, or back to school fees – but you will always have to.
So, plan ahead and put it in your budget. Set a goal for how often these not-so-fun expenses come up, and let YNAB divide it for you. We currently set aside $6.37 a month for oil changes. Not that bad – right? A lot better than dipping into my car savings account – or worse – my travel fund!
Spending Money Makes the World Go Round
Spending money is not innately bad. Every single person who makes money does so because someone else spent it. Budgeting isn’t about cutting off all of our spending habits and staying at home to stare at our growing emergency fund. In one of my favorite quotes from the Broadway play Hello, Dolly!, Dolly exclaims that money “should be flowing down among the people, through dressmakers and restaurants and cabmen, setting up a little business here, and furnishing a good time there.”
I definitely agree. As you start tracking your expenses as part of your new budget, I think you will enjoy this spending more – even if you are spending less. The spending will feel more legitimate and deserved.
And it is – because you have planned, you have sacrificed, and you have determined where it is that you want your money to go. Happy spending!
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