Welcome to Day Four of “New Year, New You” Week! Just one more to go! Today we are focusing on the 4th most common New Year’s Resolution….Budgeting…or taking control of your FINANCES. Since this is, unfortunately, not one of my strong suits, I decided to turn to my friend Jordan Page at Fun, Cheap or Free for some tried-and-true tips on creating a family budget.
I really appreciate Jordan’s no-nonsense approach to this subject and how she “walks the walk” and “talks the talk.” I think you will agree. Take it away Jordan………….
Well, it’s the 2nd week of January. Has anyone besides me completely tanked on one or more of your New Year’s Resolutions?? The good news is, this is common so you’re not alone. The bad news is, this is common so you’re not alone!
For most of us, at least one resolution encompasses one of the most difficult aspects of our life – finances (ew, that F-word!). Today I’m here to share 5 simple tips that will, if you take them to heart, GUARANTEE financial success for you in 2014! (And will make it simpler than ever).
5 Simple Tips for Managing Your Money:
1. Out with the “Budget”, in with the “Spending Strategy”
A budget, for many, implies doing without and never being able to enjoy yourself. But a “spending strategy,” on the other hand, embraces the fact that you’re going to spend; it just helps you spend SMARTER. A spending strategy shouldn’t make you miserable….it should get you excited, because it’ll move you closer and closer to what’s truly important to you—living debt free and having money for what matters most.
2. Don’t work together.
Ok well, work together, but don’t work on the same thing. Let me explain better…
Picture a successful company. There aren’t two CFO’s…or two VP’s of marketing…or two Director of Ops. Sure, they all work together toward the same common goal, but ultimately, they have their own responsibilities that they handle solo so no one’s stepping on each others’ toes. Why should it be any different in your family??
Sit down and make a list of everything you spend money on…and divide it up! Don’t stop until every item has an “owner”. If both of you go grocery shopping randomly, you’ll end up paying too much. If you both randomly pay the bills, you will probably miss a payment assuming the other person took care of it. Divide and conquer!
In my family I am at home with the kids during the day, my husband works in the office all day. Here are examples of the spending duties we divided up based on our personal skills and daily environment:
Me: Groceries/meals/meal planning, kid activities (memberships, day-passes), clothes, school fees, medical bills and choosing doctors (since I’m the one driving them to their activities), general home needs (but not home repairs), paying and picking the babysitters… to name a few.
Him: Car maintenance/checkups/repairs, paying all utilities/bills/loans (except medical bills), date nights, his own haircuts, paying off the credit cards, home repair needs… to name a few.
This can be daunting, but the Fun Cheap Or Free team can help. Join us at our 3rd annual Frugality Boot Camp on January 18th (or online at your own pace if you’re not in Utah) to learn everything you need to know about simple budgeting, frugal living, and yes, working with your spouse on these nasty finances!
3. Focus on THREE budgets only.
Another great mistake I see people make is to have a dog grooming budget. Hair budget. Decor budget. Pampering budget. Eating out budget. Yadda yadda budget…so confusing! I propose consolidating it down to 3 budgets only:
- Grocery – Anything you could buy at a typical grocery store (food, pharmacy items, basic baby needs, pet food, basic beauty/toiletry items…). This should be $100 per person in your family, per month…then divide it weekly, remember? :)
- “Other” – Any other non-grocery items that you regularly spend money on (eating out, hair cuts, clothing, date nights, new cleats, car washes, dog grooming…). Divide up your non-bill, non-grocery expenses for the last 3 months and find the average to get a good start on what this budget should be.
I explain this in great detail in THIS POST.
As mentioned above, my husband doesn’t worry about the grocery budget. However, we both have our own “other” budget each week. This not only covers our “other” duties, but also gives us some wiggle room for personal fun money. I can grab lunch with the girls, he can do a round of golf…as long as it fits within our “other” budget for that week (encourages frugality!)
So what about gasoline and bills? Those are very hard to budget for, because it is what it is. Cut back where you can, but things that AREN’T included in our weekly budgets are called “Family” items:
- Family – Bills, utilities, emergencies – gasoline, power/gas/water, mortgage, loans, car/home repairs, medical costs. Set as much on auto pay as you can to make sure these bills are paid on time.
4. Break it down weekly – not monthly.
Many of us say, “Ok I will have $500 per month to spend and that’s it!”. The 1st of the month rolls around, you get a wad of $100 bills and next thing you know, it’s gone before tuesday. Pace yourself. Take your monthly budget, then divide it by how many weeks there are in that month…and now you have a WEEKLY budget! Trust me, it’s way easier to manage, and much easier to follow.
I follow the US calendar and consider my month as the first majority week of that month, Sunday to Sunday. February 2014 for example, the first week would be Feb 2 – 8 and there would be 4 weeks in that month. April 2014, the first week would be March 30 – April 5, and there would be 5 weeks in the month.
For good budget guideline amounts and how to easily break it up and track it weekly, see The simplest budgeting technique ever.
5. Don’t push yourself too hard.
Wait, whaaaa? Shocked you with this one, didn’t I? The biggest mistake I see people making is to shoot past the moon and aim for Mars! Guys, Mars is really far away and hard to get to…that’s why no one’s done it yet. When setting budgets push yourself past your comfort zone, but be realistic! The goal is to SUCCEED! If you fail within the first week you’ll throw in the towel, say “I’m bad at this budgeting stuff!” and never try again. Baby steps! Cut back a little this month. Then a little more the next. Then more the next. It takes time, like exercising a new muscle.