If you resolved to make 2015 the year of the budget, then have we got a post for you! Whether you’re starting your very first budget, jumping back on the horse for the umpteenth time, or adjusting it for life changes like marriage or new kiddos, we wanted to share everything we wish we’d known before we started a budget. So jump in our time machine and let’s relive all of our mistakes!
1. You’re going to fail, and sometimes it’s going to suck.
Weirdly enough, those are actually supposed to be words of motivation. We’re all human. We mess up sometimes. Or life happens. Or we just get lazy. I like to compare it to a diet. Have you ever stuck to a diet perfectly? Don’t tell me if you have. I have not. In a moment of weakness, I might eat a cookie or ten, and suddenly my diet is totally ruined forever and ever. Unless! If I just keep on truckin’ and try to be better, those ten cookies won’t make a big difference in the long run. Same with budgeting. Having one bad month is okay… you just need to regroup and try again.
Now moving on to the sucky part…If you have a tight budget, or if your budget is tighter than it used to be, it’s going to feel uncomfortable for the first few months. And if you’re accustomed to buying what you want when you want it, it’s going to really suck at first. But when you stick to your budget perfectly for a whole month, it will feel so empowering. And when you start meeting some of your financial goals, you’re gonna love it even more.
2. Your budget will ride or die based on your ability to track.
Okay, pop quiz time. What have you bought in the last 12 days? And how much did each purchase cost? Now add all that up, and categorize it, too. And if you’re married, I’ll need you to also tell me everything your spouse bought. What’s that… you need a pencil and paper? Nope… do it all in your head. All right… enough of this nonsense. The point is, you need to track your budget somewhere other than your head. Mental budget tracking is unpossible (which should be a real word, by the way). Johnny and I have tried to mentally guesstimate our spending over the course of a month, and it has NEVER been right. Daily tracking is key to sticking to the numbers you’ve set.
3. It will be uncomfortable to explain to friends and family.
For the most part, Johnny and I avoid talking directly about our budget to friends and family. It’s personal. Especially so when we were paying down our debt. Despite our best efforts to stay in the budgeting closet, there were situations where there was no other option than telling others that we were on a tight budget — the “Johnny’s allergic to all food that costs more than $12” excuse didn’t work too well. Depending on your financial situation, you may need to be open about it, too. Some people will understand, and others may not. But it’s not about them. You are doing the right thing for your future, and that’s all that matters. And who knows, maybe your friends/family/coworkers are closeted-budgeters, too.
4. Don’t overcategorize.
When we first started budgeting, Johnny and I had a million different categories. Pet supplies. Toiletries. Car washes. Cat sweaters. It got really tedious and weird. And then it got frustrating when those categories fluctuated from month to month, and we were left never hitting the right numbers in our budget. And it really affected our budgeting mojo. We solved this problem by creating an Everything Else category. We could spend as we pleased within it, as long as we didn’t go over the grand total for the month. If you want to hear more about how it works and why we find it so liberating, read this post.
5. Find a support group.
During many stretches of our debt payoff process (when our budget was especially tight), Johnny and I felt pretty alienated from our peers. We felt like we were the only ones keeping a budget or watching our spending. Of course, this wasn’t actually true, but because budgeting is such a taboo topic, we sometimes felt totally alone. Reading personal finance books and listening to Dave Ramsey’s radio show helped remind us that other people were in our exact same boat. When we started feeling a little more comfortable in our budgeting skin, we’d start putting out little hints that we were Ramsey-ites. And when we found a fellow budgeter within our social circle, it was the best! I just wish we’d known about personal finance blogs back then! Even now, all of you like-minded folks help keep us motivated with all of our financial goals.
We learned all of those tips the hard way. And by that I mean the fun way!…not really. Hopefully reading this will spare some of you from learning it the hard way, too. Those are just our top five, but there are so many more items that could be added to this list. So help us round out the list: what’s the one thing you wish you’d known before you started budgeting?
