The Best Budget System When You Can’t Budget
Budgeting can be depressing, constricting, suffocating, annoying, awful, painful, and can basically feel like straight torture. There are plenty of other things I’d rather do than try to make a budget that I can stick to… and actual Chinese water torture is one of them (another is watching Calliou on repeat, which I think is actually worse than water torture).
But here’s the truth about budgeting: the simpler, the better. If a 10-year-old can understand it, you’ve got something that will work for you.
Over the years, I’ve picked my favorite parts of budgets that have worked so well for many people in the past. The biggest things that seem to work are:
- A weekly budget instead of a monthly one, because keeping track of a smaller amount of money instead of a huge lump sum is so much easier.
- Writing it down helps and makes it hurt. If you have to actually write down that you spent $20 at the drive thru, it really makes it sink in.
With those things in mind, I came up with a little variation of the cash envelope system that can be used for either cash or credit cards (if you’re just starting, using cash will help you get into the habit of staying on budget).
Before we get to the fun part, there are a few things that you need to do first:
1. Get the whole family involved.
You shouldn’t need to be the policeman in the house. If everyone else is constantly trying to spend money and break the budget, it won’t work, you’ll get exhausted from always being the “bad guy,” and you’ll quit. Get your husband and children on board. You’re all a team, and it won’t work if you’re the only one committed to keeping the budget on track.
Related post:8 Ways to Stop Spending Money You Don’t Have
2. Open up the 6 bank accounts that you need
There are 6 bank accounts that you need that will help you save money without even thinking about it and will help you with paying bills each month. The best thing you can do for your budget is to have all of your bills on autopay to avoid late fees, and to make sure that you don’t fall behind. And always set your savings account to an automatic withdraw to build it up without you even knowing it!
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3. Make your budgets for your fluctuating spending categories.
3. Make your budgets for your fluctuating spending categories.These are categories outside of just bills, utilities, etc. There are only 2 categories that I spend money on each month outside of bills: groceries, and “other.”
“Grocery” budget includes anything you could find at your local grocery store.
This includes anything from your regular neighborhood grocery store. Not the Super Walmart where you can buy your veggies and new throw pillows in the same trip; the plain old Walmart, Food Lion, Giant, Safeway, etc. Stores that sell basic items.
Some examples of “grocery budget” items are:
Food, baby wipes and diapers, shampoo, lotion, shaving cream, aluminum foil, basic kitchen utensils, cleaning supplies, dog food, over-the-counter medicine, makeup, and other toiletries, etc.
“Other” budget includes money set aside for normal, regular, non-grocery expenses.
Anything you wantto have comes from here. This does not include bills or utilities that should come right out of your bill budget.
Some examples of “other” budget items:
Home decor, babysitting money, clothing, haircuts, car washes, piano lessons, school pictures, lunch with friends, date nights, manicures, gifts for birthdays/showers, etc.
Related post:How Much Should I Budget for Groceries?
4. Decide how much should be in each category.
Groceries should be set up for $100 per person in the house per month. So if you have a family of four, your monthly grocery budget should be $400 (or, as I like to put it, $100 a week). I swear this isn’t just a random number I came up with! “They” (whoever “they” are…) say that this is the amount that should be spent by a family on groceries.
For your “other” budget, here is how to decide how big that should be:
Decide what will be covered in YOUR “other” budget.
Grab your detailed statements (spreadsheet, credit card statement, or whatever you use to track your spending) from the last 3 months that show every cent that you’ve spent.
Add up how much you spent on “other” in the first month, then second, then third.
Average them out (add the sum of the 3 months then divide by 3) to see the average that you spent each month.
There’s your STARTING point…. but wait…
Now… cut it down (try to cut it in half!) and start there. Make it hurt! It’s almost positive that you are spending more than you should because you haven’t been watching your spending. Now that you know that you’re watching your spending, it’s almost guaranteed that you can stick to the seemingly crazy-low budget number.
Remember: for the first few weeks and months, there will be some trial and error. And that’s ok! As long as you get back on track and adjust your budget to make it work next month, you can do it!
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Here’s how this so-easy-even-a-10-year-old-can-do-it budget works.
If you have an envelope and a pen, you can start this method today.
Here’s how it starts:
- The envelope gets split down the middle, and then sectioned off into 4 weeks and 2 smaller rows at the bottom for totals.
- One column is for groceries, the other is for “other.”
- The monthly budget amount goes at the very top (in this example: $400 for groceries, and $200 for “other”)
- From there, each week gets the weekly budget amount written in ($100 a week for groceries, and $50 a week for “other”)
- Make a box at the bottom corner of each week to show the total saved or overspent in a week.
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What happens if you go over budget?
Overspending happens sometimes, especially when you’re new to budgeting or trying to figure out what numbers work. Even if you overspend by $2, you need to borrow that money out of the other budget. You can only borrow from the same week, never from the next week or the previous week’s extra money.
At the end of the month, total up your spending and savings.
This helps you to adjust your budget how you need to, especially when you’re first starting out. It also helps you to actually see how much you were able to save when you really work at it. Seeing the amount that is going toward your savings goal helps motivate you to save more and make your goal faster.
Related post:How to Save Money When You Live Paycheck-to-Paycheck
What happens to the money that didn’t get spent in a week?
It goes into your fun bank account, where you are saving up for something special. I love this part becausethe extra money still has a special job and isn’t just sitting there waiting for you to buy something on an impulse!
Why an envelope?
The envelope is perfect for holding cash for the budget, as well as the receipts from what you bought. Store your receipts in the envelopes so that if you need to return anything, you can do so easily. It also helps you to make sure that you entered all of the correct amounts at the end of the week and month.
This is the method that I use for my financially challenged husband and it has made such a big difference for us! It’s easy, it’s simple, and it works.
I want you to make sure that you have the best tools available to start spending again in the right way. Getting you budget together before you start spending again will help give you plenty of time to find the right numbers for your family.
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What budget works best for you?
