How to budget for inspiration not deprivation.
The budget: that austere and arbitrary critic that tells you, “NO, you cannot go out for coffee, you cannot take a weekend trip, you cannot buy ice cream!”
What small pleasures do you allow yourself on your budget?
If you don’t put your budget in its place, pretty soon, it will be looking down its pointy nose at you, reminding you how undeveloped your impulse control is, how you’ll never amount to anything, you’ll always be in debt . . . If that’s not enough to make a person give up, I don’t know what is! Even when things seem dire and cutting costs is a necessity, adding guilt and stress to the pressures of paring down the budget seems to me like an unecesary burden.
Do you find yourself spending time with the budget Nazi in your head? Do you find yourself splurging and rebelling against its authoritarian austerity? Maybe it’s time to leave the relationship!
I prefer to spend my time with a very different sort of budget. One that doesn’t make me feel like some kind of loser every time I consult it. I’m not a financial guru at all–which is why I know that my budget strategy can work for anyone! If I can do it, so can you. Here’s how:
Make your budget at the END of the month! This way, your budget is just an honest friend here to tell you the truth about the way you spend your money. You’re making observations, not judgments. Once you have all the information, you’ll be in a position to make decisions based on your preferences.
Take an honest look and DON’T beat yourself up! You’re just exploring here, learning something about yourself and your spending. Think of it as an anthropology or psychology project. What can you learn about yourself? Some fascinating things I learned about our spending habits by having an end of month budget:
- 3 years ago I noticed that DH and I spent about $100 a month or $1200 a year having coffee out.
- 2 years ago, I discovered that when DH and I went to the nearby grocery store for one item we’d forgotten in our monthly shop, it always cost us a minimum of $15, no matter how small and insignificant the forgotten item was!
- This fall, we discovered that we spent an average of 65-70 euros a month on wine.
Using information to recognize your options and make decisions: When we noticed that our coffee expenses were the equivalent to a plane ticket to Europe, we decided we preferred to drink our coffee at home or bring a thermos to a park bench. We noted quickly that we felt equally satisfied–if not MORE satisfied–with our decision to move to cheaper coffee and more trips home for DH (when we lived in the States).
As for the grocery stops for forgotten items? We realized that we preferred to save money by making a more careful list in advance. Extra grocery trips and impulse buys were not making us happier people!
We prefer to keep wine-tasting on our budget, thanks!
As for the wine budget–it may seem extravagant, but we decided to keep it.
Why? Because we don’t eat out at restaurants and hardly ever go out for drinks or coffee. We enjoy wine-tasting on the weekends after a nice hike and having a glass of wine at home with diner. And since we know exactly how much we spend each month, we know we can afford it!
See your budget as a guideline to make you happier: If you look at your budget and tell yourself, “Hey, next month, I bet I’d be just as happy with fewer trips to the grocery store or having coffee at home!” It’s a lot easier to follow than telling yourself, “OK, next month, grocery expenses under $200 or BUST!”
The later technique kind of reminds me of the whole dynamic of going on a strict and depriving diet–it usually results in misery, crankiness and binging later. Doing something because you want to is much easier to maintain than doing something because you’ll be a no-good spending disaster with no self-control if you don’t.
What about your budget technique? Do you use a budget? Do you have budget-related guilt? Do you have budget goals?
Maria–Thanks for stopping by! I know what you mean about feeling slightly alienated by really austere budgets. I actually happen to spend very little money and don’t buy a lot of things new, but saving money is not the only important thing! Sometimes having a few simple pleasures matters too! And I agree with you-rather than cut things from the list, I usually find ways to make my ‘fun’ cheaper. I don’t want to choose between frugal and happy!
I’m also an end-of-the-month (or really, end-of-the-week) budgeter. I don’t set limits on spending, but I always know how much we’ve spent recently and how much we can afford to spend. For me, frugality is more about knowledge than control.
We both make very little money, but we live pretty simply, so we’re never broke and don’t generally concern ourselves much with how much something costs, at least for the little things. When I noticed that we’d spent, oh I’m too embarrassed to say, a HUGE amount of money on groceries in a recent month, I made it a point to take notice of our purchases at the grocery store. In the cheese section a couple of weeks ago, my partner reached for a block. I looked at the sticker–eesh, $15! We opted for a $3 package of parmesan. When my end-of-the-week budgeting attunes me to an issue, just trying to be a little more conscious can bring us back under control.
