Finally, It Works

If you’re like me, you like to budget.

But if you have a husband like mine, you know that the budget thing has to be really simple, fool-proof, and funds have to be protected. I’m not saying Russ is a frivolous spender, because he isn’t, but his idea of budgeting is “Do we have  money in our account? Okay, then let’s go spend it.”

We have tried every method of budgeting (it seems like it, anyway!).

Don’t believe me? Since we got married we’ve tried:

- a paper spreadsheet printed out each month
- this book, Debt-Free on Any Income (which came with a CD rom of lots of fun spreadsheets)
- The Church’s “One for the Money” book complete with budgets, get-out-of-debt plans, etc.
- Quicken (too complicated, and too many features)
- Budget Map (actually a really cool idea, but it wouldn’t work with one checking account and one spouse who would never write anything down…)
- mvelopes (an online envelope system that really worked for a while, but cost us every month… how’s that for counter productive!)
- Budget (a program from Snowmint CS, which was actually pretty useful, too, but not as “automated” as mvelopes, and since we were moving from mvelopes to this program, it was just too much work).
- Dave Ramsey’s “Deluxe Envelope System” – which would be great if Russ was doing the shopping, but I spend cash way too easily (easier than using my debit card, if you can believe it)

All the trial and error was actually pretty good because we discovered a lot of things about our money habits:
1.) We don’t like to keep track of every single tiny purchase. We are not normally frivolous spenders, we have a pretty good grasp of “need” and “want” and we don’t spend emotionally. We get what we need, and leave what we don’t. We eat whole, natural foods, so we don’t buy crap at the grocery store. We don’t like keeping pieces of paper around, and we don’t like writing stuff down.
2.) I am not good at using cash. Russ is really great at it. If I give him a bunch of cash, he’ll end up with almost as much cash a month later. He seriously doesn’t spend cash. If you give me cash, I’ll spend it all at once instead of rationing. And then I don’t have any more cash, and I can’t get the things we need, because I spent all my cash. I guess I feel like because cash is “untraceable” I can spend it on whatever, instead of on things we actually need.
3.) We like to have all our bills automated.
4.) When we have less money, we spend less money.
5.) I like to plan out every dollar for the month, but Russ likes to have a large “slush” fund (which he usually does not use).

So, after trying every different budgeting method under the sun, we’ve finally found a process we think will work for us:

First, we use my own budget I made up (based off the mvelopes budget that I absolute LOVED). It is just a spreadsheet, but it is crazy powerful and really helps us give every dollar a name. It checks our sums in three different ways, so we can always tell how we need to move things around to make the budget work. In one document, we can do our monthly budget, and budget each paycheck. It’s pretty awesome, if you ask me.

Second, we added a feature to our budget (which isn’t in the one I posted publicly, but I will update it soon) – we’ve color coded the line items. Bills that need to be paid are highlighted in yellow. Bills that have been paid or are pending in the checking account are marked with green. Once the money clears our checking account, we change the color to red. That way, if we’re wondering why there is extra money in our account, we can usually just check the budget. This is a great recording system for us.

Third, we recently added yet another feature to the budget because when our discretionary spending is mixed in the same checking account as our “bills” money, we sometimes end up spending that money.

Remember Russ’ method of “budgeting”? If there’s money in the account, we can spend it! So we decided to open a second checking account for our “discretionary” spending. This is all spending that isn’t programmed, automatic, or regular. Grocery money goes in this account, gas money, spending money, etc (it all goes in there because half the time we are “stealing” money from one category to use in another, which doesn’t bug us, as long as we eat and Russ can get to work). The only drawback to this was that we would probably spend all the money in the account right up front (remember me with the cash? I’m not that much better with the debit card). So instead of putting all the money from each paycheck in there, we set the budget spreadsheet up to calculate all the “descretionary” items each month, and divide that by 30, then multiply by 7, and that is how much money we transfer to the second checking account each Monday for four Mondays.

We’re still working out the math, but the idea behind this system is that we create “artificial scarcity” with our money. We “have” less money, so we spend less money.

It has taken five long years, but we finally have a budget system that is going to work for our family. And it doesn’t involve me spending several hours a day recording bank transactions, balancing checkbooks, and checking online accounts. It should be seamless and only require us to address the budget twice a month before pay day, and any time we need an emergency budget meeting.

Which means more time to hang out with the babies, blog, and live life.

That’s what I’m talking about.