God has provided for our needs, and he does not want us to be constantly worried about money. Learning about guilt-free spending on a budget can be a lifesaver!
Guest post by Shannon of Growing Slower
I knew long before I had kids and even before I met my husband that I wanted to be a stay-at-home mom. However, making that a financial reality once we actually had them was a whole other story! (Can I get an Amen?)
It was a long and painful shock for us to go from two comfortable incomes to just one. Along with that, there was the increased expenses of having children! I am happy to say that God has taken control of our hearts in this area and brought us true financial peace at last. I hope that sharing this one of many ways I’ve been humbled in my journey as a homemaker will encourage you in your own!
Are you doing your budget all wrong?
As my husband and I were trying to figure out how we were going to afford to have me be a stay at home mom, we quickly realized that we were going to have to make some big changes! We made a huge list of 97 simple ways to save money and did almost all of them (ok, except for #49!).
We made a budget and closely tracked our spending. The problem was, we’d say, “we’ll spend ‘x’ amount on baby supplies, this much on groceries, and we’ll leave a little left over just in case.” So that always gave us the mental leeway to go over budget. And guess what? We did. Every single month!
How to Make a (Zero-Sum) Budget
The turning point came when we learned about the importance of a zero-sum budget. It was a subtle difference, but this small mental shift has made all the difference in our ability to stay within our budget every single month and work toward paying off more than $20,000 in debt this year on one income.
Here’s how the zero sum budget works. First determine your monthly income and make a list of all of your expenses, debts, and bills. (Make sure you haven’t forgotten to put these expenses in your budget.)
The key is that the sum of your income and your outgoing budget categories is zero. Give every dollar a name, as Dave Ramsey says. Whether it’s your tithe, or diapers, or groceries, or your emergency fund, put it down on your budget. Make sure that your outgoing expenses exactly match your income. This ensures that when you do have a little extra, it goes in the “retirement” or “kids college” budget, and not to “oops we spent too much on groceries” category.
Note from Erin: If you need help making a budget, I have good news! The popular You Need A Budget (YNAB) app is offering 3 months FREE for my readers! Claim this freebie here.
The zero-sum budget emphasizes the fact that you don’t spend more than you make. Not even by one dollar. It also forces you to plan out where every dollar is going to go before you start spending. Just this small step of having a plan will help you meet your financial goals much faster. But here’s my favorite part of using a zero-sum budget system…
Guilt-Free Spending (on a budget)
I used to feel immediate stress when we would have expenses come up, wondering, Did we have enough to cover it? Would we be dipping into savings again this month?
Now when my toddler outgrows his clothes (again!), or it’s time to buy chicken feed or seeds for the garden, or we need to take a gift to a wedding, I don’t stress. I can spend money on these wants and needs without a sense of dread, knowing we have planned ahead for the expense.
When my husband tells me he needs new clothes for work or he wants to take me out for a date, I can happily say, Great idea Honey, there’s a budget for that!
God has provided for our needs, and he does not want us to be constantly worried about money. Now that we are being good stewards of what he’s blessed us with, we can enjoy the peace he intended for us to have.
Try it, you’ll like it!
A budget is typically thought of as a no-fun grownup thing that makes you feel guilty about spending money. I can assure you just the opposite has been true for my family!
If you haven’t taken control of your finances by keeping a budget, I would encourage you to try it. Don’t give up if you don’t do it perfectly right away. It took our family many months before we learned this discipline. I pray that you will soon find the same peace with your finances that we have discovered!
Looking for more posts on budgeting and family finances? Read these next:
3 Reasons Why You Can’t Afford Not to Have a Budget
6 Ways to Eliminate Financial Stress
6 Ways to Give Generously on a Budget
Do You Have a Spending Problem or an Income Problem?
How We Paid Off Almost $90,000 in Consumer Debt
Saving for a “Sunny” Day: Make Financial Goals to Achieve Your Dreams
What’s Your Money Personality? Take the Quiz & Find Out!
…get even more posts in our Low Income Living index!
How do you manage your household budget? Share your tips in the comments!
Shannon Brown writes about frugal and simple living at GrowingSlower blog and in her Real Mom’s Guide series of books. Shannon and her husband live in eastern Washington and are parents to an energetic little boy and a peaceful baby girl. You can find Shannon sharing her favorite frugal tips on Pinterest, Google+, and Facebook.
You’ve paid off $20k in a year? That’s amazing! We use YNAB software to manage our budget, although I have to admit, we don’t give every dollar a job. Thankfully with a little attention, we usually manage to make our budget.
Shannon Brown @ GrowingSlower
We didn’t even start until September 2013 with a tiny extra payment of $39! It has been about 8 months, and I think we will make our last loan payment soon. It has been truly amazing how God has moved to make this possible once we submitted to his calling to be debt free!!
How does one that doesn’t have a guaranteed income budget? Dh is a truck driver. He gets paid weekly but it’s never the same amount. Some weeks are better than others and every now and then, he owes money for fuel or expenses rather than getting a paycheck. I have no clue how to prepare for that. You can’t solve for x without knowing y and that gets us every week, every month, every day….
