I hate budgeting. And I’m bad at it. But I do it anyway.
I hate budgeting. And I’m bad at it. How about that for truth from a personal finance writer? I blame my parents. They have never budgeted in 42 years of marriage, and if I told you how much they are worth today, well, I’d have to kill you. JK, but it did work out for them in the end.1
I never budgeted through college or for the first nine years of my marriage. I really never needed too. During those years I lived very simply, and my parents/company paid for my health insurance. My income was always more than my spending so why bother? Plus I was always concerned that if I had a bucket of money set aside, and I went under budget, I might feel entitled to spend that money just for the fun of it. Spending money for the fun of it is no fun at all in my world. My philosophy on budgeting is that it is much simpler to adjust my lifestyle to consistently spend below my income than to put the energy needed into budgeting.
But then we did it. We went and had babies. Two of them so far and hopefully more one day. Having babies affected our budget in two ways. One, babies are expensive. Sure we cloth diaper, breastfeed, and dress them in hand-me-downs. But my husband and I are self-employed. So for us, each child is an extra $150 in health insurance premiums each month. Each. Month. Just for the premiums. Plus we are saving for their college, and our next car will have to be a bigger one.
The other thing that happened when we had babies is it started to feel like we were really living. Now, please don’t think that I’m saying that you have to have children to live life to the fullest. But for me, I spent my teenage years and my 20s feeling like I was preparing for “real life.” At 29 when we welcomed our first son, a switch flipped in my head. Suddenly I felt like I was in the throes of life, and I started feeling like if I didn’t really enjoy life now I would never get another opportunity.2
And with that feeling, comes spending. My husband and I want to spend time with family and friends. We want to pursue the careers that make every minute feel valuable, not just the careers that make us the most income. We want to experience the world through travel and exploration. All of that costs money. And those careers that would make us more money than our passion careers? Friends, the opportunity costs of those decisions hit our wallets a lot harder than our travel and dinners out with friends.
So I bit the bullet and decided to start budgeting. It was partly out of a fear that our spending would grow to take up our full, reduced income. But I also wanted to see if it would really help us squeeze even a little more out of our income, as promised by countless personal finance professionals. Finally, I wanted to have a clear idea of where our money was going each month in case we ever needed to make drastic cuts.
I came up with a five step monthly budgeting process:
- Cut and paste all transactions from our credit card and banking statements into an Excel spreadsheet. (I ignore cash because it is such a small part of our spending.)
- Assign each transaction to a predetermined category–gas, groceries, transportation, saving, giving, utilities, etc. Here I should note that many of you might have this process automated with some sort of fancy-schmacy Quickenbooks or something. By all means you do you, I’m just a by-hand, Excel kind of girl. Plus it takes, like, 10 minutes, tops.
- Sum each line item and plug it into my spreadsheet that shows how much we budgeted to spend in each category. I get a monthly and year-to-date variance.3
- Bellyache to myself about some unforeseen expense that destroyed my otherwise underbudgety month. And it is ALWAYS something. Gas prices go up or income taxes were more than I thought they would be or someone had to go to the emergency room.
- Assume a very serious expression and bellyache more to my husband about how we never come under budget and LIFE SUCKS AND WE WILL DIE POOR. This discussion is usually part of our scheduled family finances check in. Some months we actually do go under budget, but in three years of budgeting we have yet to finish the year under budget.
So I guess I really have two problems with budgeting. Even though I try to leave room in the budget for unforeseen circumstances, there is always something I failed to foresee. And if the car breaks down or a kid gets sick, it’s not like I’m going to say, “But wait I’m already over budget, no emergency room visit for you!” Instead I end up beating myself up at the end of the month for overspending, when really there are just lots of expenses that come up during this baby-having, self-employed time in our lives.
My other problem is that I wait until the end of the month to track my spending. I realize the whole purpose of the budget is to remind me to slow my spending when it gets to a certain level. I saw on a PBS documentary that JP Morgan recorded his daily purchases in a little notebook even though he was crazy rich. I tried it and it was more trouble than it was worth. I mean, am I really going to stop buying groceries in the middle of month because our health insurance premium went up? Those unanticipated expenses are the whole point of a savings account. We faithfully contribute to our saving accounts each month, and being over budget hasn’t yet put us into debt.
Has budgeting helped us spend less? I don’t know. Budgeting has made me want to spend less because I knew a big ol’ overage would be staring at me at the end of the month. But we live pretty cheaply already. And, like I said, if the washer needs a repair, I’m not going to put it off just to hit some number I came up with last year. I wonder if the people who are really successful at budgeting and keep it up long term are the same folks who don’t really need to do it? You know what I mean?
So maybe one day I will admit defeat and give up on the whole experiment of budgeting and go back to simply focusing on how much our spending is (hopefully!) under our income. For now I will keep plodding along, happy that I have clear insight into what we are actually spending each month, living for the day that we will come under budget.
Help a girl out in the comments section. Are you a successful budgeter and have great advice for the budget challenged (me)? Should I just give it up and trust my frugal instincts to keep it reigned in? And what is it about having kids that makes appliances and cars regularly go on the fritz?
Photo by: peasap