Deciding where your money is going to be spent can be stressful, especially if your budget is tight. In fact, financial difficulty is one of the top reasons that couples fight and is a common cause for divorce. If you are having trouble controlling your spending, you should know that having a budget is essential to bringing your finances back in line.
Here are a few stress-free budgeting tricks for families to help take the fight out of your financial discussions.
The basic premise of any good budget is to decide exactly where your money is going to go — before you spend it. That doesn’t mean you don’t have any discretionary funds. It just means that discretionary funds are in the budget. And it also means that you don’t go out to eat on a whim unless you know exactly how much money you have left in the “eating out” category.
You need a plan. But, once you have a plan you also need some help implementing that plan. It’s never easy, especially in the beginning. So the more help you can get, the better!
Track Spending Before You Create a Budget
Before you can tell your money where to go, you need to know where you’ve been spending the bulk of it and which expenses you already have that cannot be curbed. For one pay period, track all spending and write it all down – marking those things that are fixed expenses and those things that are variable or discretionary spending.
It’s a breath of fresh air to know where you’re spending your money. Take a hard look at it, because the next step is to create that budget and tighten up the reins!
Create a plan to make your expenses fit within your income. Called a budget.
Maybe you have a goal to be debt free, so you’ve created a budget. Maybe you have a goal to take a vacation at the end of next year, and that’s why you are budgeting. Setting a big picture goal is a GREAT way to have a sense of purpose when you spend money and a great motivation to stay on track. But you also need monthly goals. A monthly plan for exactly where your money is going to go and why. Think it through and write it down.
Use the Cash-Envelope System for Stress-Free Budgeting
The fastest way to make sure you aren’t over-spending in any of your variable budget areas is to use cash. The goal here is to have an envelope set aside for each expense that isn’t a stable amount and paid online. Examples of fixed expenses would be car payments, electric bills (which might vary by amount but are generally predictable), and phone bills.
Groceries, date nights, babysitting, car maintenance, discretionary fun money, clothing, and entertainment are all examples of budget categories where having a cash envelope system is practical and binding. Each envelope will contain your budgeted amount in cash. Once an envelope is empty, you will have to wait until the next month to make any additional purchases in that category.
Budgeting Apps to Help Stay Stress-Free
There are many budgeting applications available for both android and Apple devices. These apps will help you see and track your spending. Having a budgeting app is beneficial because it allows you to physically see where your money is supposed to be spent and also exactly where your money is going. Plus, having a budget app on your personal electronic device means that you have it with you no matter where you are.
So when you finish with soccer practice and want to go out to eat on a whim, you can check your budget first and make a wise decision. And in this case, it’s not just about how much money is left in that envelope. It’s also about how many days are left for that budget cycle, what upcoming plans you have that might require money from that envelope, and what kind of restaurant you should choose from. Let the app be the bad guy so that neither one of you have to take that heat.
Organize your Expenses with Lists
I love to make lists. In fact, when I find the need to be super organized, I start making lists in a notebook so I can carry them with me everywhere I go. I’m not much of a planner from day-to-day but a good notebook full of lists helps keep me on track.
Create lists before you go grocery shopping or clothes shopping or household goods shopping, so that you will know exactly what you need to purchase and how much money you have to spend. Having a planned list and a planned budget helps keep you from making too many impulse buys from the eye-catching displays you will see.
Also, make lists for larger purchases that you will need to make in the next few months. This will prevent large expenses from sneaking up on you, and it will give you a chance to start setting funds aside for needed items.