My husband and I are on the brink of accomplishing a major financial goal and would like to do so before the end of the year. In order to reach this goal, we’ve realized we need to be a bit more intentional with our spending. With purchasing a home earlier this year, we’ve been a bit free with our spending these past months filling rooms with furniture and working in our yard. With the major purchases behind us we are ready to get back to a more streamlined budget.
We came up with a method that worked well for us as we were frantically saving for a house. I’ve raved about online expense tracking tools like Mint.com and shared some ways to be successful when using these tools but we found greater success going the old school route. That’s right, we broke out some paper and pen for this exercise. We call if the credit card budget because all the focus is on keeping our credit card at a certain level so we can meet other goals but at the end of the day it’s just basic pen and paper budgeting.
This post will walk through our manual “credit card” budget tracking process and then I’ll share a few other things we did to cut back on spending and stay on track.
Write Everything Down
I learned at an early age that I retained information better when I wrote it down. It helped me excel in classes in high school and college, helped me pass my Certified Financial Planner (CFP®) exam and is the reason I started this blog. Writing something down allows me to retain information more than just reading something or listening. We all have our learning styles and this is mine.
Little did I know that same approach could be applied to managing our household finances and be as equally successful. At the start of each month, my husband and I look at our budget, after automated savings, and break it into sub categories like groceries, dinners out, entertainment, Maureen’s clothes budget, etc. Once we’ve determined our budgets for each subcategory, we update our template, print it and keep it in our kitchen. When we get back from a trip to the grocery store, date night, Homegoods (insert excursion here), we will take that amount out of our budget. For example, if we have $400 budgeted for groceries and spend $150 at Costco (no judging!) we will cross out the starting budget of $400 and write in $250. This process repeats itself over and over until we get to the end of the month and see what’s left over.
This concept is similar to the envelopes budgeting system but without cash. Let’s be honest, very few of us have cash on hand and we all like getting points on our credit cards so I see this as being the best of both worlds. When we look at our monthly template and see there is only twenty dollars left in our “date night” budget then we are going to the local taco spot over a nice sit down dinner or we don’t go out at all. Having to write down your spending after each trip to the store has created so much more awareness and has helped us stick to our budgets each month.
I’m not going to lie, some months are really hard, like this month when all I want to do is buy all the sweaters and get a new fall coat. I have a clothing allowance I give myself each month, but a new jacket translates into nothing else that month which is a hard pill for me to swallow. It has really forced me to analyze and be more thoughtful with purchases.
Tips for Success
Sharing below some other tips we’ve been using to keep us on track each month:
- Make a List – we aren’t allowed to go into a store without a list. I shared in this post that going to the grocery store or hardware store without a list is a recipe for budget disaster!
- Limit Alcohol – We’ve been making a conscious effort to only drink once a weekend. Some weekends we do better than others but the overall trend has resulted in lower grocery store bills. I never realized how quickly a bottle of wine or six-pack of beer could add up until we cut back.
- Weekly Check– every week or every other week, my husband and I have a money date. As part of that money date, we look at our monthly budget and see how much is left in each category. From there we plan our spending in the week ahead. If there is room in our entertainment budget we will plan to play a round of golf on a Saturday or extra funds in the coffee budget we will plan a walk to Starbucks in the morning with Mac for our caffeine fix. If I don’t have any money left in our “home furnishings” budget I am not going to tempt myself with a trip to HomeGoods. The weekly check in keeps us accountable to one another and that makes all the difference.
- Remember the Bigger Picture – as part of our money dates, we review our monthly cash flow, my husband’s income fluctuates each month, and we review our sinking funds for upcoming goals. A good month of staying on budget translates into reaching our financial goals quicker. Understanding the push and pull of cash flow and completing financial goals makes it more motivating to stay on track.
- Celebrate the Successes – and by celebrate I don’t mean buying a prize to reward yourself – that is a budget buster. The thought here is to acknowledge the sacrifice to stay on budget and celebrate the win. It’s no different than hitting a new PR on a run, celebrate the win and use that momentum to keep pushing forward.
- Avoid Target! – every time I go to Target I find myself overspending on things I don’t need. This was one of the biggest lessons I learned from being a homeowner. For the most part we have avoided Target and I think there is a strong cause and effect between avoiding Target and staying in budget!
I am happy to report that earlier last month all our hard work and budget centric spending paid off (literally!). We were able to accomplish a major financial goal that we had been focused on for seven years…any guesses!? I plan to share more in an upcoming post but would love to hear what you think it is.