Budgeting That Works
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Seriously. It takes sacrifice, awareness, and a willingness to be pretty honest with yourself. But budgeting is most certainly achievable. And the end results are worth it. At first I became really impatient with myself because "I'm trying to save money and pay stuff off and I have barely done that and I STILL DON'T HAVE ANY MONEY!" (Okay, I have money, but my focus shifted so I didn't have money for the non-essentials. Bye, Target.) But check out my recent progress:
1. I will own my car in less than a week (and pay off a 4 year loan with 5% APR in 3 years and 1 month). This took me paying about $2000 since the start of 2018 because I shifted my priorities in spending.
2. I will have plenty of spending money for my three trips happening in April, May, and June. And won't need to use a credit card for hotel, events, or food.
3. I will be able to build my savings to three months worth of expenses by the end of June and have a solid emergency fund to rely on.
To me, this is all pretty huge. Here are the things I tried and the reviews (🗹 works, 🆇 not so much for me):
🗹Setting a grocery spending limit & BUYING IN BULK!
I am single and live on my own, but cook for the BF and myself at least twice a week. I limit my grocery spending to about $100 a month. We buy most groceries together in bulk from our local Sam's Club, especially meat, pasta, rice, canned goods, Keurig K-cups, and snacks. You can also use Amazon and subscribe for basics like paper towels, K-cups, etc. This keeps me well within my budget and allows for small weekly runs for fresh produce, specific ingredients, or items I do not need in bulk sizes like vanilla extract. If we eat chicken twice a week then one Sam's Club purchase in bulk lasts us for about 6 weeks. We have yet to run out of K-cups in either of our households and could probably survive a Walking Dead apocalypse with the amount of toilet paper stockpiled in the BF's garage.
The number for the grocery limit is going to really depend on family size and your focus in eating. I rarely eat out anymore, and this is a sacrifice that makes a huge difference to my budget. I can wait until trips or the summer to eat out more when patio season is upon us and after I achieve my most important financial goals (tackling debt and building an emergency fund). By "focus" I mean eating goals : I had to decide between "eating healthy" or "eating cheap," in a sense. I love fruits and vegetables but many are out of season or overpriced at the grocery. I also found myself wasting food if I bought spinach, carrots, apples, clementine oranges, kiwi, and bananas because I could not eat it all. So I stick to one fruit and one vegetable on sale or that will last well purchased in bulk or that is on "markdown" at Kroger to keep costs low. My parents' garden and the farmer's market will make changes in my purchases this summer.
The number for the grocery limit is going to really depend on family size and your focus in eating. I rarely eat out anymore, and this is a sacrifice that makes a huge difference to my budget. I can wait until trips or the summer to eat out more when patio season is upon us and after I achieve my most important financial goals (tackling debt and building an emergency fund). By "focus" I mean eating goals : I had to decide between "eating healthy" or "eating cheap," in a sense. I love fruits and vegetables but many are out of season or overpriced at the grocery. I also found myself wasting food if I bought spinach, carrots, apples, clementine oranges, kiwi, and bananas because I could not eat it all. So I stick to one fruit and one vegetable on sale or that will last well purchased in bulk or that is on "markdown" at Kroger to keep costs low. My parents' garden and the farmer's market will make changes in my purchases this summer.
🆇Cash Budget
I love the idea of a cash budget and experimented with the envelope system, specifically for groceries and the "non-essentials/fun stuff" category. The basic idea is you set aside cash each month or paycheck with the maximum amount you intend to spend and put it in an appropriately marked envelope for your designated categories. If you spend it all, no more spending in that category! If you have extra, save it for next month. Unfortunately, I do all of my banking and payments through my mobile app and am not used to carrying or managing cash. Nor do I like to carry it! I tried this for February and found it to be a hassle. Or worse combined cash from different categories to pay a bill, mostly to justify spending money on something I did not need. The idea makes so much sense and can be helpful for some, just not for my lifestyle.
The BF and I do put any spare change (read: change we find in the floors of our cars and in between couch cushions...) in a jar we call "The Disney Fund." It probably amounts to about $8.31 but we love the goal of setting aside money in small ways for an expensive trip we want to take in the future.
