I have a confession to make. I consider myself to be a financially responsible person. I rarely make impulse purchases, I pay pennies on the dollar for almost all our household belongings and I’m the master of making dinner at home almost as special as restaurant meals.
But I don’t budget.
I have never felt the need to set financial limits on my family’s spending because we do just fine. But do we really? We aren’t debt free, which bothers me more than I’d care to admit. We are getting this paid down pretty fast, but I do feel that a set budget would probably turbo power our goal of debt free living.
So this is my new year’s resolution:
Set a budget and stick to it. Period.
I ran a quick Google search on “how to budget” which brought back 104 million results. Yes, 104 million. So I should do just fine in figuring out the details of how to do this budget thingy.
I’m no stranger to tracking our spending, as my husband and I have made a few half-hearted attempts at Quicken in the past. But we just weren’t that into it. Without budgetary goals, it really didn’t matter how much we were spending. So, we spent $400 on food? Eh . . . .
So starting January 1st, we will not only track our spending, but will also set a budget for all the different categories.
I’m really looking forward to this resolution, as I’ve turned into quite the money geek and I think it will be a fun challenge.
Have you set a new year’s resolution for yourself? Please share your ideas in the comments section below.
Katy Wolk-Stanley
“Use it up, wear it out, make it do or do without.”
{ 15 comments… read them below or add one }
I, as well, am a failed budgeter. Although, I spend next to nothing on anything beyond basic needs, bills, and rent…I don’t budget. I did once upon a time way back in the 70’s and began by tracking every cent I spent for a full month. Since it’s January 1, maybe I will try that again and see if I can develop a budget that meets my needs. Thanks for the incentive!
One way that helps us stay on track is a bi-yearly net worth statement that my husband does. This really keeps a balanced view of debt to assets ratio and helps us see just where we are in terms of our goals. It is a great planning aid when we know we will have a major expense on the horizon, such as our 50th as well as keeping us aware (myself especially) of those under the radar costs i.e quarterly tax reserves and other insurance. It has been a solid piece of our being debt free. Our budgeting is more an estimate based on experienced costs and seasonal adjustment.
Good idea. I have never budgeted. I am not in debt. I tend to “roller coaster” financially. I save, save, save and then I spend, spend, spend it. Not as a resolution, but I do believe I will at least do the tracking for a month anyway. I would like to see the result. This is very difficult for me…I can’t even make a weekly menu of meals and stick to it. Thanks for the suggestion.
My resolution for 2010 is to make monthly mini resolutions each geared towards larger goals like weight loss, improved health and finances, etc. Last month I started drinking green tea every day. Now it’s a habit that I don’t even have to think about. I just do it. January, my goal is to spend 15 minutes a day exercising…any type of exercise will do. Hopefully by month’s end, that will have become a habit also.
My husband and I have agreed to spend (at least) the first three months of the year actively saving money. Not just buying things on sale, using coupons, etc. kind of saving (which we already do), but the kind where you find out exactly how much extra money you’ll have if you really, really don’t spend any extra. I’m guessing it’ll be more than we imagine.
Really what you should do before you set a budget is to track your spending. Check, you’re doing that, but you need to do it for 2 or 3 months first so that you know where your money is going.
By setting a budget now, without knowing where your money is going you’re just guessing, probably guessing wrongly and therefore likely to fail sticking to the budget.
Once the tracking has been done and the budgets set based on those figures, if one of your budgets is too high, only then can you start to figure out how to lower it and by how much. 🙂
Have fun!
If you don’t want to read all 104 million hits in Google check out this article about the 60% budget solution. http://articles.moneycentral.msn.com/SavingandDebt/LearnToBudget/ASimplerWayToSaveThe60Solution.aspx?page=1
This is basically how I do our budget. I have what we call the “Pot O’ Money” category which more or less the 10% short term savings he talks about in the article. When the husband says “I really want a new hoozit” I can say yea or nay depending on if we have already spent the Pot O’ Money for the month. Nice compromise between no budgeting & ultra obsessive budgeting.
