Budgeting-for-a-Lifetime
3.30.16 Savings

An Expert’s Take: Budgeting For a Lifetime

By: Jordan Page

The Crunch: As a frugal living expert and financial disaster survivor, I’ve learned the secret to budgeting that actually works — simplify. The simpler the budgeting process, the easier it will be to stick with it for the long term. The technique I’m sharing today single-handedly helped my family rid more than $10,000 in credit card debt. More importantly, it has helped thousands of people stop getting by and start getting ahead.

While every family is different, there is typically a division of spending and bill-paying that goes on in most households. In my family, I am the primary spender, and my husband is in charge of budgeting for all family activities, including date nights. The steps to maintaining a practical and balanced budget for a lifetime are:

  1. Divide up your spending and simplify your individual budgets.
  2. Break your budget down weekly instead of monthly.
  3. Keep track in a simple envelope.

Let me introduce you to the simplest budgeting technique ever.

1. Divide Your Personal Spending and Simplify Your Budgets

No more “hair cut budgets,” “eating out budgets” or “dog grooming budgets.” I suggest lumping your spending into two categories.

For those who do the majority of the spending in the home (typically the homemakers or the one who does the cooking and grocery shopping), the categories would be:

  1. Grocery
  2. Other

Then, decide which financial responsibilities fall to the secondary spender in the home. As I mentioned earlier, my husband’s greatest responsibility is budgeting for all family activities. See more on that here. His budgets look like this:

  1. Family entertainment
  2. Other

Today I will be talking to the primary spenders.

What Does the Grocery Budget Include?

  • Anything found at a neighborhood grocery store, not a warehouse super store. Think of a neighborhood market. It don’t have power drills and bed sheets, but it has most of the basic items a family needs on a day-to-day basis.
  • Examples of grocery budget items: Any and all food, basic pet needs/food, baby needs/diapers/wipes, basic kitchen utensils and cooking items, cleaning supplies, milk/drinks, over-the-counter meds, basic beauty products, and other toiletries, etc.

What Does the Other Budget Include?

  • Typical, non-grocery expenses, not including family expenses, bills or utilities: These are regular, non-emergency items that usually come under the “want to have” rather than “need to have” category. They do not include any bills or utilities (including gasoline), home/car repairs or emergency or large family expenses — such as vacations or braces. These are typical weekly expenses.
  • Examples of other budget items: Home decor items, clothing, haircuts, babysitter and/or date night expenses, piano lessons, car cleaning, school pictures, lunch with friends, spa treatments, shoe repair, a round of golf, gifts for birthdays and showers, crafting, and DIY items, etc.
  • How much to budget? It depends on the family. Check your bank statements for the last three months, tally up what would be covered under your “other” budget responsibilities, add it up, find the average and cut it at least by one-third.

Tighten your belt and put the money toward greater things! It feels good in the end – I promise.

Where Does Money for Bills, Utilities and the Like Come From?

In our house, money for that comes from our family budget. Family budgets are taken care of first, and then whatever is left over (after savings and debt, of course) is divided into our “other” budgets.

2. Budget Weekly Instead of Monthly

This is the biggest secret! If nothing else, do this. Take your budget for the month and divide it by the number of weeks you have in the month. Following a budget for seven days at a time is way easier than following it for 30 days.

3. Track Your Budgets

An envelope is the single most effective way I’ve tried to track my budget. Here’s a video showing how this simple little envelope works. (Note: Be sure to watch the video first or the following will make absolutely no sense!)

You can make your own envelope like I did in the video, or you can download our free envelope printables.

The most important points from the video are:
  • Keep a simple envelope in your wallet or purse at all times. Divide the envelope in half vertically. One side is for grocery money and one is for other expenses.
  • Divide each budget by however many weeks there are in the month. If there are four weeks, divide your budget by four.
  • Draw a horizontal line for each week. Four weeks = four lines.
  • Meticulously track your spending, counting down from your total. If you start with $100 grocery budget for the week and spend $40 on the first day, your new total for the rest of the week is $60. Be sure to put all your receipts in the envelope!
  • If you go over your grocery budget, that’s OK. You just need borrow from the other budget (and vice versa), but do not borrow from the next week! When your week’s budget is gone, it’s gone!
  • Got money left over at the end of the week? Fabulous! Put it toward debt first, savings second and into a “fun money” account once the two are under control.

Good luck with your new system!