Wednesday, March 26, 2014

You don't have to live paycheck to paycheck

We're a family on a budget. That plays into a lot of decisions that we make. The budget is on my mind every time I make my shopping list or go to the store. It comes to mind when the check engine light turns on in the car, or when one of us gets sick, or when I start to wonder if I have a cavity in my tooth. It's on my mind if or when we go out to eat, and when we decide how to spend our free time.

But just because it's on my mind, does not mean that I'm worrying about it.
Feeding the "money pig"

Money. No matter how much you make, you have to decide how to spend it.

When you're single you make money and you spend it. Or save it. Or do whatever you want with it. And then you get married and your money is his money and his money is your money, and you BOTH have to decide how to spend it. And then you have a kid and decide to stay at home which is wonderful and rewarding and fulfilling but you have one less income and one more person and have to be responsible with insurance and savings and stuff.

You Need a Budget.

Well, you do, but I'm not bossing you around, honest. I'm just sharing with you a product that has changed the way we look at our finances.

Budgets. A lot of times a "budget" is more like a spending tracker, which can be helpful, eye-opening, and rather convicting; however, it only gives you a history and not a plan. Other budgets are specific allotments of money (or percentages of income), but they're based on the money you project to make for the month, which as we all know, can vary.

A few years back, we decided that we needed to be very intentional about our finances in order to reach certain goals. Jon was going to build us a spreadsheet budget to track our spending, but before he got started on it he decided to spend a little time looking at what software is already out there. What he found was YNAB - You Need a Budget. We did (need a budget), and we do, and YNAB has changed how we handle our money.

(Note: this isn't a paid endorsement or anything. YNAB has no idea who I am. I'm just sharing with you something that has been helpful to us. If you have a system that's working for you, awesome! If not, here's something to check out. That's all. Ok, onward...)

We never live paycheck to paycheck, because any money we make this month goes toward next month's expenses. With this method, we're always a month ahead! We didn't plan our March budget based on what we projected to make, we planned how to spend every dollar that we already made in February. If we made a little "extra" money, a little more can go into savings, or toward clothes, or that other thing we wanted to buy. If the income was a little lean last month, we don't put anything into the "fun money" or "eating out" categories, etc. The major difference is that we're budgeting actual income, not projected income.
When the 1st of the month rolls around, it's so freeing to already really.truly.tangibly have the money needed for rent, groceries, and other bills.

(Also, YNAB a really handy dandy phone app, so I enter how much I spent on gas while I'm sitting at the gas station, or my grocery bill in the parking lot. It automatically syncs with my budget on our home computer. Saweeeet.)

Screenshot from my phone app
Right now we're sort of in save-every-possible-penny mode because we're working toward some savings goals. The idea is that hopefully Future Us is going to thank Present Us for any cuts or sacrifices we have made. It's basically the opposite of instant gratification. Sure we could have a bunch of nice stuff now and rack up a lot of debt, but... that's not looking out for Future Us very well. (I'm working on a post about some of the practical ways we save money, and I look forward to hearing your tips as well!)

I have to continually remind myself that when we choose not to eat here, or go there, buy such-and-such that it's not necessarily that we can't afford it (in fact, we very well might have those dollars in the bank), but we're choosing not to. Part of the YNAB method is that you "Give Every Dollar a Job." Some dollars are sitting in the bank, but they've got a job... they might be for next month's phone bill, or next Christmas's gifts, or our next car, or the emergency fund.

We're learning to be intentional with every dollar that we have to work with (and to make those dollars work for us!). And I'll tell you what, living life on a budget (a whole month ahead!) is very freeing.

Do you budget? Have you found a system that works for you? 

2 comments:

  1. This sounds really great!
    I love the idea of a phone app!
    We took the Financial Peace University class a couple years ago, and I loved a lot of the principles in there- but to be honest, the cash model, just isn't working for us in this stage- I am going to have to check this out, seriously- thanks for the heads up!

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    Replies
    1. Dave Ramsey has so many awesome principles that we appreciate and apply, but I'm with you... cash doesn't work for us either! (If I have cash in my wallet, I spend it way either than pulling out my card! Besides, there is so much accountability with a debit card... we can see every transaction and have to admit it to the budget!) YNAB is an up front fee for the software, but all updates are free and there is no monthly subscription or anything. It's been totally worth it for us.

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