I was also a non-budgeter until this past year. It literally changed my life to spend based on a budget, mostly because we were able to be proactive about what to do with the “extra” money– money above what covers the essentials. It allowed us to buy a house and establish a healthy emergency fund. In 2010, I need to set up Roth IRAs (we only have 401s right now) and make sure our insurance coverage is appropriate for us. Not particularly sexy or fun, but necessary. Good luck with your budget, keep us posted on how it goes.
I don’t budget, either, but I think I’ll start recording my expenses in a notebook. I pay off my credit card every month, but I’ll try to keep a closer watch over that, too. I’ve committed myself since June to buy nothing new, and I’ll add to that more careful spending on food items – I’ve got some raw peanuts and flaxseed that have been in the cabinet longer than they should have been, and I know they’re past their prime. I’ll feed them to the wild birds outside, and I’ll track my food purchases carefully. And eat out less often! My husband and I tend to eat out when friends we want to see ask us out, but the only thing they ever suggest is to eat out.
My job position was cut Monday (I live in metro Detroit, the land of 15% unemployment) and I’m receiving severance pay for six weeks and then will be on unemployment, so I’m going to be especially careful about purchases. And, as I’ve said before, Katy, you’re an inspiration!
Tracy,
I’m so sorry to hear about your job. There are so many ways to live on less, but having an income is key. Stay strong.
Katy Wolk-Stanley
The Non-Consumer Advocate
Fore me a budget is counter-productive: it makes me want to spend more than I would without the budget.
I know how to cut spending down to the bare bone (aided by the fact I wouldn’t have to buy “capital” items like clothes or transporation for a decade) if I have to, I’ve paid off my debts, and I live within my income while adding to my savings. That’s sufficient for me.
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I’m looking forward to learning how it goes for you. With one exception the people I know who budget need it to restrain themselves. Now maybe we’ll see a different take on the matter.
I was forced to put a budget together and stick to it after being laid off in 10/2008. I put together an Excel spreadsheet listing all our debts and income (formulas and all), balancing it againt our checkbook and on-line bank statement. I include every penny spent, which helps to actually see where all the money goes. We are on a debt reduction plan based on Dave Ramsey’s method “Total Money Makeover” (book checked out from the library) which sparked the excitement needed to follow this plan. We plan to be debt free with exception of our 1st mortgage by 2011. Don’t get me wrong, we do live pretty comfortably; periodic vacations and even filling my cupboards and fridge with organic foods to boot. So it can be done my friends!!!
My husband and I every couple of months look at our credit card debt. I decided we needed to sit down at the end of December and look at it again. We set a budget, found a way to track nearly all of our expenses so we know where the money goes. We also set an allowance. We each get $100 a month to buy something we want, go out to lunches or we can save up over months to buy something bigger. We set up many bills so that we over pay. Our house should be paid off in 19 years, not 30, the car and the school loans will be paid off much quicker as well. Our biggest goal though is to tackle the credit card debt, I hate it! So I’ve been making many gifts, and trying to use what is in the house furniture wise to set up my studio and it’s going really well!
Katy,
I found your blog just yesterday while I had some down time at work, and I’m really enjoying it! I just found this post and I have to tell you what got me into the budget game. It was Mint.com. For the first couple months when I got an account, I wouldn’t stop talking about it to everyone I met. Sure, that meant I was a really annoying person for a couple months, but I just so believe in how much help it can be! I’ve saved hundreds of dollars (I wish I was exaggerating!) over the past few months. Once you enter your information into their system (which is free!) they automatically create a pie chart and graphs to show you where your spending is going. You can compare past months, and then set your own goals (as well as viewing the average, based on how you’ve performed in the past)! I got to see where all my money was going, and used a little creativity (and common sense) to see how I could avoid spending so much in the future. Hope this helps!