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It can be difficult to stick to a budget sometimes. In fact, budgeting your money can seem daunting, especially since people try to make it so much more complicated than it needs to be. These easy tips will help you see that sticking to a budget is not nearly as difficult as it seems!

How To Stick To A Budget FOR GOOD!

How To Stick To A Budget For Good

In response to a Living on a Dime story about budgeting, Yvonne writes:

My problem is not setting up a budget but sticking to a budget. Gas costs what it costs. Groceries – It is expensive to eat healthy. Do you have suggestions for how to live on a budget? We don’t do a lot of things but we seem to overspend our budget each month. And I know there is no way my husband is going to keep track of every penny he spends. Please help!

Tawra: This is a question that I receive frequently. Many people feel that the thought of budgeting is too daunting. My first thought is that if you set up a budget and can’t stick to it, either your budget, your spending or both are not realistic.

One thing I should mention up front is that there are several reasons why you might make a budget and how you handle your budget depends largely on why you have one. Here are the main two groups:

  1. If you spend more money than you make, you may be making a budget to get your spending under control. If that is the case, your realistic options are to cut spending to fit within your income or to increase your income to cover your spending.
  2. Some people create a budget just to create a plan for how they spend their money, even though they don’t have a problem with over-spending their income. If this is you, you have some leeway in your budget. Say your income is $5000 a month and your budget is for $4,000, allowing for $1000 savings each month. If this is the case, you can also choose to cut spending or increase your income, but you also have a third option. You might decide that $1000 savings is more than you can handle and cut your plan so that you expect to save only $500 and add the other $500 to your spending budget.

The reason why you are creating a budget determines the urgency of sticking to your budget. If you’re in the first group, you don’t have a lot of wiggle room. There is no good way to regularly spend more than you earn. If you do, everything will eventually, break down and it will impact all parts of your life. There is simply no choice but to live within your income or increase your income. If you’re in the second group, you have more freedom to choose to keep more “optional” budget items since you have not committed all of your available income.

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Sticking To A Budget

Budgeting is not a precise thing, especially at first. In order for a budget to be effective, it has to accurately project your spending. The first time you make a budget, you will probably have to use your best guess for some things. Many people have no idea what they actually spend on food, entertainment and other more flexible budget areas. If you keep copies of utility bills and other expenses, your guess may be more accurate than another person’s guess. Even so, you will probably find out after the first month that some of your predictions in various areas are not accurate.

The solution to this problem is, after the first month, to re-evaluate your budget based on your spending. If you want to stick to a budget, you have to be realistic. Ask yourself if the problem is that you disregarded the budget in certain categories and spent more than necessary or if the budget projection is not realistic. If you spend a certain amount of gas going to work each day, that is an expense that you can’t necessarily cut easily because your income comes from your job. If you feel that you must use the amount of gas you are using, you will need to adjust your budget to allow you to spend more on gas.

Even though I said you can’t necessarily cut the gas cost easily, most people usually do have options to reduce that cost. The question is, how important is it that you stay within this budget projection on gas? If you’d rather buy the gas than go to a movie, reduce your entertainment budget and increase your gas budget. If your budget is very tight and it accounts for every cent you earn, you may have to consider ways to reduce your gas cost. Even though “gas costs what it costs”, there are ways to reduce your consumption so you don’t use as much.

In our own situation, we used to think about something we wanted to buy at the store and then go get it right away. Now, we wait until we have many places to go that are near each other and make one trip out of it, unless it is a matter of life and death that we go now. It has been a challenge to our patience when we get excited about doing it “right now”, but we have saved a lot of money consolidating trips. Most people would be surprised to see how the mileage for “little trips” running errands adds up. If you drive to work by yourself each day, consider carpooling with someone else. We Americans don’t like the thought of that because it limits our feeling of independence, but if you work far from home, it can really save you a lot of money. If you live close to work, can you walk or ride a bicycle? Then you would get some of your exercise at the same time.

If your gas cost is high because you are involved in a lot of activities that require you to be in different places at different times of the day, consider whether you need to do all of those activities. If each of your kids are involved in a sport that costs $100 for three months, you also pay the cost to get them there and, if you’re busy enough not to be able to cook dinner, the cost of fast food is a direct result of that activity. If you do one such activity once a week and spend only $10 for fast food and $2.00 for gas each time, the entire three month activity cost is not $100, but $244. It is OK if that activity is important to you as long as you can afford to keep it in your budget.

