So I’ve established in some previous articles how important I think it is to budget. I talked about how the most important thing before creating a budget is to decide what your most important financial goals are. I talked about the parts of the budget, the nuts and bolts of getting it put together, and how I think YNAB is the best budgeting tool out there.
A budget by itself though, is really kind of worthless.
Let’s face it, a budget isn’t going to force you to save money. A budget isn’t going to force you to eat at home every night this week.
A budget is just a plan for your money and the real win here…is to work your plan.
I am terrible about eating at home.
Growing up, we always did take out or fast food. I say always, not always. I know there are some people who literally don’t use their kitchens. That wasn’t us, but we did eat out a lot. When I got to college, and got an apartment and wasn’t eating in the cafeteria any more. It was the same thing. Now that I’m married, the single biggest struggle for me is the food thing.
I can make some extra money and set it aside to spend on something I really want…and resist spending it on anything for a long time. I can look at some clothes that I really could use, and still decide to hang on to my money. I can look at the budget and say no all day to things we need for the house.
But after a long day at work…
When I really don’t feel like doing any work to get food on the table, which is all the time, I’m terrible. I will suggest grabbing take out every time.
I’m not perfect here. This blog is written as much for me as it is for you. This is the thing that would blow my budget each month. So I get those things that are difficult for you to rein in on your spending.
So if the budget is worthless-if it won’t actually do the saving for you-what will?
The budget is there for awareness. The budget is for laying out those priorities for how you want to spend your life.
Once you’ve made that decision, it’s there to remind you.
It’s there to remind you why you want to spend less on take out(So that you can take that trip that will actually mean something).
It’s there to remind you why you don’t need to spend more on clothes this month(because you’ve committed to saving more for your retirement now, and not waiting another single month).
Where you’re going to actually do the saving is with your habits.
The budget is your plan but you have to build the right habits around your life to actually make progress forward.
If you haven’t read James Clear’s book, Atomic Habits, I highly recommend it. There’s been a lot out there about habits recently, including Charles Duigg’s The Power of Habit, but I feel like Atomic Habits takes the habit topic to the next level.
I wanted to write about 7 habits that are crucial to your success as a budgeter.
Tackling these habits will allow you to keep budgeting where others fail or just decide that budgeting doesn’t work.
Budgeting does work, but not if you don’t.
Assigning Every Dollar Before You Spend It
Most proponents of budgeting suggest this one, and I want to echo that sentiment. It’s so important that Dave Ramsey named his budget program, “Every Dollar,” after it. It’s also YNAB rule #1.
You have to decide what you want to actually accomplish in any given month. I don’t care if you’re a hard core budgeter or if you would rather think of your budget as a conscious spending plan. It doesn’t matter-either way you’re coming up with a plan for what you want this money to do before you actually start your month.
It makes your month so much more intentional. You don’t have to be perfect or be spending your money in the “right way,” but be intentional about where you want your money to go this month.
Making a Plan to Eat at Home
Or insert whatever habit it is that you need to build to be successful.
For me, the food budget just kills me. My wife doesn’t struggle with this the same way I do.
So I have to focus on my habits for the big picture win here. It doesn’t matter if I’ve budgeted a certain amount for food, I’ll still happily blow it. It doesn’t matter if I’m spending with cash so that it hurts more when I pay the cashier. I’ll pull out a card and still blow it.
For me, staying on budget with food is all about making a plan for food for the week, making a shopping list, and even prepping food for the week.
My point is that sometimes we can spend a ridiculous amount of time tweaking the budget when what we really need to do is focus on those habits where we’re bleeding money.
I’ve spent so much time in the past tweaking the budget, making it just right, then fixing it some more, only to blow it at the fast food line.
For you, you may have a weakness with shopping online and you need to build in some habits that keep you from going to those sites when you don’t need to be spending any money.
Spend 2 Minutes at the End of the Day with your Budget
Spend a little time at the end of each day with your budget. My hope is that if you spend just a few minutes each day, you can avoid those marathon budgeting sessions where you’re having to spend all of this time trying to figure out what went wrong.
I did this just the other day. Things go way busy with all of the end of year things at school where I’m a teacher and I just simply fell off the wagon when it came to checking in with our budget each day.
Then, as I try to get back with it, it’s a huge mess.
Now, if you’ve got a big enough mess on your hands, I recommend a fresh start. Don’t even mess with it, it’s not worth it. YNAB has an emergency restart button and I think it’s so helpful for people who are in such a big mess that it isn’t even worth trying to figure out. Do it, take the fresh start.
However, if you spend just 2 minutes at the end of each day importing transactions and just double checking that you’ve entered everything, you won’t ever have to spend that time catching up.
Now, just like it happened with me, it’ll happen with you too and it’s just not worth worrying about. Don’t beat yourself up, just hop right back on. But if you can spend most days with this rule, you’ll stay caught up, aware, and intentional with your money.
Check your budget before spending
When you budget, you should do it with a fresh mind. They’ve done all of those studies that talk about how willpower is limited throughout your day and the more you have to make decisions, the more that willpower muscle gets fatigued.
So when you budget, do it fresh. Then, when you’re trying to decide if you should buy something, check your budget.
Do you have money for it?
The purpose of your budget is to be intentional and thoughtful about how you would like to spend your money before the time comes to actually spend it.
