I wrote this post after we got our budget together for the sixth month in a row. (We're now working on nearly two years as of 8/2019!) Here are a few budgeting lessons we've learned along the way …
One practice we've continued after completing our journey through Dave Ramsey's Financial Peace University is monthly budgeting.
Last night marks the sixth month in a row we've done it, and it does indeed get easier each time, just like Dave promised.
“Giving each dollar a name” — allocating in advance how every dollar of income will be spent or saved — has a lot of benefits, not the least of which is that we finally see where our money goes from month to month.
Budgeting lessons
The first times we did the budget were a little rough. Lots of questions, and arguments about this or that.
1. Pen to paper works pretty darn well.
We've tried several different kinds of budgeting. We tried not budgeting and that fell flat. We tried several different computer-based budgeting packages, and none of them were quite as easy to keep up with as we thought they'd be, between technical hiccups and multiple steps to enter simple pieces of information.
The method we've used over the past six months is mostly pen and paper. We have a spreadsheet that we fill in, print out, and keep near the front door on a buffet. (Download the spreadsheets from here!) As we spend money, we write the amounts on the appropriate page in the budget. It gives us enough resolution to track what we need and is easy enough that we don't dread doing it.
2. It's easier to pinpoint overages.
Tracking the expenses as they happen gives us an early warning that we haven't allocated enough somewhere, or that we're spending differently than we had before.
For example, we went over a bit on groceries this past month. (It happens.) it was a matter of minutes before we figured out why. (“Oh yeah, we bought some K-Cups because we ran out of the ones we got for Christmas.” “Oh yeah, there were those new protein things you tried.” etc. etc.)
Having the budget right before the front makes it accessible when we go out the door. Doing that helps to avoid the overages in the first place!
3. A surprising amount of the budgeting process is about communicating.
When we worked through Financial Peace University, we learned that there are (broadly) two kinds of people: nerds, and free spirits. Nerds were good with the numbers and putting the budgeting together; free spirits were the more … free ones that perhaps didn't want to be pinned down so much and wanted to spend the money. (Both are needed!)
Both my wife and I had nearly equal elements of each trait from the questionnaire we took, so we just worked into a rhythm of “she draws up the budget, I look it over and tweak.”
As we work through the process together, though, we have to come to a meeting of the minds. The finances are front and center, and balance sheets don't lie. (At least ours don't!) We have to (GASP!) talk about the money and work through our issues.
I know that we didn't do nearly enough of that regularly in the past. We only talked about the money when it was a problem, and that's not good. Now, at least, we talk about it when it's indifferent. I'm hoping we talk more about it when it's good!
4. Progress is addictive; we want more progress.
A side effect of some of the tax law changes was that my paycheck went up a little bit (due to reduced withholding). We both missed this in the budget for February and March, and as a result, we were budgeting with less than the full amount.
Budgeting with 95% of your income isn't bad, of course, because it creates a buffer. (Bonus Lesson Learned: Being conservative, intentionally or otherwise, isn't bad.)
But my wife immediately put the “missing” money into our “Big expenses” fund. Instantly, this made our efforts look a whole lot better.
5. I appreciate more how my wife does the budget.
Frankly, I was foolish to complain about how my wife balanced the checkbook. Regardless of whether I thought it was right or not, it worked.
Same thing with the budget. The way she divides things, tracks things, and eventually reconciles things at the end of the month — they all work.
6. Tracking month-to-month envelope balances allows us to reallocate.
When I reviewed the budget this past month, the amount allocated to our water bill seemed low.
In fact, it was low. So low that it wouldn't cover what I knew to be the minimum bill. (We get charged for at least 5,000 gallons every two months, regardless of whether we actually use that amount or not.)
The reason it was low was that we had overbudgeted previously. As a result, we had a surplus in that envelope and didn't need to take so much out of the current month's income. That means more to go somewhere else. Yay!
7. We know that we're not out to get each other.
This is more of a general marriage observation, I suppose, but it does show up when we talk about the budget.
Arguments happen. But the one thing I do that gets us back on the right track at light speed is to step back and say:
“You're not out to get me, are you?”
Because I know she isn't. She never is.