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There’s nothing wrong with increasing the amount you plan to spend in your budget as long as you can afford it. If you have only a set amount of income and are having trouble keeping your spending within that income, an increase in one budget area will mean that you will have to cut somewhere else. We know a family here in Kansas that thought that air conditioning was not essential when the temperatures were in the mid-90s and the humidity was high. They decided not to use the air conditioner, but they did not think buying delivered pizza and other convenience food was unreasonable. There is nothing wrong with that. We wouldn’t do it ourselves. It is just the choice they made. Regardless of how you make it work, income must outweigh spending.

We don’t recommend trying to keep track of every penny you spend. (Good news for your husband ;-) Some financial systems require you to keep every receipt for a pack of gum, but that is just not practical. It is too tedious and people just get frustrated doing it. If you are having trouble keeping track of spending in a given budget area, it might be useful to use an envelope system.

One of the biggest drains on a budget is “nickel and dime” spending a quick stop for a pop at a convenience store or an impulsive magazine purchase. If you don’t know how much you spend in this area, put a set amount of money in an envelope for miscellaneous spending. Only make these purchases out of this envelope until the money is gone. This will help you get an accurate idea of how much you spend in that area.*

Say you put $300 in the envelope and it is gone is ten days. That means you spend $30 per day on “miscellaneous” spending. (And you didn’t have to write down every purchase.) At this rate, you can plan to spend $900 a month on these things (I’m gasping at the thought ;-).

If you want to limit spending in this area, put the money in an envelope and when it is gone, don’t allow yourself to spend any more on those things until the next month. If you’re accustomed to spending a lot more than your budgeted amount, this can be difficult. If your budget is not too tight, you might want to reduce the spending in that area over a few months so you don’t get discouraged.

If you feel your only option is to cut your spending but you are having trouble doing it, you will want to make sure you’re clear about “needs” and “wants”. The only real “needs” we have at a most basic level are food and shelter. Everything else is a “want”. All “wants” are negotiable at some level. We want to have a house with air conditioning. We don’t want to eat only beans. We believe it is important to have a car. If your “wants” are too important to give up, you must increase your income to make everything balance.

The problem we see the most is that most people who are having trouble with spending and debt want too many things they can’t afford considering their income. (Mike: I understand that. I’ve been there!) If you find yourself in this situation, it is easy to get irritated with having to make a choice to give up something you feel strongly about keeping.

We hope this helps! Good luck with your budget! -Michael and Tawra

P.S. If you want more information on budgeting you can check out our friend’s Steve and Annette at Money Smart Family for their tips on budgeting too!

 

*Note From Jill – I don’t even bother with envelope spending. I just put a $20 bill (or whatever amount I decide on) in my wallet. If half way through the day it is gone then it is to bad for me. It only takes once for me to run out of money and need more to learn to be more careful. Surprisingly enough I keep really good track of my spending when I have only $20 to think about each day.

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Figuring Out Your Grocery Budget

Marianne writes:

We have been trying to just spend $50 per week for our family, which is down to 3 people now, but I also did it when we had 4 at home. I find that I am more conscious about what I buy when I set a limit. I focus on the basics. If I don’t need as many groceries that week, I just stock up on something that is on sale.

Do you have a monthly budget that you go by? For me, the planning and preparing ahead of time is what makes me more successful with my shopping. I am not saying this way is right for everyone… I was just curious if you tried to keep within a certain amount to feed your family or if you budget by the month or the year or just buy sales and don’t worry about cost.

-Marianne

 

Jill: Marianne, I don’t usually have a firm budget for my spending. I do plan so that I have a general idea of what meals I will make and then I get what I need for those meals. I’ll also buy other things if there is a really good sale on something I know I will use. Most of my life, I have not had a regular predictable income and I have often had to readjust my spending not only month to month but week to week.