You’ve already made the decision.
If you have money, go for it! If not, respect the decision that you’ve already made. Don’t depend on your willpower in the moment. You want to be in the habit of checking your budget on the go to see how you’re doing and letting that inform your purchasing decisions.
Entering transactions as you go
Checking your budget on the go and then entering transactions on the go can be tough.
If you’re like me, it takes several minutes to get out to the car and wrestle our 2 kids into their car seat. Now, of course that included checking with our oldest to see if he wants to go potty in the back of our highlander before we get him in the seat. So by the time we finally get everybody settled, we’re lucky if we don’t want to kill each other.
It’s time to get out of there. We have to move, the kids are yelling, we’re in a hurry. There’s no time to stop, pull out the receipt and enter the transaction into YNAB.
But, you should.
I don’t always, but it makes that 2 minute check in at the end of the night so easy.
I think it takes about 30 seconds. And that’s if you’ve been to someplace like target and you need to separate the transaction into different categories. If it’s just a one category transaction, I bet I could do it in 4 seconds.
Take that moment and just add it.
You’ll know that your budget is completely up to date and that you have every bit of information right now.
If you’re spending the day shopping and you like to just want for the transactions to import, you aren’t making a completely informed decision the longer you go throughout the day. You don’t really know how much you have left in your categories, so it’s best to add them as you go.
Talk with your spouse about the budget
Be on the same page as your spouse. My wife can’t stand to budget. She’s the free spirit and I’m the nerd. She can’t be slowed down by talking about our budget. It’s definitely something that we’re still working on.
But I can say this. It just doesn’t work if you two aren’t on the same page.
Come up with a system that works for you both. It seems to just work a little bit better if I come up with the budget and then talk with her about what’s going on. She just doesn’t like to be involved much. But it just doesn’t work if she doesn’t get a sense for what’s going on.
It might be that your spouse is just as opinionated as you(maybe more). You have to set aside some time every time you’re paid to decide what you want to do with this money. If you pull the rope from the same end, you’ll be amazing at how far you can go.
So no matter your level of engagement from your spouse, you have to be on the same page.
Rolling with the punches
Whatever you do. Keep it up.
Katie and I have been faithful budgeters for almost all 8 years of our marriage and I can tell you that we continue to have to fight to be intentional with our money.
I love writing for this blog because it covers a subject that I feel like comes really easy to me, but I use it to talk to myself just as much as I’m talking to you.
We make mistakes, we waste money, we fall off the horse.
But I think the biggest advantage that we’ve had with our finances is that we roll with the punches and always get back up again. We always keep going. We keep asking-what does this money need to do before I am paid again?
Roll with the punches is rule 3 with YNAB. It simply says that you make adjustments when things change.
A huge knock on budgets is that they aren’t realistic. That you’ve got to look into your crystal ball and plan out your perfect month, and then stick to it at all costs. Well, YNAB believed so much that being perfect wasn’t realistic that they turned it into rule 3.
So here’s what rule 3 is for and what it isn’t for. When something comes up- when you make an honest mistake-change the budget. Make the adjustment. Keep going. That’s totally okay.
People expect that the budget has got to be perfect for the whole month and the truth is that you’ll probably have to make little adjustments from time to time.
Dave Ramsey talks about needing to hold an emergency budget meeting when you’re needing to change the budget and I honestly think that’s pretty good advice. It’s good to talk about why you’re needing to change and of course, decide what category you’re going to pull the money from.
Rolling with the punches, or being unrealistic?
Rolling with the punches is okay, but here’s what you need to look for.
Are you making an adjustment to your budget because the month honestly didn’t go the way you thought it would? Or…are you finding yourself making the same adjustment month after month to the same category?
So, to use an example from my own life-are you adjusting the dining out category again this month, not because of an honest miscalculation, but because you haven’t been focused on the real habit of making eating at the house a priority?
It doesn’t matter how beautiful that budget is. If you’re not actually working on the habits to make the budget happen, you’ll be rolling with the punches month after month after month.
You’ve got two options-and I think they’re both okay.
Your first is to focus on the habit that will keep your budget categories in line. This is the thing that I know I still need work on.
The second choice is just to be a little more realistic about where you are with your budget right now. If you’re setting a goal that’s a little too lofty for your dining out category but you’ve just started to budget, focus on getting the budgeting habit down first.
If you’re a new budgeter, that’s actually a huge step in the right direction right there! Work on that budgeting habit. Focus on deciding where you want your money to go, checking the budget before you buy, entering in transactions as you buy-all of these things are a colossal win!
Get that down first, but be a little bit more realistic about where you’re spending right now.
Then, your next habit to focus on can be the habits that will actually physically help you get that category down to where you want it to be.
Budgeting habits
It’s tough to change every single thing about ourselves all at the same time.
Focus on one thing at a time and you’ll experience a lot more success.
This article is aimed just as much at me as it is to you, just as much to the experienced budgeter as to the new one, and I know that everyone that I talk to on the subject of budgeting struggles with these same concepts.
The important thing is to just keep swimming.
So my focus with this blog is to turn it into a conversation about our money. I have a good list going here of budgeting habits, but what habits would you add?
What habits do you struggle with the most, which are really easy for you?
Shoot me an email or add to the comments below.
Looking forward to hearing from you.
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