I wish I knew more about the track of inflation. For instance, I swear to goodness, December 2014 to January 2015 the price of food went up an average ~15-20% at the local grocery store. Cuts of meat I was used to seeing for $3.99/lb had jumped to $10.00/pound. Produce got a lot more expensive. Variability in cost is tricky to predict!
Good point! Being able to plan a successful budget has a lot to do with being able to predict how much items (especially food) is going to cost. I’m learning that all too well in NYC!
Maybe this belongs in the “your going to fail” category, but I would add that odds are your first budgeting system won’t be the right one for you. Whether you start with Mint or old fashioned envelopes, chances are you’re going to have to try more than one until you find what works best for you.
SO true! Our first month we did the envelope system with cash only and it was totally not working for us. Great addition.. thanks for sharing!
Support group is one means to get motivated and refreshed especially when planning or budgeting goes wrong. Participating in forums is helpful because we ourselves get advice from people who experience it themselves. So, there are some guarantee of success and reality there!
Yes, forums are a great tool!
I wish I had known it wasn’t as tough as I had made it out to be. For a long time I envisioned creating a budget and living with it as being so horrible and awful that I just avoided it. Start sooner! It actually made my life much better across the board.
Too true. While it’s tough and takes some adjusting, it creates a sense of control and peace in your life that just wasn’t there before. Very worth it to get on board ASAP with budgeting!
Thanks for your advice on ‘overcategorizing’. This is definitely one of my downfalls when budgeting. The ‘Everything Else’ category is a great idea.
It is hard to explain budgets to other people. I don’t mind talking about finances and such, but most of my peers are in pretty lucrative jobs and so I don’t know many people with a more frugal mindset like me and my husband. That is one reason we started blogging – was to meet more people like us, so we didn’t feel as crazy and alone 🙂
It is a difficult topic, for sure. Even if people think we’re crazy, it’s who we are. And after years of budgeting, Johnny and I are rather proud to call budgeting part of our identity. We wouldn’t be the same without it!
It can definitely get weird trying to explain it to people, like when you’re invited out to dinner and drinks with friends. They’ll think you’re being cheap, but you’re just trying to stick with your budget. In those cases, it’s probably easier to share that you’re on a budget because you’re trying to meet certain goals.
Yes… I felt cheap when we were paying down our debt, especially in those situations. And I felt a huge sense of relief when we’d finally spill the beans to a close friend that we were paying off debt. It took a lot of pressure off!
Well my new budget started and failed in the space of a weekend! Went online looking for a dress for my mom for my brother’s wedding….didn’t find her a dress but spent €240 on stuff for myself…. I did have a moment of “oh s**t, what have I done” and then went through convincing myself that I really NEEDED them, as in life and death needed them and then resigned myself to the fact that I had a blip and I would start again! So here’s hoping… I have however cut a deal with myself…. If I behave spending wise, I get to treat myself again in say 6 months… I have capped that figure at €100. It’s how I stopped smoking….I got a new car with the money I wasn’t spending on cigarettes… I think I’m seeing a pattern….Hmmm. Its the only way I can do it otherwise I’ll feel miserable…. As they say, we’re here for a good time, not a long time….! That being said, I want to be financially sound and secure and hopefully, fingers crossed, I’ll get there.. You’re all totally inspiring chicks and chaps so thanks!
Girl, you and I are one and the same. This sounds EXACTLY like something I would do!! But it’s just a small failure. There’s still plenty of room for big success over the long haul! Your idea of rewarding yourself six months from now is a great one! And give yourself a little reward each month, too, even if it’s just $15-20 on makeup or something. It will make budgeting a bit more manageable. Good luck! You can totally do this.
I wish I had known that a budget has to be balanced! I was irresponsible when I was younger and racked up some credit card debt – but nothing I couldn’t pay off within 1-2 months. Once that figure crossed into the 3 month repayment mark, I panicked, and threw TONS of money at it – but neglected to budget enough for other things that were necessary – like food, and transportation costs, and some fun money. The result was a see-saw of debt repayment-debt increases, and the increases only got worse when I had a major emergency expense.
Now, I make sure that before I’m repaying any debt, I’m also putting away money in an emergency fund, and budgeting a reasonable amount for the rest of my actual “needs”.
