One Hundred Dollars a Month

Last year, for the first time ever, I created a budget for our family.  I know that probably sounds weird, because most of you already do this, but I am not lying when I say it took me three days {3 DAYS!!!!} to hammer out our family budget for the year.

I’ve always been good at keeping a strict grocery and travel budget, but everything else, eh, not so much.  I mean, I knew what we’d generally pay for things like housing, utilities, clothing and gas, but I have never actually written out a budget plan for an entire year.

I learned that sticking to a budget is hard…and not in the areas you think.  Last year, I decided to limit myself to $100 a month personal spending allowance.  I thought that would be super tough, it totally wasn’t, though.  Turns out, that’s not the area I was hemorrhaging money {like I had originally thought}.

Instead, it was the passive spending that got me.  The utilities for the house…flip on a light, turn up the heat, stuff that you are not immediately shelling out cash for.  AND, the stuff that I took as fact, like how much our car insurance and homeowners insurance cost.  I needed to be more diligent about shopping around for that stuff…like at least every 6 months to ensure I was getting the best deal.

After a year of a budget, I know that creating one is totally worth it.  Monitoring where every.single.penny goes gives me concrete areas that I can trim, cut out, and then use the money for purchases I actually want to make…like paying down my house, or buying a plane ticket to spend a week on the east coast.

By far the hardest part about creating a budget is actually sticking to it.

Here’s how I did it:

Start by tracking every penny you spend.  Keep every bill, every receipt and then log it.  You can use online budget software or Excel–heck, go old school and do pen and paper.  You might be surprised by how much you are actually spending on things.  This step is going to take some time, but it means you won’t be arbitrarily assigning amounts to any one category.

Now, assign each purchase into a category.  You’ll want the basics:  Mortgage/rent, water, sewage, trash, gas, electric, groceries.  From there, you’ll have to personalize it.  If you want an entertainment budget that is separate from miscellaneous spending, do it.  If you want a travel budget, make that a category.  You may want to break down car expenses into car payment, car repairs/maintenance, gas, insurance, etc.  In fact, I reaaaaaallly recommend breaking everything down into the smallest possible category, so that you can see exactly where your money is going.

Here’s a list of categories to keep in mind {in addition to the ones I’ve already listed}:

• Medical bills
• School expenses
• Prescriptions
• Savings
• Retirement
• Clothing
• Toiletries
• Household repairs
• Homeowners/renters insurance
• Association dues
• Annual subscriptions {newspaper, magazine}
• Television
• Internet
• Gym memberships
• Pet costs {food, vet, grooming, etc.}

After categorizing, and assigning CURRENT spending to each category, you’ll be able to immediately see where you can improve.  Here’s the tough part: assigning what you plan to spend versus what you are currently actually spending.  This is where I think most people start to sweat.  Applying restrictions stinks, plain and simple, but money in has to at least equal money out.

I think the key to sticking to a budget is to balance realistic spending AND saving without over-deprivation. It’s like the whole diet thing–it’s very hard to have self-control when you are genuinely hungry.  The same goes for a budget–you have to give yourself a bone–which is why last year, I still got $100 of personal spending.

Once the budget is in place, for the first little bit, use CASH.  This will hold you accountable.  Set your household bills to auto withdraw each month, though, it’s still SUPER important that you enter those numbers into your tracking log each month, and pay cash for the rest.  No money, no spendy.  If you are an online shopper, like me, buy yourself monthly gift cards, load money onto a prepaid Visa, or deposit money into your Paypal account.

At some point, you’ll want to find your motivation for setting a budget.  Are you over-spending and need to reign it in?  Why are you overspending?  Do you need to make more money, or you are you trying to pacify yourself with purchases? Maybe you are working toward saving for something?  How can you give yourself a constant reminder of the prize?  Maybe print out a picture of your travel destination {or whatever the prize} and tape it to your wallet?  These are kind of heavy questions, and I will warn you from experience, they get a little uncomfortable.

I don’t know about you, but for me, the goal was to stop wasting money on things that I didn’t need.  A lot of that just fell into place when I realized where all of the money was going.  My budget became a starting point for ways I could save even further–kind of like a weird little hobby.

Do YOU have a budget?  How do you make sure you stick to it?

~Mavis