Observing your past spending habits to make a sensible budget is the way to go! Depriving oneself like going on an extreme diet never works.
AMD–You can save a lot of money with knowledge and reason–more so than with willpower, in my humble opinion. By the way, your comment on cheese at the grocery store just makes me want to go on a rant. I fired normal grocery stores when I lived in California and when with a CSA + Trader Joes because of the evil pricing habits they have–you know the ones, with the “sales” that are really the food’s normal price . . .and when the food is not on sale and you pick it up accidentally, they nail you and hope you don’t notice. Once I picked up the wrong can of artichoke hearts and noticed it rung up for $10! I made them take it back 
Jersey Mom–hah! I was just thinking to myself, what spending habits?!? but then I remembered how I used to survive on ramen and wear only used clothing–THOSE spending habits. Yeah, it’s ok to live a little–I was like a budgetary anorexic back in the day. But even for people that tend to over-spend, I think this kind of a budget is a gentler way of handling things–you can do the ‘easy does it’ route without the guilt.
We tend to overspend, but somehow, over the years, we’ve learned to overspend in ways that are really easy to eliminate.
For example – my husband and I are both in our 50s. Our only debt is our mortgage. We decided years ago not to take out car loans, and to pay off credit cards every month. We don’t buy our kids the latest gizmos or fashions; when we need a new item of clothing, we check the thrift stores first; we have a summer garden.
The one place we routinely overspend is on groceries and eating out. But you know – I don’t really feel bad about that. We add to our savings every month, and if one of us were suddenly out of work, we could stop eating out and cut way back on groceries. That’s just not something that bothers me.
We don’t budget, exactly. We do a lot of up-front lowering of our spendable cash – we both put 20% into retirement funds, so we never see that money. We put money in the kids’ college accounts, so we don’t see that money. We have an emergency account that would pay our bills for a year or more even if we had absolutely no income. After that – as long as we don’t go into debt, we don’t feel bad about spending money. Middle age ought to have *some* benefits.
I agree that your budget should serve you and not the other way around. For years I have given myself a daily allowance (currently $20) with which I must provide all my food, entertainment, household items, etc. I deny myself nothing I truly want, but I buy a book or a bottle of wine or a movie ticket with the knowledge that it must be accompanied by several days of very inexpensive meals in the near future. Will I enjoy this thing enough to justify the reduced allowance in the coming days? It is a good way to quickly determine the value of something I want rather than need.
Clisby–I think also that once you have a stable lifestyle set up, you don’t have to be so anal about budgeting–assuming you’re someone who has developed good habits. Since we just made an international move, we had to do the observational budget all over again since we have a completely different income situation (just one of us working for now) and a different economy in which to spend (gas and heating costs more, food is about the same, some temptations are removed). The budget is completely different. Once we know how we spend our money and have our habits where we want them again, I doubt we’ll need to count every penny. And I certainly don’t think you should ever feel guilty about making an educated, rational decision about how you want to spend your money. It sounds like you have the budget well under control!
Maus–I think that you’ve hit on the idea of why I think having a budget is important: It allows you to decide which things you enjoy the most and if spending in one way is really ‘worth it’ when you think of other things you could do with the money.
We both like magazines and have a subscription or two each, but over the long term, it works out cheaper; one of mine has not gone up in about ten years. We also buy the odd mag at the shops, often at the supermarket where my husband works so we get staff discount. His computer mags have been put to good use over the years as he always knows the best deals and is very knowledgeable about computers; he has fixed and upgraded our and friends’ computers a lot over the years and he enjoys the mags too. But mine are pure pleasure; home decorating and antique mags. I think complete austerity is damaging; I spent enough years truly poor, so I feel a little luxury is healthy. Another indulgence is a Chinese takeaway about once a month; heaven.
what a great post! And interesting comments!
I don’t “budget” but we have been living frugally on one income for years now. We’re in a trying time because my husband was laid off in the fall and is only working odd jobs right now. So I have been feeling like I should do something different with money – I like your approach a lot. So, thank you.
Attila, I think everyone should have a few simple luxuries. We just have to choose what they are. Today I did something I almost never do: stopped for tea in a salon du thé. I could definitely brew the tea at home for less, but since I barely ever go out, it was a real treat to do it just this one time. I think that’s part of the trick: when you just have a few luxuries, you can really enjoy them.
