After yesterday’s post on credit cards and how Courtney and I simply don’t fight about money, I realized that I might have made the wrong connection, namely that no credit cards means no fights. That’s not right. I think credit cards can contribute to that problem because most of us have a harder time controlling our spending, but getting rid of the plastic won’t remove the money fights.
Before we budgeted, Courtney and I were worried about the restrictions of budgeting. We hated the idea of feeling like we couldn’t do stuff with our money. It just felt burdensome. Now that we’ve been successfully and faithfully budgeting for over eight years now, we’ve learned a few ideas that really help.
Budgeting isn’t Restrictive; it’s Freedom!
A budget isn’t a restriction on how you can spend your money; it’s permission to spend your money in specific ways. I took the kids to the bank over the Christmas holidays to deposit their hard-earned money. At the same time, I cashed our monthly check for household expenses. You should have seen the kids’ eyes bulge when the teller counted out the money. Katherine immediately announced, “We have enough money to go bowling!”
And we sure did! And then some.
I took the opportunity to talk to her about how we budget money, though. I wanted her to see that money is finite in terms of your individual possession of it. You have what you have and not a penny more. As I explained the budget, I could see her starting to get that “budgeting is bad” look in her eyes, so I quickly shifted direction. I told her how Courtney used to be frustrated by money. She felt pent up because she’d go spend $20 on something, and then I’d be frustrated because that money needed to go elsewhere. With a budget, however, we both decided to commit to a system where each dollar would have a purpose. So when we decided to spend $20 on something, she had permission to spend it! But the big benefit is that I no longer worried about her sinking the budget because that $20 was supposed to be spent there. Budgeting gave us permission to use our money in ways that we wanted to use it.
I feel like people who don’t budget have a greater sense of stress and anxiety about bills, as if the bills were punishments. We don’t see it that way. We cover our bills and categorize the rest and then enjoy our lives without worrying about it.
It is easily the most liberating thing we do!
Cash Systems Work
As part of our budget commitment, we went to a cash-based system. There is significant research that shows that people who spend with cash spend less money. We’ve seen that work. It’s also very easy for us to track and maintain; our major spending categories (such as groceries and clothing) have cash deposited in them each month. When the cash is gone, the spending stops. Pretty simply.
If you try to use a card, even a debit card, you need to identify a way in which you can stop spending when you cross the budget line. I find that more complex.
For those that complain about not being able to shop online, we do that all the time. When we buy something online, we take out the cash from the envelope and put it in the “to deposit” part of our envelope box. At the end of the month, we deposit that money OR use it as part of our next month’s cash. It’s easy.
Last, I have long heard people say that they can’t carry cash because they’d just spend it, I just have to say a firm and solid, “Grow up.” Please don’t take offense, but truly grow up. Are you an adult or not? Are you really telling me that you can’t walk around with $10 in your pocket and not spend it?
Make Money Real for Your Family
One big thing that we’ve learned is that the more real you make money to you and the family, the easier it is to do it. That’s why we use cash. That’s why I take my kids into the bank and have them physically deposit the money with the teller. It takes an hour each time, but the kids can see what’s happening as their money is put into the drawer. I make sure the kids do it all as well. The account is in their name, they sign the slip and fill it, and when we get home, they show mom and celebrate the increase.
When we have financial goal, I typically get a jar and we either fill it (for savings) or empty it (for debt) with real coins that represent larger amounts of money. When we paid off a car, I took a big glass jar and put in a penny for every $10 in debt we owed on the car. It was big and heavy, and I had everyone heft it. Then when we made payments, we counted out the coins and hefted those, too. It made it very real, and the whole family got excited when I would announce we had made another payment.
Budgeting makes planning easy. We just finished Christmas. I bet most people didn’t plan ahead or are trying to figure out how to pay for Christmas now. We didn’t, and we haven’t for 8 years because we know Christmas is coming. Strangely, Christmas is an annual thing. Perhaps more strangely, people seem genuinely surprised by that. For the last 8 years, Courtney and I have set aside money each and every month for gifts. When Christmas comes around, we have our budget. We know exactly what we have to spend, and we have not gone into debt over Christmas since. Budgeting makes that possible.
Make it Easy
Anymore our budget is pretty much on auto-pilot. I review it monthly to account for the minor changes, and Courtney approves it. It takes maybe 5 minutes a month. Once a year (typically late December), we sit down and figure out if we need to make any major changes for the coming year. That conversation takes 15 minutes. All told, we probably work together on our budget for maybe 90 minutes a year on the high end. Maybe.
The first few months you budget will be an hour a month. They were for us as we adjust here and shift there. But pretty soon you just know that groceries tend to cost about this and gas costs about that. So make it as easy as you can, and don’t complicate it.
On a side note, budgeting has made our lives super easy. At any given moment, I know exactly what our discretionary income is for a month. It makes it very easy to know what we’ve committed to do and how much we’ve spent of that money. It takes the guesswork out of so much of life. We don’t do smart phones, for example, because we know how much that would eat of our discretionary budget, and we’d rather have the money. We don’t drive fancy cars, eat out weekly, or buy the latest gadgets for the same reason.
Budgeting has helped simplify our lives and reduce our spending.
If you’re not a budgeting family, give a try. Expect your first experience to fail and maybe even expect a fight. Or two. The next month will be worse as you dread the budget, have low expectations, and have an even better understanding of how the money should be spent (that conflicts with your spouse!). But month three and month four? Expect it to rapidly go the other way. By month five and six, you’re in the groove. The one who likes to do budgeting (there’s always one) will take over, and that’s great. Let them. The one who doesn’t will by now start to recognize that the budget means permission to spend, not restrictions on spending. And after that… Enjoy the cruise.
Budgeting won’t end all your problems, after all a job loss is still a job loss, an emergency is still an emergency, and life still happens, but it does help. It takes out the guesswork and the stress.