Thursday, September 1, 2022

Budgeting update

Back in February of 2020, I shared with you that I had started working hard towards managing our budget. 

At the time, I was frustrated about running out of money before the end of each month and relying on our credit card to see us through. We always paid our credit card back with the next paycheck, but it still annoyed me that we were starting each month with less money than we would have if we hadn't gone into debt in the first place. 

Another thing that bothered me was that I didn't have a handle on where all our money was going. It just seemed to disappear. 

I also had all these big things I wanted to save for, like house renovations, but since we were always running out of money before the end of the month, there didn't seem to be much left to put into savings. 

I took all of these frustrations and turned them into the motivation I needed to learn how to handle our money better. Since then, I've been learning and refining how I budget, and things have definitely improved. 

Today I want to share with you how I budget and why it's working for me. 

The first thing I did when setting up my budget was talk to a lot of different people about how they manage their money. I talked to people on low incomes, inconsistent incomes and regular incomes to get an idea of budgeting methods that would work no matter our situation. I also watched YouTube videos about budgeting and followed several budgeting gurus online to pick up their tips and tricks. 

Putting it all together for me and my household, I figured out that having all of my budgeting data on a spreadsheet that automatically updates every month doesn't work for me. I need to be a lot more involved in the budgeting process than that. 

I need to be the one physically moving money about and keeping track of it on paper. 

Back in 2020, I copied a paycheck bill tracker template designed by The Budget Mom, to get me started with a pen and paper budgeting method. Since then, I've been refining the tracker every month to get it exactly how I want it. 

Each month I update the dates on the paycheck tracker and check whether it's going to be a four-week or a five-week grocery month, and then I fill in all the "BUDGET" columns with the information I have and make sure that our income is going to match our outgoings for the month. 

I print it out and fill in the "ACTUAL" columns as the month progresses, to keep track of how our budget is tracking in reality. 

Sometimes the water bill or the power bill might be a little higher than I had budgeted for, or unexpected expenses might crop up, so I've included a miscellaneous spending line to allow for any discrepancies like that. 

The other thing I did that has really helped us stick to our budget is set up online accounts for all of the different SAVINGS categories listed above. I already had a BIG BILLS account, which covered big annual spending like insurance premiums and car maintenance, but in the past couple of years I have also set up an EMERGENCY account, a HOMESCHOOL account, a BIRTHDAY/CHRISTMAS account, an APPLIANCES account, and so on. 

Steadily putting money into these accounts each month has helped me know how much I can spend on items like clothing without breaking the budget. If I buy clothes, I use the credit card to do it but make sure not to spend more than the amount of money sitting in our CLOTHING account. Then I simply transfer money out of the clothing account to pay off the credit card and we are still on budget. 

The EMERGENCY account is something I'm slowly adding to to give us a buffer for a time when our income might suddenly stop or an emergency might occur that we need to pay for. 

Recently I dipped into our emergency fund to cover a plumbing bill, when a pipe burst in our bathroom. It was so good having the money sitting there ready to pay the bill, as it didn't affect the rest of our budget at all. 

In the past, an emergency like that would have thrown out our whole month's budget. 

Even with all of this excellent budgeting happening, I realised we simply weren't earning enough to achieve some of my bigger goals, like renovating our kitchen. Because of that, I decided to get a part-time job and dedicate all of my earnings to our HOUSE RENOVATIONS fund. The job is only 12 hours a week and it's not particularly high paying, so progress is slowly, but any progress is better than the no progress we were making before. 

The good thing about the job is that it's in a school, so I get all the school holidays, which helps it fit around family life. It's also in the school that we want to send our kids to for high school, so that will help ease the transition from homeschooling to institutional schooling for them. 

Now, I couldn't write a post about budgeting without mentioning the current inflation that is causing the price of absolutely everything to rise. We've seen interest on our mortgage go up, rates increase, water charges increase, power charges increase, grocery prices go up, and petrol prices go up. Almost every expense line has increased significantly. 

Because of inflation, it has been increasingly difficult to make our outgoings match our income each month. 

Recently, I've had to reduce the amount of money we're putting into several of our savings accounts, and last month I changed cell phone providers to save half the cost on my monthly bill. Paul also canceled our Netflix subscription as it was a luxury we could no longer afford. 

Those changes have helped us a little bit in combating the price increases going on. 

The other thing I've been doing is working really hard to keep our grocery bill down, as that's the budget area that's easiest to blow out on. 

I've been shopping at Reduced to Clear and Why Knot to get discounted food items. I've also been shopping at Pak'N'Save once a month to get the good deals there, and then doing weekly online Countdown orders the rest of the month. I find it much easier to stick to my budget when I'm ordering online, even though the overall prices at Countdown are higher. 

Mainly, I'm just so glad that I started figuring out how to budget two years ago, before inflation was such a big problem. It has got us into a much better position financially as we head into these tougher economic times, which is helping us to get through them. 


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