Margo, thanks, this kind of budgeting really helps you see where you have some wiggle room and lets you make choices that make sense for you. I hope it works for you.
I LOVE this post! You managed to describe something I’ve always had trouble explaining: my budget is a guideline, not a leash. If I over spend one month on food I don’t panic, because I know I’ll likely underspend another month. I watch the overall flow of the money over the months not every little shift in my chequing account daily.
Thanks,
Tim
I’ve had to resort to an allowance for myself, which is $100 in retail stores. I spend money here and there on books, netflix, wine, and the occasional download on ITunes. I currently still have around $10000 to pay on credit cards, which is bad but several years ago it was up over $20000! However, if I stick to my current pattern of spending, I will be able to have this paid off by early next year.
The thing that has really helped me get control of my spending is this budget program on the Wells Fargo website. I can see exactly what I spend in which categories, and I can see my 12-month average. When I noticed at one point that I was spending $600 a month on average at retail stores, I went on a crash “retail” diet! With $100, it’s just enough to buy a cute outfit once a month, or a couple of tops, just to satisfy my inner clothes horse.
I’m satisfied with myself for the progress I’ve made in paying down my debt. Now, to the student loans!
Tim, I’m so glad you like it. I lurk around your blog often, so I take that as a compliment! And I hear you on a budget not being a leash!
Pickler–wow, credit cards paid by next year sounds great! That Wells Fargo tool sounds excellent by the way–I had no idea. Here I’ve been inputting everything into my excel spreadsheet by hand. As for your inner clothes horse . . . I didn’t know you had one, but now it all makes sense .
I think also that once you make a change in an area–say spending on clothes or toys or whatever, it’s easier to make further changes later on. But cutting $500 out of your budget is a great thing!
For me, I go out for coffee with girlfriends, instead of going out for dinner with them.
And I have started to try making a couple of new recipes for dinner each week, which has had the effect of not wanting to go out for dinner just because we were getting tired of eating our usual dishes at home.- and it has been fun making new things to eat!
Non-consumer girl. I think you give a great example of how to tweak your budget to allow for fun. You could look at going for coffee with girlfriends as a kind of splurge if you’re just counting your pennies–but here, you’re using it to save money instead of eating out. It’s a great example to learn from.
Yes we have a budget; the whole thing is geared towards our goals and our priorities. We save on utilities etc but splurge on travel and good quality coffee. We rarely eat out as we prefer to eat at home.
Laura–yes the good quality coffee and occasional travel is important to us too! Thanks for sharing.
We give ourselves a cash allowance of $30/week which is ours to blow, or save for something. Movies, lunches, coffees, or not. Since we’ve had the allowance, I rarely spend my money on these types of incidentals, I tend to save it for more meaningful purchases, like a seasonal kayak rental.
Also, not to plug a product because there are many online budgeting sites, I just happen to use mint.com. I really love it, because it logs on to my bank, my 401k, my mortgage, credit card, etc. and then shows me my net worth, how fast I’m paying off my debt, and lots of other great stuff.
Then it sends me a report every week and lets me know if I’m going over my budget for any of the categories I’ve set up.
Tina–it’s interesting to note that once you had an allowance you saved it for other purchases. And thanks for the idea for online budgeting. I had no idea about such possibilities . . .
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[...] Scrutinize your budget, cut back on expenses, save up an emergency fund and pay down [...]
[...] Seeing as DH and I enjoy the challenge of being cheapskates much of the time, we don’t currently have this problem;) But in my humble opinion, spending more than you earn each month (or just plain old not knowing!) is a recipe for disaster. I may be busy right now, but I am still keeping tabs of our cash flow by tracking our expenses. [...]
my dear, thanks for your detailed post on what I actually consider to be my preffered way of budgetting. I read loads of blogs about this topic and I used to think I am not meant to be such a well organised person as those bloggers are (or want to be, or think is good to be).
If I would try to write about the way I budget, I would’t be able to catch all the subtilities, so thanks again!
I love to spend money for what I feel makes me and my family more content. I spend money on a good wine but mostly for cooking, I just refuse to cut in from my list. I balance it cooking at home mostly and making my own desserts – hobby, pleasure, healthy all good for me and my family. I wouldn’t change this way of living for the world
maria