Tuesday, July 28, 2015

How We Budget, or, Money For the Non-Mathematical

For most of our first year of marriage, Andrew was in grad school and I was unemployed.  Panicky, we asked Andrew's brother Anthony, a lover of budgeting who'd been married for a while, to sit down with us and show us how he and his wife broke down their spending and stuck to the limits they set.

Anthony's an accountant.  With him, "sitting down" meant opening an Excel document, entering a bunch of formulas, and peering at his estimated gas costs per month based on the exact mileage he drove each week.  I so admire that man's precision, love of detail, and willingness to live a little Spartanly in certain areas during months he overspent in another area.  But Andrew and I knew the sort of fastidiousness that worked for him wasn't as well-suited to our personalities.  After learning Anthony's ways, thanking him but having a mild freakout, coming up with a more moderate version that felt like our own way, and changing our methods through trial and error over the past four years, here I am sharing with you how we set up a monthly budget.  So far, each of our 4 years of marriage has brought either a move, a job change for one of us, or both (we had that first year of sort-of poverty, followed by one year of what felt like total riches when we both worked full-time, followed by the past two years of more school for Andrew while I work part-time), yet these steps are flexible and have continued to work each month, as long as we've adjusted them for our changing financial situations.

Let me say that I'm fully aware we are basically cave people when it comes to money.  Aside from a calculator and the deposit app for our bank, we like to track all our spending on paper, not digitally, and prefer to crunch the numbers without any shmancy formulas.  You probably spend a lot less time carrying the one and writing on legal pads than I do.  But if, like me, you aren't terribly mathematically inclined, or if you like a lot of visuals to see what's going on, maybe this will help you like it's helped us.  Here's how we did it:

1. Figure out exactly how much you have coming in each month.  For us, that basically just means adding up our paychecks.  We decided to leave out windfalls like birthday or Christmas money because we wanted to set up our spending guidelines based on the least amount of income per month we might be bringing in and have the freedom to use the surplus how we wanted or needed (sad but true: we once had no choice but to blow half of a $500 gift on a locksmith when we got locked out of our apartment on Christmas night).

2.  Identify your monthly fixed costs, like rent, internet, utilities, and loan payments, and subtract the sum from your total income.

3.  Categorize your other expenses.  We have categories for groceries, dates, gas, and miscellaneous needs like gifts, toiletries, Andrew's schoolbooks, Aaron's dipes, and things for our home--this month, for instance, we inherited a printer and needed to buy new ink and a table for it.  For a while we also set aside personal spending money for each of us to use on fun stuff, which usually translated to clothes for me and snacks for Andrew, but, well, we just aren't raking in the Benjamins right now and had to shelve that for a while.

4. Decide how much is realistic for you two to spend in each category.  Our personal goal is to strike a balance between comfortable and overly strident, while not losing any money each month, i.e. have more money going out than coming in.  As a ballpark if you've never tracked your spending before, we designate $250 for groceries and $250 for miscellaneous, which works well for our little family of three  if we are frugal.  I recommend talking about areas in which you're willing to be flexible about spending a little more or a little less--for us, we decided not to worry much about gas since visiting our families at least once a month, even though we lived about 3 hours away, was a priority.  Since we tried to set up our categories in a way that would allow for money left over at the end of the month, we just used it as a cushion for months with extra gas expenses.

5. Subtract the sum of each spending category from your total income.  What's left over will hopefully be a positive number, and is yours to save or spend how you want.  When we're saving for a big purchase (at one point it was some storage furniture; right now it's a new camera lens), we roll any leftover miscellaneous money towards it at the end of the month.

So, this is that our breakdown looks like (yours might have different or additional categories):

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It's up to you how to track your budget.  Like I said, I get that most people are more technologically advanced than I am, but the thing that's worked best for us is just keeping separate lists on the fridge for each of our spending categories and writing down the amount spent each time we make a purchase.  For me it's an easy habit because I constantly see our lists (like, when I'm putting groceries in the freezer, the lists are right there for me to write down what I spent on groceries) and can do the math right there to see how much is left for a given month.

