Finding time… to Budget

Who is responsible for keeping track of cash flow in your home? I’m not sure how or why it happened, but I’m pretty sure it’s always been me in ours.

With money management being one of the top reasons for conflict in a marriage, I think that Brandon and I are pretty lucky to share a similar view of, and approach to, money. How we save. How we spend. How we give.  How and why we sometimes fail at following our budget (!)

When I started writing this post I was ready to tell you all how I think I’m pretty good at this whole “budgeting” thing. After all – I plan and track our spending on a regular basis (in a very confusing excel table that adheres to my unique and warped sense of logic!), we strive to live below our means to allow for more flexibility, we make donations a priority… and people often seem impressed with what we are able to do on two pretty average incomes.

But you know what? After taking a closer look at our most recent credit card statement and our savings goals for the last year… I feel I need to revise my original statement from “Budgeting is something that I think I do quite well most of the time” to something more like this…

Budgeting is something I think is important – very important. Budgeting is something that I try to do well. Sometimes I do. Sometimes I don’t.

We have always had some sort of budget plan. We have a financial advisor for some of the more long term stuff (education and retirement savings) and we have managed – up to now – to avoid spending money that we don’t have (if you don’t count our mortgage – we unfortunately did not buy our home with cash – although that would have been really really nice!!). In a society that lives and breathes… or shops on “credit”, this alone could be considered a kind of accomplishment. But I’m terrified of debt so this doesn’t impress me too much. I still think we should be doing better.

In order to pay our bills, save for fun (and not so fun) things and give to a good cause or to those less fortunate than us – the first and most important step is planning. We look at how much we’re bringing in and estimate how much should be going out. It always surprises me that more people don’t do this. The simple exercise of considering income and expenses (which can be done together in 15-30 minutes) can be very eye-opening – especially when you realize how easy it is to forget expenses that don’t fit into a specific category (and in my experience one should beware of the “miscellaneous” category!).

Our plan – which has been tweaked and become more detailed over the years – is what I call our “generic monthly budget”. While theory and reality don’t always look quite the same, it at least gives us some direction and a sense of our limitations.

When building our budget, I try to take into account all the possible bills and transactions… the regular bills (mortgage, car, insurance, daycare, etc.), the necessary expenses (groceries, gas, pets, etc.), the anticipated but unknown spending (personal, kids, home) and of course the totally miscellaneous. We also intentionally set aside short term savings for donations, school fees, car repairs, etc. so that when something comes up, it’s already been accounted for (at least in theory!). And of course, we regularly talk about and “update” our goals and our limits. That’s kind of… shall we say… “key” to the process.

Based on our planning, I try to set aside time (weekly if I’m being really good) to plan and then track our monthly expenses in the not-so-simple excel chart. It probably takes me a good 30 minutes to plan out the coming month, but it helps me to get a sense of when money is coming in and when it is going out (important with automatic payments and/or savings transactions). My excel chart makes sense to me… but apparently it follows some warped sense of logic that only I adhere to. Brandon (a math teacher) doesn’t get it. Oh well. I understand what I’m trying to do with my different sections, columns and formulas. Date/Description/Planned $/Actual $/Planned Total $/Actual Total $. And…even I’ll admit it gets a wee bit more complicated when I start trying to set money aside for specific expenses like car repairs, school fees, etc. For example: Actual $ (-) car repairs (-) school fees (=) actual $. I find it easiest to keep the regular cash flow and the short and long term savings in separate accounts so I don’t get too confused 😉

So the planning is something I’m getting good at. Unfortunately… planning is only half the battle!

I’m learning that budgeting is not just about the time it takes to plan how you will manage your money. It’s managing the money – yes. But it is also about managing the daily wants and needs, the ideas and possibilities… and understanding when to say yes and when to say no.

A little more than a year ago we got a little more serious about our finances, took a closer look at our budget and decided (with certain goals in mind) that we should and could start saving more money. We got all savvy and started cutting out some of the regular expenses that we felt could go…

  • We chose to keep the car that we had just finished paying for…
  • We didn’t renew our cell phone, which was never charged, which we never used…
  • TV: we got rid of our PVR, cancelled cable, set up an antenna and subscribed to Netflix…
  • We started to watch our little “extras” spending more closely and made a bigger effort to respect our pre-agreed upon limits for different types and categories of spending…
  • We…and by we I mean “I”… started to do my groceries differently (by buying my fruits and vegetables at a different store and taking advantage of the “price match” program at Maxi – which, by the way, I highly recommend!)

We did really well… for the first six months or so(!) Then we made a series of decisions that may not be considered excessive… but let’s just say that they didn’t really match with our original savings plan…

  • We bought a small cottage (Despite being small and inexpensive… and somehow fitting into our somewhat revised financial plan… how’s that for a major budget buster?!)
  • We both got cell phones (We had to. We needed to be reachable… at the cottage… for daycare and school… Good reasons, I know… and we have great plans and only use them for text and wifi… but still… at least these ones stay charged!)
  • We renovated our front entrance (Well if we were going to patch and paint anyways… we might as well spend some more and improve it. Hmmm. Again, it made sense. So did borrowing the money from our savings to do so…)
  • Our basement flooded so we renovated our basement too (Insurance paid for most of the necessary repairs… but if you have to replace the floor, you might as well take down walls and make other improvements, right? Uh….)
  • We signed up for lawn care (huh?)
  • We decided not to repair the car one more time and start paying into a new one.
  • We renovated the cottage
  • …and NOW… we are in the process of trying to improve our back yard (to create a place that we can sit and relax and enjoy)

You catch my drift? And this doesn’t take into account the little daily spending that sometimes gets out of control. Who knew $20 here and $20 there could add up to so much money?

All this to say… we haven’t met our objective 100% even though I still think that we really should have been able to…  However… we’re probably at about 70% which I guess isn’t terrible. I won’t get into numbers but it’s nice (and rewarding) to see that making an effort to be more intentional about our spending means we have a little flexibility now.

My hope is that as we approach some pretty significant changes (ahem… reductions) to our income in the next few months that we will be more disciplined but more importantly, more intentional in our approach to saving and spending.

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