When counseling my clients, I admit to them all the time that I come to this line of work from a checkered financial past. I’m not ashamed of it. Managing finances isn’t an ability, it’s a skillset. Skillsets need to be taught. If you weren’t taught (which I wasn’t), then you probably don’t know how to do it.
There were a lot of initial hesitations and resistances to learning that skillset for me. One was self-doubt. I wasn’t sure I could learn it (hint: I did. You can, too.) Another was just the uncertainty of doing something new. Change can sometimes be scary (hint: Sometimes change can be for the best. This is one of those times.) Perhaps the biggest hurdle for me to get past, though, was how tedious and detailed I assumed it was going to be (hint: “Assumed” is a key word, there. Budgeting can be as simple as you want or need it to be—and it’s way better to have a simple budget than no budget, at all.)
That last barrier is something I’ve been thinking about, lately. First of all, let me say that I think if you start out with a more detailed budget, it gives you a much better grasp of your situation. Your awareness of your cash flow is higher. I think it’s a good idea to at least sit down and do a pretty detailed budget once, just to engage you in the process and really get you thinking about how you spend and what you spend it on; and I mean EVERYTHING. Soak in that process. If you find numbers that make you uncomfortable, ask yourself 3 important questions: 1) Why am I uncomfortable about it? 2) Do I feel like I need to change it? and 3) What would I feel comfortable changing it to?
So now let’s say you’ve done all that. You sat down, you spent some time working on a detailed budget, and now you’re looking forward to moving on and sticking to the plan without the plan’s details bogging you down. Here are a few thoughts on how to do that.
First of all, consider that there are a number of things in your budget that likely won’t change month to month. Your mortgage or rent might change once a year. Your car payment is what it is. So is your insurance. In fact, when you think about it, I bet there are almost more categories that don’t change than there are that do.
The categories that almost certainly will have changes in how much you actually spend are things like gas, groceries, entertainment, and eating out. Those categories that are a little more fluctuating are also probably the categories that you need to be a little more on top of. (Doing a full, detailed budget can help you figure out where your “problem” areas exist.) So how do you do that?
Well, to be honest, there are lots of ways—but they’re all based on the exact same principles. Those principles are: 1) Setting a limit; and 2) Doing something to help stay within that limit.
One example of that might be groceries. Let’s say that my grocery limit is $150 for the month. That’s the limit that has been set according to how it fits into the rest of my budget. So then I have a few different options I can use to try and help facilitate staying within that limit.
Maybe I have a sub-savings account at my credit union or bank and I have $75 out of each check automatically transferred in there. And then when I go grocery shopping, I make sure to take the cash out of that account. When that account is empty, I’m done grocery shopping for the month.
Maybe another option is to buy a gift card for $150 from the grocery store when I first go at the beginning of the month. Then, I never buy groceries with cash but, instead, I always pay for them with my gift card. When I run out of money on the card, I’m done grocery shopping for the month.
Maybe a third option is to put $150 in an envelope on the kitchen counter at the beginning of each month (or put $75 into it from each paycheck.) When I go to the store, I take the cash out of that envelope. When I run out of money, I’m done grocery shopping for the month.
A fourth option could be to collect receipts and keep a running total each time I shop using a ledger. When I hit my $150 of expenses, I’m done. A fifth option might be to use a smartphone app that allows me to punch in transactions as I do them, and when the app tells me I’ve hit my limit of $150, I’m done.
I’m sure there are more options than that, too. Again, the best system is whatever system works best for you, so don’t be afraid to experiment. All of those examples are basically based on those same two concepts from before. (As an aside, you know that if you keep hitting your limit halfway through the month, it means that you probably need to revisit the budget and rework your plan. Same thing if you find you’re actually only spending $100 a month, too. Revisit, rework.)
You just need to find some system for yourself that also works within those two concepts for whatever those “problem” spending areas are: 1) Set a limit; and 2) Take action to stay within the limit. It doesn’t have to be tedious. It doesn’t have to bog you down. And I suspect that you’ll find that making the (I promise you not-too-overwhelming) effort to stick to those concepts will have big gains for you in your ability to control (and enjoy) your money.
Dan Szymczak is a HUD certified housing counselor at LSS Financial Counseling. If you want help from a certified credit counselor or have questions about how to find a budgeting method that works best for you, call us at 888-577-2227 or click here to complete online counseling.