Honestly, PhD life is rough financially: Andrew puts in way more than 40 hours worth of work per week, with very little pay to show for it, and it's not really prudent for us to buy a house right now because we don't know where, God willing, he'll end up teaching one day when he's finished with his degree.  Though I'm sure I'd be quite happy having a little more money to go out to eat on nights when we're tired and would love to have someplace bigger to live than a 2-bedroom apartment, I'm grateful that for most of our marriage, we've been forced to spend less than we might be inclined otherwise.  It's trained us in sacrifice and encouraged us to be creative with our dates and entertainment, and truly made this former spender actually happy to decide certain new stuff isn't as necessary as it once seemed.

Let me be clear; that's not to say I think we've taken a higher road than couples who have a more typical dual-income situation and more settled home.  What I'm thankful for is the way month after month of circumstantial cheapness has helped me wise up about money in a way I might not have otherwise--people learn about and come to appreciate money in different ways, and for me, this was a very welcome opportunity.  If you're in a similar situation, or are just wondering about ways we try to spend as little as possible while still having fun and feeling like we have what we need, here's where we've been able to save the most:

  • Grocery shopping based on sales, not our appetites, and not buying packaged foods.  One of our highest priorities is eating healthfully, yet when we're trying to spend moderately on groceries, I've found that it can be easy to go over budget (especially at this time of year, when there's tons of fruits and veggies).  To compromise, I read over the store flyer before a shopping trip so I can make my list and plan our meals based only on the produce, meats, and other ingredients that are on sale that week.  At first I thought this approach would be limiting, but to my surprise, it's much more freeing than just asking each other, "So, what do you want to eat this week?" because we aren't just blankly casting around for ideas.  And, as someone who enjoys cooking, I really like the challenge of coming up with recipes based on what's available to us.  Every few months, we make a huge Costco trip to buy items that have become our staples, like cooking oils, chicken stock, roasting chickens to eat and to make more stock, rice, quinoa, vitamins, and spices.  Rather than blow a whole month's grocery budget on that one trip, we break it down over the next few months into $50-$60 installments, which is about what we spend on one normal grocery trip, subtracted from the $250 total for the month.
  • The library!  We're lucky to be able to walk to our library, which is also located next to a kids' play fountain and a farmer's market, and Aaron loves it.  I haven't braved organized story time yet, but he loves picking out books and playing with the toys there.  Andrew's schoolbooks are a big expense every semester, so to offset that cost, we don't really buy books for pleasure reading anymore unless it's one that we've already read and loved.  We bought a Kindle Paperwhite after Aaron was born so I could read one-handed during feedings and while he napped in my arms, and the amount of eBooks we've both borrowed from the library system have more than paid for it by now.
  • Truly, just a combination of being creative with our wants and thinking twice before buying non-necessities has gone a long way for us.  For me, I love treating myself to a coffee drink and I love having my nails painted, so rather than spend money at a coffee shop or nail salon, I make iced coffee at home and paint my own nails.  We also decided that our Amazon Prime membership, which we really value, offers a decently comparable selection of movies and TV shows to Netflix (it's not quiiiite as good, but we are fortunate in that Andrew's sibs let us mooch their Netflix account in exchange for using our free 2-day shipping, so we decided to stop shelling out for both Amazon and Netflix services).  For dates, we try to think outside the going-out-to-dinner box, unless we have a coupon or Living Social deal, and just do things like go for walks or to Adoration or play board games and make dessert after Aaron goes to bed.  I promise it's not as old and boring as it sounds.
So there it is, way more than you maybe ever wanted to know about our money and what we do with it.  I just remember the stress of figuring out spending as a couple when we were newlyweds, as well as the feeling of wanting to know where our money was going during times when it felt like we were buying one thing after another, whether for stuff we wanted or for situations that actually called for it, and I hope this is helpful.  But, to Him be the glory.  God blesses us with money as a good, but not as an idol, and I try to be mindful about the fact that worrying too much about too little money is idolatry in the same way that greed and materialism are idolatry.

What do you think?  Questions?  In attempting to uncomplicate things have Andrew and I actually complicated them, living unaware of some simpler method out there?  I'd love to hear about your budgeting experiences and any strategies you've come by in your relationship.  Share away!

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