Wednesday, August 15, 2012

More Than a Budget

*This is cross posted over at Sarah's blog who will be hosting guests posts all about finances and budgeting, some with faith perspectives. Check out her blog and all the pictures of her sweet baby girls!

Since I started my blog last November, I've written quite a bit about being frugal and being on a budget. Though budgeting isn't always fun, and sometimes I would love to live more carefree like I used to, I actually get a lot of satisfaction from staying on budget and finding ways to save money. I really can't stand waste, and that applies to our finances, too! When I first moved to Raleigh, and until about a year before the wedding, I didn't really budget. I lived fairly smartly, but didn't keep track of purchases. And yes, that was freeing. But I also probably wasted a ton of money on stuff that I don't even know about, since I never tracked anything. I also had no accountability to my savings or any real financial goals besides a cushion of money I like to not dip below. We started budgeting to hardcore save for the wedding, and now it has turned into preparing for me to stay home one day. Since I make just about 50% of the income, it makes things a bit complicated. It would be SO much easier if I made less and we had less to figure out how to do without... BUT... it also gives us a wonderful opportunity to build our savings. Any bit of my money that we can quit depending on will go into savings until I stop getting a paycheck, so our savings should be pretty decent by that point. You have to look for the silver lining!

Here are some suggestions of living on half of your income, for others who may have similar goals. Keep in mind that we are not completely at that point. We have cut out about 65% of my income, but still have that pesky 35% or so left! So that means that any help you want to give in your comments will not only be appreciated by other readers, but by me, too! I can tell you this... it will take more than just a budget!

Tips for living on half of your income:

First and foremost, create a budget!  If you haven't, this is a must. Make a budget of all your bills, and use it for a month. After that, you should be able to tweak it so that it's fairly accurate. Figure out how often you will update it and keep up with it. We update ours every Monday (having a set day keeps us from forgetting!). Even if we go over on a given month, we still write everything down. That way, even if we go over budget two months in a row, we can still see if we improved or pinpoint specific line items that need work.

Start slowly! If you have the option, slowly cut back so you don't feel deprived and impoverished. We cut back a bit more each paycheck, instead of trying to cut out a huge amount all at once.

Leave a bit of wiggle room in your budget. You will ALWAYS have unforeseen expenses, so there should be a line item to account for that or else you will be discouraged by constantly breaking your budget. 

But on that note, your wiggle room money is not fun money! If it doesn't get used each month, pat yourself on the back and quickly transfer it to savings. If you high five your spouse and then head to Wendy's, you're doing it wrong (and not just because you chose Wendy's).

On that note, you should transfer into savings the money from any line item that you DON'T use up that month. If you see a trend on a certain category after a few months, lessen the amount in that category! We had a few line items that had just a couple dollars left over each month. For a while, that would just get eaten up by other categories, but that was really just careless spending. The better option is to not even know that money exists, so you won't use it for frivolous things. If you consistently have $3-4 left in your grocery budget each month, lower that line item by $3. It may not sound like much, but any amount you stop spending is that much closer to your goal!

Pay off small debts (and big debts, if possible!). If you owe on a dental bill, for example, pay it off as quickly as possible. Then the money you allotted for that each month can now go to savings. Any time you pay something off, that money needs to be put in savings, not used for another category. And certainly don't start a new category unless you absolutely have to! If you use it for something else, you're not closer to your goal of cutting out 50% of your income.

Use coupons and deals! No, you don't have to become a crazy couponing lady (though you certainly can!), but using coupons and deals on things that you NEED and ALREADY USE will help. But remember: If you use coupons and deals to buy things you wouldn't have normally bought, then you're still spending money you wouldn't have spent! Whatever money you save should be put into savings! 

After a few months of strictly living on a budget and working on the above items, find 'creature comfort' line items and start making them smaller. Again, doing this in moderation, if you have the time, will make it easier to get used to. If you have x amount in entertainment or eating out, take 10 or 20% of that and switch it to savings. Do that every few weeks until you get down to a small, doable amount. Keep in mind that, depending on your income and goals, you may have to completely eliminate these creature comforts. At least doing it slowly will make it less painful. You really need to be a cheerleader for your spouse during this, and vice versa. You will both have times of being frustrated and you have to count on one another to give reminders about why you are working to accomplish this goal. Also, focus on free things to lift your mood, like going to the park, festivals, taking walks, free outdoor concerts, etc. You will feel less deprived if you and your spouse are still doing fun things together and not just sitting in the house wishing for more money!

So what are your tips for going to one income/living on half your income? If this is something you have already done, please share in the comments anything that you found helpful!

1 comment:

  1. I love how you and your sister used to tease us mercilessly for couponing - and now you both are bigger couponers than us!! I'm very proud of how you and Steven are managing your money!!