What do getting married, becoming a home owner and having a baby all have in common? For me, they've all taken place in the past 2 years and required David and I to be on the same page when it comes to finances. Here's what we've learned,
in no particular order:
1. Account for both yearly and monthly purchases. Part of the reason I found sites like mint.com hard to use is anytime we had a bulk payment (like homeowners insurance) it made our budget look really off kilter. There was no way (I could find anyway) to "pay yourself" each month to save up for these big payments.
A large chunk of David's paycheck each month goes towards paying ourselves for future expenses. We itemize them in a separate tab. This past year we were blessed that all the money we set aside for traveling to family for the holidays was unnecessary because of our surprise move. We ended up using that set-aside money to pay our hospital bills from Caleb's birth, which we had seriously underestimated (oops!). Each year of life experience gives us a better idea of what to budget in these areas. Other yearly expenses include: dentist, gifts, auto, medical, etc. These are things that can be sky high one month and nothing the next.
2. Budgeting can be emotional, especially if you have to come to consensus with your spouse. When David and I set up our budget, it was the first time we'd ever had to consult another person about how each dollar would be spent. In fact, with both of us being pretty frugal by nature, it was the first time we'd set up a budget beyond "spend as little as possible."
At first, I felt very constrained by having an actual dollar limit. Sometimes I had to get very creative to live with in it and many times in those early months, I blew it completely. As time went on though, I learned many strategies that helped, rarely went over in any category and often had money left over which we were then able to save or give.
Because we set up our budget early in our marriage, I can honestly say David and I have never had a fight over how much someone spent. We've had a few looong discussions over how we wanted to spend money in the future, but because we are both living under the same "rule" of the budget, we've never had a "you spent WHAT?!?" moment. That's one of the best things about the budget to me!
3. It takes time realistic numbers for each category. It took several months of tracking our purchases, explaining our goals to one another and re-evaluating the budget to find the right balance. For instance, one of my priorities is eating organic milk, meat and eggs. David supports this and gives me a grocery budget that allows for it. My challenge? To be smart enough with what's left over to also afford organic produce when I can. Your goals may be different, but find a way to both allow money for things that are dear to your heart while still challenging yourself.
3. Plug in your numbers frequently. As those who read my blog often already know, I got caught by not doing this in January. A budget is no good if you don't know where you stand in it. Even better? Put the cash you have to use for things like grocery's and eating out (easy places to go over) in an envelope.
4. Dream Big. A budget seems constraining if it's not helping you achieve some dream. We have 2 big goals that make the budget worthwhile to me. One is to pay our home off in less than 10 years. This seemed like a huge, unachievable goal when we set it, but we have seem amazing progress and are currently on track to meet this goal. Each time I deny myself something small now, it's so much easier when later that month I get to make an extra payment on our principle.
The second goal that keeps us going is giving. It can be tempting to say, "I'll wait to give until I don't have a mortgage, then I can really give". However, we believe that he who is faithful with little will be faithful with much too, so we are trying to be faithful with our little. Plus, I don't want those who are going without something today to wait until I have achieved my dreams before they receive what they need spiritually and physically.
Finding a balance between a personal dream and giving is tough. For us, we commit to give and those commitments are honored first, then our monthly bills, then extra goes toward the house.
5. When life changes, the budget will probably need to change too. Part of the reason we are so passionate about paying the house down now is we know as we add kiddos, there will be less "extra" at the end of each month. Don't try to make the same budget work for 10 years. At the very least, re-evaluate every new year. When we first started budgeting we re-evaluated every month!
6. Be creative. It's amazing the areas of our budget we've been able to cut. We still enjoy life, we just find less expensive ways to do it. We don't watch much TV so instead of cable we do netflix, we take advantage of any discounts for paying "up front" instead of month by month (we save on our garbage service, homeowners insurance and car insurance by doing it this way) and we think outside the box when it comes to entertainment. It never ceases to amaze me where we've been able to find savings now that we watch where our money goes.
7. See how simply you can live. This is a new one for me. I started realizing how much stuff was cluttering up our home simply because I got a coupon or "good deal" on it. Sometimes, that's a good thing, I love having a freezer full of meat I got a good deal on, but getting a good deal on unnecessary items is not a good deal. I didn't think I was buying unnecessary things until I started looking for ways to re-purpose what we already had around the house before buying something I though we "needed".
I've realized keeping a lot of extra "things" in the home wastes not only money, but the time it takes to organize and clean those things.
8. When it's time to buy- used items are my friend. From cars to clothes, this has been a huge savings for our family. Craigslist, consignment shops and even yard sales can be great sources of gently used items.
9. Things you only need to use once can be borrowed. This is especially true of tools. Recently, David borrowed a wood plane to help the doors in our house fit correctly. Since we'll probably never use something like that again, being able to borrow instead of buy was definitely a blessing. If you're worried about asking for too many favors, consider offering a trade. David often offers to be tech support to the lender should they ever need it.