Making your first budget (or your second or third) can be frustrating.
Earlier this week I told you about the moment, or rather process, when I realized I needed to change my financial situation. Making a budget that worked for my family was also a long process. I’d like to share it with you, so you can avoid the mistakes I’ve made along the way.
The Pre-Married Budget
When my husband and I were in premarital counseling, our pastor made us make up a budget. That first budget was a joke, now that I look back on it. We took the amount of money my husband made and subtracted all of our expenses. When we got to $0, we called it good.
Unfortunately our budget didn’t take into account things like hair cuts, car repairs, and new clothes. Or even used clothes. We wrote it down to show our pastor, and that’s the last time we looked at it. We obviously didn’t get off to a good start.
Budgeting in the Early Married Years
In our early marriage, I was really into Larry Burkett and what is now Crown Ministries. Larry, and now Crown, have a guideline budget tool based on suggested percentages of income for each budget category, so I used it as a guideline.
Unfortunately, our minimum debt payments were 15% of our income, instead of the suggested 5%. And our total housing costs were more than the suggested 36%. Still, I was determined to make the budget work, so I started slashing budget categories.
What we ended up with was pretty unreasonable. $85 a month for groceries. $20 a month for car repairs. (We drove a ‘76 Datsun). Still, we pretended everything would work out. And we never once lived within our budget.
Budgeting During the Commission Years
My husband worked in commission sales for many years. In my opinion, there’s nothing harder than trying to make a budget when you don’t know what your income is going to be from month to month.
Still, I figured out a way to make a budget that worked for us. I think it would have been a good thing, if I had used the right tools to track our budget. But I didn’t know about the wide variety of budgeting tools available, and I was trying to use Quicken, which didn’t do what I wanted it to do.
That’s not to say Quicken is a bad program, but it wasn’t the right one for me. So that budget failed too. You can’t stay on a budget if you don’t keep track of what you’re spending.
The Budget Today
We’re still working on fine-tuning our budget, but we finally have a system that is working pretty well. My husband’s income is fairly regular, which makes it easier to budget. I’m using Y-NAB, which does exactly what I need my budget tool to do. And we’re committed to getting out of debt. I have high hopes that this is the year my budget works for me!
This is the first in a multi-part series about the things I’ve learned from my budgeting mistakes. Stay tuned next week for more in-depth posts about budgeting on a variable income, dealing with an unreasonable budget, and finding the right tools to use.
Do you use a budget? What are some of the problems you’ve encountered when trying to budget? How did you deal with them? Don’t have a budget? Do you not want to use one, or is something holding you back?
Photo by Betsssssy.
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Yep – hubby and I use a budget & love using a budget. It takes the stress out of managing our household finances – because we have a game plan. We also take a look at our budget twice a year, to update it, if necessary. A budget is definitely not a set in stone – static type thing. It has to grow and change as our family’s circumstances grow and change. Terrific post Lynnae!!!
I think budgeting is definitely a learn-as-you-go process.
The topic of a budget never came up in our premarital counseling.
As a couple, we didn’t really start discussing it until a few months in to our marriage.
Live and learn!
I use a budget now and wouldn’t go a month without one. Back before I’d paid off alot of debt and my expenses exceeded my income, I’d start one and get discouraged and then stop. For anyone in this situation, it is best to continue to use a budget, even if it’s not pretty. You at least know where your money is going for the month.
I have tried budgets before, and for our income which flucuates it is hard to do. I do better with tracking our expensese and knowing exactly how much is needed.
Interesting post. I also don’t think those percentage things work. But they are a good starting point.
Ha! I haven’t even SEEN the word Datsun for 15 years! LOL
Our budgeting process has tracked very similar to yours. One thing I started doing years ago that helped was to take a certain amount of cash out and use it for groceries. That one category always had the most fluctuation in our budget and having a set amount of cash, mostly, helped us regulate the spending.
I’m just looking forward to getting debt free and starting a new budget! Woo Hoo
Before I got married, I used a homemade Excel version of the Envelope system to budget.
With two incomes and no kids, my husband and I don’t currently budget, but we do pay ourselves first (into savings and retirement) and track expenses. I think once we’re down to one income and start our family, I’ll go back to my Excel system.
It wasn’t until we had been married a few years and had a baby on the way that we started thinking about budgets.
