Before I started organizing our monthly budget with my current system (using The Sustainable Budget Blueprint), in order to know exactly how much we were spending in each category each month, I had to choose an impractical or unreliable tool to rely on:
A. the automatic breakdown of our online banking tools (which just guess categories based on the location of the purchase)
B. spending hours going back through all of our spending to try and make my own best guesses as to which category each purchase should go under.
Have you ever tried to categorize a purchase from Amazon, Walmart, or Target? Without the actual receipt, GOOD LUCK. Seriously. You’re probably guessing properly about 50-60% of the time, but that is just not good enough for me.
There were two problems I kept running into:
- I was wasting my life trying to categorize these purchases at the end of the month. It just TOOK TOO LONG.
- It wasn’t saving me enough money to make it worth my time. In fact, it wasn’t really saving me much at all.
Thankfully, I was able to come up with a system that worked (and has worked for several years, now) to track our spending AND save me from wasting hours of my life each month line-item categorizing our spending – PLUS the new way of tracking ACTUALLY gets us closer to our savings goals each month.
Here’s the ugly truth:
If you’re simply tallying the amounts that you have spent each month (after you’ve already spent it all), that’s great, as far as awareness (which I’ll admit can make a HUGE difference in and of itself for some people), but I’d be willing to bet that you often feel like so many of my clients have expressed feeling: Like a hamster on a wheel.
My clients often tell me that they are so tired of making little to no progress towards their debt pay-offs or savings goals even though they live each day with the mentality of “we have no money, so spend as little as possible”.
The thing is, living in a constant state of scarcity (telling yourself there isn’t enough, so just spend as little as possible) isn’t going to help you spend less. I know it seems like it should, but it really won’t.
When you live with that sort of scarcity mindset, EVERYTHING you spend money on is “more than you can afford,” so what’s $5 or $15 more going to matter. It’s all “over-budget,” right?
For example: What if, instead of living in scarcity, you knew EXACTLY how much money you had left in your grocery budget BEFORE you went to the store (with your list because you have your meals planned since we are about saving money, here, right?)?
What if you went into the grocery store knowing with 100% confidence that you still had $44 in your grocery bill for the month. When you realize you have $50 worth of groceries on the counter, I’d bet that you are going to be a little more likely to pick up that $10 frozen lasagna you popped into your cart, and just say, “Oh! Sorry, I need to put that back!”
The reason this works is because if you KNOW FOR SURE that you are $6 over your budget for the month with that frozen lasagna, and you also know that you will already have enough food at your house to make omelettes (or spaghetti or fish tacos with those frozen fish sticks you have in the freezer) instead of over-spending on groceries, you are FAR more likely to put back that $10 frozen lasagna so that you can walk away with $4 to spare in that budget instead of being $6 over.
When you don’t know for sure how much was left in your budget, you just consistently end up going over budget, and only realizing it at the very end of the month when all you can do is shrug your shoulders and think, “Oh well… Hopefully I can guess better next month.”
How about instead of living our lives in that uncertain, consistently anxious mindset of scarcity, we ACTUALLY FIGURE OUT how much money we have to spend on groceries (or sports or clothes or eating out or *you name it*), so that we can go into the store with confidence, and feel GOOD about the things we spend our money on?
How about we spend our money (that is set aside specifically for those things we are spending it on) with confidence knowing that we don’t have to feel guilty about spending it because THAT’S WHAT IT’S THERE FOR???
Now, THAT is something I can get behind. It’s why I’m so passionate about this.
- I finally figured out a way to get off the hamster wheel.
- I figured out how we could build up our emergency savings from NOTHING after we had a really hard season of job changes and employers lying to us about what we’d be getting (spoiler alert, sometimes people lie, and sometimes those lies can drain your bank account until you’re not sure how you’re going to pay your mortgage the next month…).
That’s another story for another day, but for the sake of THIS post, we were able to figure out a budgeting tool (along with the provision of the Lord, which has never failed us) that brought us from that point to the next step I figured out… - I figured out how to quit wishing we could remodel our disgusting 70’s bathroom with the peeling metal tub, and I watched our Master Bathroom Remodel savings account grow every month for about 20 months until we had enough to hire THE BEST contractors in Denton instead of someone we could afford sooner and instead of finding the spare time (over weeks and weeks and weeks) on our weekends for us to do it ourselves.I cannot tell you the joy that we felt knowing that the job was being done RIGHT by people we trusted, and NOT FEELING GUILTY for spending the money needed for it BECAUSE WE SAVED FOR IT!!
That money was MEANT to be spent on that bathroom, and it did its job when it was meant to happen. It may have taken 20 months, but man… seeing that account balance grow each month? That was a great feeling.
Do you have a budgeting method that helps you to track your spending and category spending up-to-date through you month, or are you stuck only realizing your real spending at the end of the month?
If you use an app that helps to track these things for you, are there any things you wish the app did better?
I tried many of them, but I never found one that would give me the extent of details that I needed for our budgeting. I love hearing about what works and what you wish worked better for your family!
