Every journey looks different. However, there is a general trend in many couponers’ adventures. Come along as we take a closer look at Angie Erickson’s story.
As I shared last week, my reality of saving money was a tough one for me to swallow. It took work and patience, as well as a lot of self-control to whittle down my grocery budget. However, I would not have known our grocery budget had decreased if we had not taken a very important step, which I will share with you today.
Seeing the Real Picture
My husband and I needed to become brutally honest with ourselves about three things: income, spending, and our overall budget. Once we did that, we realized that while we were aware of our income, we were not clearly tracking our spending and our budget had gaping holes in it.
At that point, we made some charts showing our spending over the previous months and were shocked at the picture that we had painted financially, simply due to not having a plan in place.
Two major eye-openers were revealed to us once we took the time to examine our finances. One was that our budget did not account for the things that you know will come up throughout the year, yet somehow you are still shocked when they do! Some examples are Christmas, birthdays, car repairs, home repairs, etc.
Once we took all of those things into account, we were in the red. No wonder we were struggling to stick within our “budget” and constantly dipping into savings. We realized, largely due to a very detailed blog post by Pocket Your Dollars, that we should set aside money each month for those things.
The other enlightening fact that was brought to our attention was that if we did not track where money was coming from and going to, it easily slipped through the cracks (or out of our pockets, if you will).
How Budgeting Works for Us
Having a budget and tracking our spending was freeing for us! I know that sounds like a contradictory statement, but it was and still is the truth. Once we had set aside money for things like house or car repairs, we didn’t feel guilty if we needed to use that money. It was allotted in our budget (and our minds) for that purpose.
Initially we had to estimate how much money we would put into those “sub-accounts” on a monthly basis, while later reviewing our estimations to see if we needed to make changes.
We use our budget as a guide. We do not punish ourselves if we do not have a perfect month. Life happens! However, the “dipping into savings” we had to rely on in the past had now virtually ceased. Being proactive by having a plan has made an enormous difference in how we choose to paint our financial picture as a family.
Get Honest About Your Finances
Quick tips to help you get honest with yourself about your finances:
— Set aside about an hour of time to examine your current budget, including income and spending. Be sure to involve anyone making financial decisions for your household. Write down the information and keep it as a reminder of where you started, as you will likely see changes.
— List all of your income.
— List all of your spending (including bills and discretionary spending).
— List the categories for the “not-so-surprise” expenses.
— From that information, set some “allotments” for those expenses. This may feel overwhelming, but just estimate because you can change this as needed.
— Come up with a plan to transfer that “allotted” money out of your checking account and keep track of the accruing amounts in those sub-accounts.
— Set goals for discretionary spending.
— Track all of your spending. This can be a tough one, but it is important! If you don’t have time to do it daily, keep your receipts and write down the amounts when you have time (at least weekly). How else will you know that you’ve reached your goals?
— Enjoy the freedom of your budget!
Join A Money-Saving Journey next time as Angie shares how to “Do Your Homework”!
Angie is a Pocket Your Dollars team member who teaches Pocket Your Dollars grocery-saving classes to mom’s groups, Community Ed programs and other civic organizations in PYD’s stead. Angie also compiles the bi-weekly Co+Op Deals shopping lists and helps update the shopping lists with additions and changes noted by readers. When she’s not doing those things, she is a stay-at-home mom to two little ones. If you are interested in having PocketYourDollars or Angie speak to your group, please contact us.
Your turn: How do you deal with those “surprise” expenses that make your budget crumble?