I have a confession to make. This is huge, embarrassing, and possibly contradictory to the Minority Mindset.
I have never had a firm budget.
Let me give a little context. My husband and I have been married 16 years and have always prided ourselves on being smart with our money and making decent financial choices. We both owned our own investment properties/homes when we met. Throughout the years, we have bought, sold, saved, raised kids, taken vacations—all of the things the average American does—all while feeling we were being savvy with our cash.
We were in for a rude awakening. This January, we decided to give budgeting a real go. My husband was changing companies with a small pay cut, so we wanted to make sure we could afford it. I am a stay-at-home mom, homeschooling our teenagers, volunteering in the community like a good citizen, and making a little side hustle out of freelance writing and editing. But I don’t contribute much to the income yet.
So we did a little research to find a decent budget planner app. We decided to use EveryDollar, created by the Dave Ramsey team. I know what you are thinking, “(Eye roll) Dave Ramsey? Next you will tell me to stuff dollars into envelopes…”
But honestly, we liked the simple design and functionality of the app and soon created the various categories of expenses, savings, income, etc.
This is where things got interesting. In order to figure out how much we should budget each month for each category, we had to actually figure out what we spent. We poured over our credit card statements, bank statements, Amazon account, and mortgage statements from the last couple years. What we discovered was rather interesting.
We were not nearly as savvy as we thought. We had spent hundreds of dollars on coffee. Our random Amazon purchases added up. Our food expenditures were erratic. After tallying and averaging all of the expenses, we were really not being very good at living safely within our means.
In the past, I have pretended to make budgets by listing out what I thought we spent in different categories, what I wanted to believe our monthly expenses totaled. I would make cute charts on the laptop composed of nice round numbers and wishful thinking. We never starved or seemed to go without, but the “budget” never stuck or even meant anything. And we certainly weren’t getting ahead.
Now, this year, that is changing and changing fast. We have been very lucky in that throughout the Covid-19 pandemic, my husband has continued to have steady work as an essential worker in the marine transportation industry. I absolutely know so many others have not had the same experience, and money is incredibly tight or practically non-existent right now. Creating a budget like this is the smartest thing you can do.
We had to have a heart change. Without understanding that living the Minority Mindset means actually changing the way we live, it would be impossible to implement a budget that actually helps us create goals and stick to them. We made the decision we wanted to continue to give our children a good experience growing up while also saving for now and investing toward the future.
These were our immediate goals:
- Begin saving toward our 6 month savings fund. We already had a $2000 emergency fund in place, but we wanted to make sure we had several months covered for life’s uncertainties. This year has proven what a shocking reality that can be.
- Save toward a “new” used car. Our daughter has just begun the driving adventure, and we will eventually need another set of wheels so she can use our old car.
- Invest more and throw more toward paying off our house. We don’t have any other debts.
It seems almost impossible to make these goals if you are living paycheck to paycheck like so many Americans. But let me tell you how we have managed to already save several thousand dollars toward the goals.
Okay, the first is really unfair. We were able to sock our stimulus check directly into our savings fund, as we didn’t need it for immediate bills.
But—the fun part—my husband and I have a little friendly competition going. We both have access to the EveryDollar app all the time and enter every transaction we make into the various categories as soon as we make a purchase. And neither of us wants to outspend the other.
My husband will treat himself to In-and-Out burgers while at work. I will eat grapes in the car while on a long car trip to prove I don’t have to eat out.
I will purchase flower starts for the garden instead of cheaper, slower seeds. My husband will spend the afternoon fixing the broken weed-eater instead of purchasing a new one.
For every dollar we spend, we hold each other accountable. And this accountability has created a mindset to save, to think twice about purchases, to consider what goals we have in place and why. Will we always have to be so crazy frugal? Of course not. We haven’t lived very frugally for years. But by doing so now, finally, we are starting to see an accumulation of money we can sock away toward our temporary savings goals, and eventually have a budget that allows for more investment and less dependence on our monthly income.
If you are just beginning a true, honest, and thorough budget, here are some tips to get started.
- Be honest with yourself. Your financial records don’t lie. Spend time calculating expenses through receipts and statements to get an accurate picture of your current spending habits.
- When you create your budget, don’t immediately cut the areas you feel are “too much.” You might be surprised that you really do have to spend that much for necessary purchases.
- After several months, you can make adjustments to your expense amounts. Congratulate yourself for not spending so much money on clothes, restaurants, or your expensive hobby. Now put the extra toward your other goals.
- And finally, find accountability, whether it’s a spouse, a friend, or a parent. Bad financial habits are like any other; sometimes they are hard to break and you need someone to support and encourage you. No shame in that. And you will win in the end.
Contributor’s opinions are their own. Always do your own due diligence before investing.
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