Do you find it hard to save money? Or are you able to save money for the short term but unable to for the long haul? Do you have an all-or-nothing mentality when it comes to finances? If you can answer yes to any of these questions, I’m going to share how we implemented the Uncomplicated Practical Budget that has allowed us to buy two homes – mortgage free – on one income and during multiple layoffs.
Lesson 1: Implementing the Uncomplicated Practical Budget
Sitting down with your spouse and implementing a budget is the groundwork of your journey towards financial freedom. The first step is to brainstorm to come up with all the categories that will encompass your budget. Some examples are Entertainment, Tithing, Utilities, Grocery Budget, Mortgage/Rent, Tuition, etc.
Since we follow a loosely based Dave Ramsey envelope system, I purchased two Dollar Tree coupon organizers and labeled them with the names of our budget categories. They look similar to this http://amzn.to/2qwcdkx*. Or simply use regular envelopes. For categories that I will write checks for, I simply leave the money in the bank. For our Christmas Fund, Food Budget and Entertainment categories, I withdraw the money from the ATM and put it into the coupon wallet.
Next, combine all the monthly sources of income. This is all the money you will have to work with throughout the month. Using the categories that you came up with, do a quick run of the numbers to ensure that your budget category amounts don’t exceed your monthly income. If it is, reevaluate the amount of money you are allocating in discretionary funds and adjust accordingly.
Now that you have determined your budget categories and set up a budget envelope system, it’s time to give yourself a pat on the back for executing the crucial first lesson to the Uncomplicated Practical Budget.
Lesson 2: It’s Not What You Make, It’s What You SAVE
We’ve all heard the old adage, “pay yourself first”. I never fully understood what it meant until we started doing it. This is as simple as creating a “savings” category into your monthly budget. After you’ve paid all necessary expenses, pay yourself. Simply put, create a “savings” envelope and deposit a set amount every month that is comfortable for you.
As an example, when we implemented this category early on in our marriage we were both working and we set aside the “tens” part of our paycheck. For instance, say I got paid $1296/bi-weekly, I would deposit $96 into our savings category. As time went on, we upped it to the “hundreds” part of our paychecks. Over time, we developed quite a little nest egg that we never missed!
If putting aside the “ten” or “hundreds” is undoable now, make a simple goal of saving $5/week. If that’s not too hard, make it $10/week. Keep increasing it little by little and you’ll be amazed at how quickly it will add up.
Lesson 3: It’s Not What We Save, It’s What We BUILD
Implementing a family budget goes far beyond just saving money. It’s not how much we save, but how much we actually end up keeping. It’s a wonderful thing to go the grocery store and save money using coupons. But are we actually keeping the money we are “saving” or are we just buying more stuff with the money we saved?
For instance, if I saved $200 for my son’s back-to-school budget, I can end up saving $60 if I have hit the right sales and have coupons, promo codes or discounts. I can end up using $140 out of my envelope and like most of us, think it is fine if I use the $60 and go out to dinner. But, the smart thing to do is to put the $60 back into the envelope to put towards the sneakers I know my son will need in 2 months. I could say I saved $60, which I did, but I did not spend it foolishly, I’m building it up for another upcoming expense.
In conclusion, budgeting does not have to be utter deprivation. Think of budgeting as freedom from worry. When you keep adding to your savings, no matter how small, amazing things will happen!
*This post may contain paid affiliate links.