Budget Epiphany

I mentioned before that Erica and I are on a spending fast. We have some credit card debt that we are trying to pay off, we’re both sick of seeing our money go to finance charges. I usually handle the finances just so that Erica doesn’t have to be burdened with it, but I have never
really understood the idea of a budget. We’ve tried to do a budget before, but it always failed. Here are some myths about budgets I used to believe:

Budgets have to be monthly – We would sit down and try to anticipate our expenses for the entire month. I can’t even tell you what we’re doing tomorrow, so how am I supposed to know what we will need 30 days from now!

Budgets are created once for all – What I mean by this is I thought January’s budgeted amounts should look the same as February’s, and March’s etc. You make a monthly budget and stick to it every single month out of the year. There is more than one problem with this, when you account for birthdays and Christmas and gas bills and unexpected trips and and and…

Budgets have to have a category for everything you will possible spend money on – There was groceries, and household products and decorations and gas for my car, gas for Erica’s car, non perishables, cereal, toilet paper…O.K. maybe I exaggerate a little but you get my point. This was impossible to track when we would go to the store and buy items from multiple categories all on one receipt.

What I have learned about budgets since then:

I can make a budget that corresponds to how often I get paid – This was very freeing. I could look at just the next paycheck, and Erica and I could sit down and talk about all the things we need to buy and decide how much money we would spend for each thing. I can’t tell you the
difference this made.

I can recreate the budget for each month/week/pay period – We can sit down and discuss what is coming up in the next two weeks and hash out our needs/wants. Rather than seeing a budget as a fixed amount to spend on each category for every month of the year, I now realize a budget is simply a way for me to tell my money where it is going, however often I need to do that.

Budgets are flexible and the categories can be broad – Groceries can include things like diapers and formula, since it is all bought at the grocery store. And guess what! This makes it easy to track! So we are on our way to financial freedom. I mean, there are still student loans and things but we’ll just take it one step at a time.