It has been an ongoing process and we continue to learn through trial and error, but that decision to try a budget made a huge difference in our lives.
We started to look at our spending differently and started to make wiser choices with our money.
Now, I am happy to say that we not only live well within our budget, but we also find “extra” to save, spend on family outings and give to charity. That is a nice feeling to know you have a little something extra in the bank, it makes the difficult process of budgeting seem less like a chore when you can see the results!
Take Care
LJ
I’m intrigued by the budgeting in the pre-marital sessions. It’s a reasonable idea – although it does make the assumption that you aren’t currently living together – but you need someone who knows what they’re doing. Did the pastor point out the things that you missed out?
@plonkee – I’ve always thought our premarital counseling was really good, EXCEPT for the financial preparation. I remember the pastor pointed out a few things, but honestly, we could have used a multi-part class focusing entirely on finances. We were soooooo clueless.
Oh well, at least you know what you’re doing now. Good personal finance classes seem to be pretty difficult to pull off.
All,
As the PR manager for Quicken, I hear from a lot of folks that Quicken Personal Finance Software isn’t for everyone. Many don’t need all the heavy tools, and are looking for an easy, online solution that requires very little work. We just launched Quicken Online in January and we’re getting great feedback from folks about how easy it is to use. One of the things I love about it is that it automatically categorizes your spending in minutes after connecting to your bank. This helps you see quickly where/how you’re spending your money. You can try it for free for 30 days by visiting http://www.quickenonline.com – if you like it, it only costs $2.99 a month.
Anyway, I hope this information is helpful.
Jodi Reinman
PR Manager, Quicken
I am so glad I am not the only one who had multiple budget attempts. The biggest thing I am learning is that a budget is a continually developing tool. It changes as you go.
I remember when I first started school, I knew exactly what my loans would pay out and I didn’t budget. I just paid my rent and utilities for the 4 months and went off about my business with the rest. I figured if the utilities and housing was paid for, I didn’t need anything else. I always ran out of money for food and gas before the next disbursement check and used the credit card because there was no choice. Then I fell into this horrible cycle where i paid the card but was left with no money and went back to using the card again. I told myself it would be better when I started a real job.
Well, the real job didn’t start with a budget so I was in even worse debt. I think it was after being severely and painfully overdrafted that I started developing the Excel spreadsheet I use now.
It doesn’t work perfectly. I still go over the limit for eating out but everything else stays well within the limits and I accommodate for the unexpected bills. It is a better balance and since my income and expenses are more or less fixed for the next year or so, I can plug in numbers and avoid purchases now to accommodate later expenses.
Sadly, I still know the real job is coming up in a year and a half. My income with quadruple once I am out of training. I hope the current budget training will serve me in good stead to better manage my money so I don’t keep waiting for the “real job.”
@Nikki – Eating out is definitely my biggest struggle, too.
Good for you for getting your budget going before the “real” job hits. My husband and I made the mistake of waiting for the real job. And when his income went up, our spending also went up.
“We took the amount of money my husband made and subtracted all of our expenses. When we got to $0, we called it good.”
That’s how I operated too lol. At 21, I had a very good job with a computer corporation. I remember specifically thinking “OK, I made $x, I have $x going out on debt repayments with $40 left over each paycheck. That means I can go charge something else to eat up that $40 excess”. How is that ANY way to live?? I hadn’t even factored in food or utilities – my paycheck was literally gone before I got it. Looking back on my inadequacies regarding money, I really didn’t know any other way. My family had always lived hand to mouth and times were often extremely hard, so that is how I set myself up. My heart is in my boots right now as I realize how reckless I’ve been for so long.
In answer to your questions:
Do you use a budget? Yes, for the first time ever. February 2008 represents the first month I have tried to live by a budget. I tracked all expenses for January and, in comparison, February is looking MUCH better.
What are some of the problems you’ve encountered when trying to budget? Saying NO to my dependents ….. they are used to getting money for this and that as if I am a Pez machine.
How did you deal with them? I told myself to stop feeling “bad” that I was saying NO and then I told my dependents that I was doing them a favor. We have talked about money quite a bit over the past 2 months. Being honest with them about being on a budget and having to be careful with money has opened up some good conversations.
This made me laugh. My husband and I recently made budget. Pretty much wrote down our income, all our expenses, worked out that there will not be a lot left over and called it quits.
We are going to redo it now and try to work out where we can make savings.