Wednesday, April 07, 2010

Living on a Budget

Can you believe that my husband and I lived without a budget for most of the past 14 years? How did we do it? Well, I guess we both mostly just tried not to spend much and tried to save lots. It worked fine since our bank balance always stayed positive. Sure, we did have fun and splurge from time to time, but there wasn't a plan for it.

Then in February I read Dave Ramsey's book, The Total Money Makeover. For the first time ever, we spent the month of March living on a budget. At least I did. I'm not sure about my husband. He looked at the budget I prepared and contributed to deciding on the final numbers. But I don't know if he really paid attention to his spending. The good news is, it did seem to work. The numbers mostly balanced at the end of the month (with a little tweaking here and there). So for April we have another budget to live on.

It's definitely been a learning process. Here's what I've noticed so far:
  • if you think that $5 for prescriptions is a totally reasonable amount to budget because nobody. ever. gets. sick. you can plan on at least two trips to the pharmacy in the first week, one of which is for your own allergy medicine that completely blows the budget, even with insurance.
  • pharmacy coupons go a long way in making up for unexpected expenses and after two trips and two good coupons, you may manage to stick to your budget after all. Having a budget means you get to pat yourself on the back for such dollar wrangling.
  • there are so many odds and ends of expenses that you never notice if you don't have a budget. Like yet another field trip to pay for. Or new soccer shoes for your growing fifth-grader. Or that whopping pool club maintenance fee that is due this month, but you weren't thinking about because who in Illinois is thinking about swimming in April???
  • if you have to account for spending only what you have available and it looks tight, you'll become very creative in finding money. Your dining out fund is already drained for the month? Gee, maybe it's time to use that restaurant gift card that's been languishing in a desk drawer. And hey, how about cashing in the credit card reward refund check while you're at it. That counts toward more money to spend, right?
We're only in month two and I can't give any final analysis yet. But it's definitely been an eye-opener living on a budget. I'm much more aware of our household cash flow. And I'm stunned to see how much of our income gets sucked up immediately by all those fixed expenses. Yeesh!

On the whole, it feels good to have a plan. We're on our way to controlling our money better and directing it to where we really want it to go. Sure, you can't change the course of a river overnight, but bit by bit you can channel it in a new direction. That's what I hope living on a budget will do.

Anyone else have thoughts on budgets? Budget or no budget? What do you do?

5 musings:

everydayMOM said...

Congratulations on a successful Month 1! That's awesome! Let's see... should I really admit our lack of budget living??? Hmmm...

Joanne :) said...

Sounds great! Thanks for writing it. For the longest time we had a "money just gone" category in Quicken, which we've been working to reduce.

A Musing Mom said...

Emily - hey, I admitted it! Seriously though, there's no judgment coming from this corner on those who don't have (or do have a budget).

Joanne - I like your category better than ours. We just call it "misc". Yours is more honest.

Home CFO 60564 said...

Our budget is based on a weekly dollar figure and the envelope system (for the most part). We budget in the 2010 New Years Party (crab legs and filet mignon $2/week and other things that seem little. I'm thankful that many people will understand when I say I can't afford it. Garage sales, hand-me-downs, gift cards, redeeming debit card rewards, and 'sharing - tools, kitchen supplies' has become a way off life.

A Musing Mom said...

Barb - I'm always in awe of your savvy budgeting ways. You'll be proud: I've set aside money in our monthly budgets to save for vacation and Christmas, like you're doing for New Year's Eve. It seems much more sane to do it that way.