🗹The 80/20 Budget
80% of my income is designated for bills, savings, groceries, and minimum payments towards my car, graduate student loan, and credit card. 20% of my income is allotted for non-essentials spending and/or extra money towards savings and debt. For the next two months, most of my extra money is focused on increasing minimum payments and establishing a habit of saving more than 10% of my income. I find this simple and easy to divide, and the percentages allow wiggle room without stressing me out so I can still do extra things like take my little sister to a movie or buy a new sheet mask (I 💛 sheet masks and spending 20 minutes once a week reading while looking crazy with one plastered to my face. But I digress.)
Combining this budget approach and one of Dave Ramsey's recommendations for debt helped me pay off most of my car in 2018. Dave Ramsey has several baby steps he highlights for better finances, the most important for me being: Pay more towards your smallest debt first. I consolidated three credit cards with a 0% APR balance transfer promotion on an already existing card, which resulted in having only three "sources" of debt to tackle: car, student loan, and credit card. Which relieves the stress of 800 different minimum payments and allows me to be more conscious of how I can increase the smallest debt's payment. By cutting that 20% extra spending section to less than 10%, I tripled my car payment each month. In April, my goal is to triple my monthly savings and at least double the minimum payment for my credit card.
This particular approach for budgeting or debt may not be for everyone. It works for me because I wasted about two years way too stressed about debt and money without making any significant changes. So saying no to getting drinks with friends, a glass of wine with my dinner out, buying new clothes, getting Starbucks, and easy Amazon Prime orders meant I could use 20% of my income more wisely and intentionally.
🆇The 50/30/20 Budget
Check out this great Pinterest chart to explain 50/30/20. This did not jive with me and the application stressed me out! 50% of monthly income is designated for bills, saving, AND debt. Unfortunately as I rent and live on my own, 50% of my monthly income covers rent, utilities, a tank of gas, and a small grocery trip. For those with less debt or a more substantial savings fund, this could be do-able and a great guideline!
Combining this budget approach and one of Dave Ramsey's recommendations for debt helped me pay off most of my car in 2018. Dave Ramsey has several baby steps he highlights for better finances, the most important for me being: Pay more towards your smallest debt first. I consolidated three credit cards with a 0% APR balance transfer promotion on an already existing card, which resulted in having only three "sources" of debt to tackle: car, student loan, and credit card. Which relieves the stress of 800 different minimum payments and allows me to be more conscious of how I can increase the smallest debt's payment. By cutting that 20% extra spending section to less than 10%, I tripled my car payment each month. In April, my goal is to triple my monthly savings and at least double the minimum payment for my credit card.
This particular approach for budgeting or debt may not be for everyone. It works for me because I wasted about two years way too stressed about debt and money without making any significant changes. So saying no to getting drinks with friends, a glass of wine with my dinner out, buying new clothes, getting Starbucks, and easy Amazon Prime orders meant I could use 20% of my income more wisely and intentionally.
🆇The 50/30/20 Budget
Check out this great Pinterest chart to explain 50/30/20. This did not jive with me and the application stressed me out! 50% of monthly income is designated for bills, saving, AND debt. Unfortunately as I rent and live on my own, 50% of my monthly income covers rent, utilities, a tank of gas, and a small grocery trip. For those with less debt or a more substantial savings fund, this could be do-able and a great guideline!
🗹STOP USING YOUR CREDIT CARDS.
I feel like this one requires no further elaboration... email me if you have questions :).
🗹Track your spending
About 100 apps for your phone exist just for this reason. Clarity, Trim, Mint, GoodEnvelopes... Do some research. I personally like writing mine in my bullet journal in addition to Clarity because it creates another layer of accountability and awareness regarding my purchases.
🗹Set goals
If you don't know what you're working towards, you probably won't ever see changes or progress. Sit down and decide what your ultimate goal is. Save for a trip? Build an emergency fund? Reduce your spending? Stop eating out? Pay off debt? Decide what matters to you first and then you can experiment with changes that will help you get to the place that you want to be. For me that place is debt-free, with more experiences and less things.
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