A friend asked me this weekend: "Isn't budgeting like dieting?"
I thought a minute about that and understood exactly what she meant. When I put myself on a "diet", I think about food constantly. I especially crave what I can't have, and hear those forbidden foods calling my name all day long. Then, I cave and eat more than I might have otherwise.
Budgeting could feel like that for some people. It could feel like limits. You might think "I can't spend any money so my life is miserable." And then hear a new pair of shoes or that flat-screen TV calling your name so you go spend some money and feel ashamed of yourself. You've busted your budget, just like wrecking your diet.
Something I've learned is not to put myself on a diet. But for some reason, budgeting my money doesn't feel at all like dieting to me. I actually feel like I have more money to work with since we've started making a zero-based budget.
Since the beginning of our marriage I've sat down each month and made a list of our monthly expenses. Using just a simple spiral-bound notebook and a fresh page each month, I have listed our expected income for the month and the bills that needed to be paid out of it. This way I was able to keep track of items that are automatically deducted from our checking account, and other items that needed to be paid by check. I also would budget a certain amount "leftover" after paying those bills for gas and groceries. Any little bit else (and it always felt like a "little bit") I would just dub "miscellaneous" and that money would get lost in whatever vortex "misc." goes into out in the universe.
This style of budgeting worked in that it helped make sure our monthly bills were always paid and deducted from the checking account. We have a sky-high credit rating for two reasons--we've used so much credit, and we've always paid our bills on time (with a few stupid exceptions, mostly right after I had babies and was a little preoccupied for a couple of months). On Dave Ramsey's plan we actually hope to get to a ZERO score on our FICO someday, but that's a subject for another day...
What didn't work about my old style of budgeting is that our true needs weren't being covered. Yes, food and fuel was in there but even those sometimes got short shrift if an "unexpected" expense came up. "Unplanned" is a more accurate description for those expenses, however, as generally we knew they were coming (choir tuition for Rose each fall, auto insurance twice a year, etc.), but we hadn't planned and saved up for them so they took away from our usual budget.
We never budgeted for clothing, so every time we get dressed it's almost by accident (we haven't gone naked yet, though). We never budgeted for car repairs, so every time we need a fix the money has to come from something else. We never budgeted for entertainment, vacations or trips to see family, or many other things that come up very regularly for us. We either used some unplanned "windfall" money or we went into debt for those things. Neither of which felt very good. And neither of which were telling our money what to do instead of having money tell us what to do.
Do you know how restricting it feels to be in debt and have a certain percentage of your income going toward paying that off every month? That feels like limits and dieting, much more than making a plan called a budget does.
Now that we're planning for all of our needs, and some of our wants, each month it feels like we have an abundance of money and I don't need to rob Peter to pay Paul anymore. We have enough, we've discovered, when we count every piece of income and use it to plan for every expense. And, we have our $1000 in the bank now to cover any true emergency expenses that come up, if they do. That feels like peace of mind to us.
Here's a link to Dave Ramsey's "Quickie Budget" if you want to take the first step for yourself. Tomorrow I'll talk more about the zero-based budget and making an Allocated Spending Plan for your household, just like any business would have.
I thought a minute about that and understood exactly what she meant. When I put myself on a "diet", I think about food constantly. I especially crave what I can't have, and hear those forbidden foods calling my name all day long. Then, I cave and eat more than I might have otherwise.
Budgeting could feel like that for some people. It could feel like limits. You might think "I can't spend any money so my life is miserable." And then hear a new pair of shoes or that flat-screen TV calling your name so you go spend some money and feel ashamed of yourself. You've busted your budget, just like wrecking your diet.
Something I've learned is not to put myself on a diet. But for some reason, budgeting my money doesn't feel at all like dieting to me. I actually feel like I have more money to work with since we've started making a zero-based budget.
Since the beginning of our marriage I've sat down each month and made a list of our monthly expenses. Using just a simple spiral-bound notebook and a fresh page each month, I have listed our expected income for the month and the bills that needed to be paid out of it. This way I was able to keep track of items that are automatically deducted from our checking account, and other items that needed to be paid by check. I also would budget a certain amount "leftover" after paying those bills for gas and groceries. Any little bit else (and it always felt like a "little bit") I would just dub "miscellaneous" and that money would get lost in whatever vortex "misc." goes into out in the universe.
This style of budgeting worked in that it helped make sure our monthly bills were always paid and deducted from the checking account. We have a sky-high credit rating for two reasons--we've used so much credit, and we've always paid our bills on time (with a few stupid exceptions, mostly right after I had babies and was a little preoccupied for a couple of months). On Dave Ramsey's plan we actually hope to get to a ZERO score on our FICO someday, but that's a subject for another day...
What didn't work about my old style of budgeting is that our true needs weren't being covered. Yes, food and fuel was in there but even those sometimes got short shrift if an "unexpected" expense came up. "Unplanned" is a more accurate description for those expenses, however, as generally we knew they were coming (choir tuition for Rose each fall, auto insurance twice a year, etc.), but we hadn't planned and saved up for them so they took away from our usual budget.
We never budgeted for clothing, so every time we get dressed it's almost by accident (we haven't gone naked yet, though). We never budgeted for car repairs, so every time we need a fix the money has to come from something else. We never budgeted for entertainment, vacations or trips to see family, or many other things that come up very regularly for us. We either used some unplanned "windfall" money or we went into debt for those things. Neither of which felt very good. And neither of which were telling our money what to do instead of having money tell us what to do.
Do you know how restricting it feels to be in debt and have a certain percentage of your income going toward paying that off every month? That feels like limits and dieting, much more than making a plan called a budget does.
Now that we're planning for all of our needs, and some of our wants, each month it feels like we have an abundance of money and I don't need to rob Peter to pay Paul anymore. We have enough, we've discovered, when we count every piece of income and use it to plan for every expense. And, we have our $1000 in the bank now to cover any true emergency expenses that come up, if they do. That feels like peace of mind to us.
Here's a link to Dave Ramsey's "Quickie Budget" if you want to take the first step for yourself. Tomorrow I'll talk more about the zero-based budget and making an Allocated Spending Plan for your household, just like any business would have.
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