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That is why a lot of the typical financial plans and methods don’t work for me and why I don’t believe in teaching that everyone should spend a set percentage or a set amount on certain things. The same plan doesn’t work for everyone. People are different with different life circumstances so each person’s method will necessarily be different from another. I think this is why so many people get frustrated when they finally get serious and try to get out of debt. They are trying to fit into a plan that just doesn’t work for their situation, which is frustrating. It would be like me trying to fit into a size 2 dress. (Is there really anyone who fits into a size 0 or 2 dress?) It ain’t gonna happen. Basic budget principles from one budget to another may be the same but you can’t expect that specific amounts and percentages will work for everyone.

Also, different people spend their money differently. I am in my home all the time. I work here and live here and because I am sick, I don’t get out often. I want a nice home because this is where I spend so much of my time, so my home is where I will put a good chunk of my money. Another person may spend long hours commuting and working away from home. That person may want to have a nice reliable, more comfortable car when all I need is my old clunker.

It is difficult to specify an exact amount for a food budget because I could say I spent $35 on my family of 4 but I may have 2 toddlers and a husband who eats very little. You may have 2 teenage boys and a husband who is a lumberjack, which would make your grocery budget significantly different than mine.

That being said, I do have enough control over my money that I always know about how much money is in my checking account and how much I will need to pay my bills, so I always have an approximate amount in mind that I know I can spend on groceries. For me, that amount fluctuates from month to month.

The biggest thing I did to control my grocery money was not so much making a plan or budget (although please use one if it works for you). I learned about serving nutritional meals– not organic, fat free or sugar free meals but meals that apply basic nutrition to regular food. I did things like give my kids a small glass of orange juice with the exact amount of vitamin C recommended for them for the day. I would include fruits and/or vegetables like potatoes, broccoli and carrots with each meal, following the food pyramid guidelines so they were more than covered.

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What does that have to do with a food budget? Well, the human body needs just so much food to stay alive and be healthy. This means you have no choice but to spend a certain amount on food to keep your family alive. I could settle on a grocery budget of $10 which may sound impressive but if my family is starving then the budget isn’t working. By watching our nutrients carefully, I didn’t buy or feed my family any more food than what their bodies needed.

Many people just don’t realize how much controlling portions and nutrients in their diets can save money on their food bills and make them healthier. Many Americans eat twice as much food as they actually need each day (and then many of them spend more money burning it off!). Even if it is organic, fat free or sugar free, they still eat too much.

This doesn’t mean I sent my kids to bed hungry. Of course not. They got to have cookies and other treats sometimes like most kids but because I was so careful with their food and their bodies were satisfied by well balanced diets, they didn’t have the continual cravings that many kids do.

Once, while visiting a national park, we got in the car to leave and a woman ran up to my window and said, “I know you are going to think I am crazy but I have been watching your family all day and I have never seen such a healthy looking family. What is your secret?”

I laughed and said, “My husband started his own business.” I know she thought I was crazy after that! I meant that I didn’t have much money to buy groceries so I had to be careful about what we ate, which helped us eat only what we really needed.

I’m not saying I always ruthlessly restrict everything I eat but when I need to tighten my belt, I’m especially careful about the portions that I eat.

Budgets are fine if they help you watch your money. Try not to make your budget too complicated. Consider that if you buy a baby crib and discover it comes with a 100 page book of instructions you get intimidated and want to give up before you even start. If you pull out sheet of paper with 5 easy steps, you’re much more likely to succeed. That’s exactly how you should think of a budget.

Regarding your budget of $50 per week, I’d say that is very conservative and if you’re able to do it, that’s great! If you had to increase it a little and if you could afford it, I wouldn’t feel bad about it. Certainly as you noted, planning ahead is one of the best ways to save because it prepares you to keep an eye out for sales and other opportunities to save. Lack of planning, on the other hand is the main reason why so many people eat out more frequently or buy more convenience foods, which can significantly increase the amount a family spends on food.

Also, as I mentioned, I do generally have an idea how much I will allow myself to spend on food each month but for me, that amount fluctuates depending on the month. I do tend to spend less even when I can afford more so that when the opportunity for a great sale comes along, I have the money to be able to afford to stock up.

      -Jill

If you would like to know more of Jill’s story about how she raised 2 teenagers on $500 per month, check out her book, Penny Pinching Mama.