- I used to think a budget would restrict my lifestyle, not enhance it, so I resisted the idea of starting one.
- But eventually my family was living paycheck to paycheck and we needed a healthier financial life, so we started tracking our spending.
- Now, my husband and I use an Excel spreadsheet to budget for the things we need and want, like travel and family outings.
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“A budget is too restrictive. It’s my definitive ‘no’ plan so that I don’t spend money. It’s the new B-word.”
This was my mindset about seven years ago, and as a result, my family and I lived paycheck to paycheck. We were on the edge of disaster, one paycheck away from being homeless.
At that point in my life, I was adamant that a budget would restrict my lifestyle. Despite the numerous discussions I’d had with my husband about the subject, I was hesitant to commit to a real budget.
Part of me thought that if I had a budget, it meant that I would be saying no to all the things I loved doing. Things like shopping, taking my kids out, and eating at restaurants.
But, inevitably, we came to a point where we needed a budget.
We were in the process of purchasing our first house and part of the agreement with my husband was that we would create a budget and stick to it.
I reluctantly agreed to give it a try; I knew that it was the only way we were going to be able to afford our dream house.
Creating the budget
The first draft of our budget was literally a handwritten list of our bills each month. Clearly, I had no idea how to set up a budget because I thought that was it – a list of bills.
As time went by, I started learning more and I slowly added more categories to the budget. I added our groceries, gas, eating out, and other day-to-day expenses. I also moved it from a list on paper to an excel spreadsheet. Here’s a template of the budget I use:
Then, I decided to start reconciling the budget against our bank account.
Checking our budget against our spending made all the difference. It kept me mindful of my spending and made me feel more in control of my money. I never noticed how much I spent on little items, like vending machine snacks or impulse Dollar Tree items. It was a real eye-opener.
Reducing expenses that don’t matter
I realised that in order for us to be able to create the life we wanted, we needed to start making cuts to expenses that didn’t matter.
This is where you need to ask yourself tough questions.
Would you rather eat fast food every day for lunch or save that money and take the family on a week-long vacation?
Would you feel happier with another blouse in your closet or do you get more joy being able to afford a nice dinner with friends?
Would a brand new car really enhance my life more than my current reliable car?
There isn’t a right or wrong answer. That’s the beauty of creating a spending plan that’s unique to you. You get to decide what’s important and what’s not.
For me, it started as a wants versus needs mindset and evolved into an ROI mindset, where the return on investment was my overall joy in my life.
We all have spending habits that we probably don’t even notice, but the money spent on those irrelevant items could be spent on something that makes a bigger impact in our lives.
So, I took a hard look at our day-to-day expenses and started making cuts on things like eating out, our grocery budget, car washes, and salon trips. Soon enough, we had extra money to allocate for things we looked forward to, like vacations and family outings.
We took more vacations, had more fun outings, and generally had a better relationship with our money. We finally directed our money to our true priorities. Is this what adulthood feels like?
My biggest budgeting lessons
There are a few things I’ve learned to do that really make my budget work.
Make it personal
Your budget should be specially tailored for your life, it’s not a one-size-fits-all tool. So, adjust it in a way that fits your lifestyle and make it work for you.
For example, if you like to eat out, put a category in your budget and set your dollar limit. If you like to travel, add that category in. Basically, tailor your budget categories to serve the life you want to live (within your means).
Make it flexible
Your budget will and should change and adapt to your seasons of life. As such, I never strive for perfection. Instead, I keep it flexible enough that it doesn’t feel restrictive and feels more like a guide instead of a sheet of rules.
If, this month, I want to move money from my restaurant category and use it for a salon visit, I can. Or maybe I saved money on groceries this month, so I can use the savings to take my family out for a local day of fun.
Spend on the important things
I look at my budget as my list of priorities translated into dollars and cents. When you eliminate the spending on items that don’t matter, it frees up money to spend on things that do. Your budget should reflect the things you enjoy so you’re motivated to save up for them.
After budgeting for many years now, I freely admit that I was completely wrong about what a budget means before I got started.
Perhaps the most important takeaway is that your budget is meant to serve your lifestyle, not to restrict it. It’s all in the way you set it up.
In the end, the intent of a budget is not to be restrictive. It’s to help you organise your priorities and give you the freedom to make decisions on where you allocate your hard-earned money.
A uniquely tailored budget helps you afford your dreams.
- Read more:
- 5 everyday budgeting tips for the 1% that anyone can use
- I was living paycheck to paycheck with over $US100,000 of debt until I made a mental shift that had been in front of me all along
- I saved over $US285,000 in my 20s without ever making a budget thanks to a laughably easy strategy I use instead
- A self-made millionaire who retired at 30 says budgeting is like dieting, and there’s a reason neither feels effective
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