The important thing is that you learned from your mistakes. Johnny and I had to learn everything the hard way, too, through lots and lots of trial and error. It sounds like you’re on a great track now, so way to go.
We actually don’t budget–we operate on what we call “frugal autopilot,” which essentially entails living a very low-spend existence. It totally works for us, but I know it’s not for everyone. And, like you said, I think that tracking expenses is the #1 way to get on top of your finances, no matter what your goals are.
Even though we don’t budget, we still review all of our expenses at the end of each month to ensure we’re on track with our target savings rate, etc. It’s definitely all about finding a system that works for you and then sticking with it :)!
Very cool that you guys can do that and make it work for you. I think Johnny could do this no problem. Me on the other hand? It would be a disaster! Tracking throughout the month is the only thing that keeps me on track. You guys have found the system that works for you, which is the most important thing!
EVERYTHING ELSE! That’s a great title for… umm… everything else. Haha! I learned that the hard way, too. I had a bazillion categories and it just didn’t work. So we now have an “everything else” category. I also finally learned to just lump groceries, household supplies, and diapers into one big category because I buy them all at the same place anyway. For the longest time I was splitting transactions like a madwoman. No bueno.
Haha, we keep things simple around these parts, including naming our Everything Else category. Glad you guys have found it helpful, too. It was such a huge key for budgeting success for us!
To budget in the yearly/quarterly type expenses. When I first started I’d have a great month, and then the next month my 6 month car insurance premium would be due (or maintenance needed), or it’d be time to buy a flight home for the holidays, etc. The budget can’t be just for January or it won’t work months 2-12!
GREAT tip. We had the same thing happen to us in the beginning. Thanks for the reminder and for sharing!
I wish I’d projected my budget out over a year or more — not expecting to be perfect every month, but to try to make a bigger plan than just paycheck to paycheck. This is a nice list — all things that would have been good to know before starting, for sure.
Seeing the big picture is a must! Great tip.
I don’t discuss my finances with my family and they don’t even know about my blog. I hate it when people look at me like I’m crazy because I have chosen to live without some things to make a better future for me and my daughter. Most people will not be supportive of living frugal and it is really sad.
It can be really frustrating when others don’t understand the lifestyle you’ve chosen. But you’re doing what’s best for your little family, and that’s all that matters! Keep up the great work.
How to monetarily plan for groceries! I can justify and categorize other items, but when we are meal planning and shopping it’s harder than I ever imagined to stop and think, “What does this cost?” (When it comes to feeding my family…)
So true. I used to just pick meals that looked yummy, but when I got to the grocery store to buy them, I realized they called for a bunch of expensive ingredients. If you haven’t gotten to this point already, over time, you’ll have stockpiled a list of go-to cheap meals, and kind of cheap meals, and more expensive meals. Living in NYC where the groceries are a lot more expensive, we’ve been doing a lot more of our cheap meals lately! 🙂
I go through phases of keeping track perfectly for a week or so, then estimating how much we spent here and there. Since I use Quickbooks to keep track, I’m pretty on top of our spending, but I could definitely do better if I tracked our expenses more precisely. Maybe I’ll add that to my goals this year!
Just wanted to say great post, and I love the humour that you seem to effortlessly inject into your posts. Love reading your blog!
Thanks, Jill! We’re happy you’re here!
[…] Five Things We Wish We’d Known Before Starting a Budget via Our Freaking Budget because one of my goals is to pay off a pretty decent amount on my student loans this year, so budgeting is more important than ever. […]
My husband was unemployed for a year and that totally threw us for a tailspin and we made a budget to get us back on track. This was a total game changer. We keep separate bank accounts, and a joint account for all of our expenses. I think the first step was really being honest (with each other and ourselves) about what we spend money on. Once we implemented our budget, we felt so much less stressed out about money! Love these tips!
That’s awesome, Rachel! It’s crazy how we avoid confronting our spending because we think it will make life so much worse, but it really does bring so much peace and control to our lives. Thanks for sharing!
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