You still have to have a budget and make one for a year, then divide it by 12 for a monthly amount for each category. In your budget you have to have an emergency fund, see Suzy Ormand on this, try to get an emergency fund of 8 months of your monthly expenses, this will take time to put together. As for your variable income, you have to look at that as a yearly figure and then divide by 12 to see if you can even live on the amount you have in your budget. When you have month with a high income, put the extra in your emergency fund and take it out of that fund on the months that your income is not enough to cover your expenses for that month. Be sure to have amounts in your budget for savings, college fund, retirement, etc. Make it a goal to totally eliminate your debt, remember debt is a sin, it put you in bondage. You won’t believe how good you feel once you have eliminated your debt.
Randy, thanks for the help. I don’t know where to start. The amount he gets is sooo different each week. I do already set aside extra when he makes more than what we need. It’s just he often makes less than what we need with the biz expenses often coming before our own…. :/ it’s been a rough couple of years for truckers. We honestly don’t have anything we could reduce aside from buying a home rather than renting at double the amount but that’s a whole other catch 22. We don’t have cable, we hav one family vehicle, no home phone, no subscriptions, etc. we shop at aldi as much as we can- ours is often picked over unfortunately. I don’t know what more we could do
Shannon Brown @ GrowingSlower
For variable income families, some good advice I’ve seen is to take the lowest monthly income from the last 6 months and use that as the basis of your budget. Then if you end up making more, you’ll be all set. It’s kind of planning for your worst case scenario. Also, I agree with the comment above, an emergency fund and just plain extra savings for the lean months is so so important in this situation. In my family’s case, we base our budget on just my husband’s base salary, which is predictable, and then anything extra that comes in with my work on my blog and home based businesses all gets dumped straight on loans. Once we get the debt paid off (very soon!) we will start putting that extra into our emergency fund. Praying you’ll be blessed as you work on your budget! I really believe if you commit to working on it, He will provide!
I’m going to work on getting us ahead! Then, eliminating debts. Then, buying the house we so desperately need/want! Thank you all.
I would really really really recommend checking out www.youneedabudget.com (also known as YNAB). Another person mentioned it above, but even after going through Dave Ramsey’s program, I couldn’t get all my spreadsheets combined to do what that one program does on one page, it truly is an amazing system. The best part about it though, and what truly turned our budget/financial life around was their rule of living one month ahead. Our situation was a little different from yours, but we still had a somewhat variable income. My husband had a base salary and would get paid every two weeks but then would get a bonus on occasion (usually quarterly), and so our monthly income would keep shifting, and it was too easy to plan based on what he was supposed to get with bonuses, etc. and not with what the reality was sometimes.
When you start living one month ahead, you basically build up a one-month buffer and are living off last month’s income. So, any paycheck you get this month goes into the budget for the following month. Then, when the month starts, you create your monthly budget off of money you already have in the bank (not what you think you’ll make that coming month). Seriously, this was absolutely life changing for us, and so much simpler than trying to budget based off what you think you’ll get paid that month (and then hope like crazy you actually do get paid that much).
WOW! Such a simple thought, but I just got so hung up on figuring out my “now” budget that I couldn’t see it! What an amazing concept!! Thanks so much for this! I knew there had to be some way to do this without guessing! Literally living from paycheck to paycheck, and not because we necessarily live outside of our means/have tons of things we can cut out is beyond stressful. I’m looking forward to being in your shoes soon. Now for the challenge- having the extra money to get one month ahead. That’s going to be hard but I can tell that it would bring us a lot of peace.
There are some good points in this article. Keep track of EVERY dollar. Have a written budget and see that you are sticking to the budget.
Here are a few more suggestions. I DO NOT use coupons, the reason I don’t is that the foods that they give coupons for are grossly over priced prepared foods in the first place and you need a coupon to make the price even reasonable. Most foods that are frozen are also expensive. If you can purchase all your food from the produce, meat and dairy departments you will be eating healthier. Also try to eliminate soft drinks and bottled water. Try to plan your menus a week in advance and base the menu on items that are on sale and make use of leftovers.
Start your children at a young age to budget so when they grow up they will have wise money habits. Include your children in the family budget planning then they will better understand why they just can’t ask for everything and also get them on a savings plan. Get them in a habit of saving 10%, you also, and get them in the habit of saving for something they want and not borrowing or using a credit card to satisfy their desire.
If you can make use of good used cars, paying cash for them, you can save a fortune. If you do purchase a new car, plan on owning it for at least 19 years. If you can pay cash for the car and then every months save your estimated car payment in a separate savings account so when you do need to replace the car the money will be there. Keep the car in good repair and you should budget for this then you won’t have a surprise. Don’t lease cars.
Buy term insurance not whole life. Don’t buy annuities, you can do better with you long term investment money. Do some investigation on the Internet to see how much insurance agents get in commissions for selling you this stuff.
Rather than using a credit card, try law-a-way. You won’t believe how many things you won’t buy when you have to think you will have to wait until you have possession of the item.
You do have to reward yourself, but put that in your budget too. Set up a “date night” account in your budget for you and your husband to reward yourself for a job well done. Be sure to create a vacation budget. Have the family in on the vacation planning of what to do and also some exposure on how you are going to pay for it.
Do you Christmas shopping all year long. You will never know when the perfect present will be marked down or on sale. Don’t wait until the end of they year when you have to make a quick decision and your options are limited.
The people who should really be reading this article are in Washington DC.
Michelle, I understand where you are coming from. I am a retired real estate broker who did not handle his money wisely when he was working. I learned the hard way, and have been through many difficult times, BUT remember tough times make tough people.
First I think you would look at your past couple years of income and expenses and try to budget income and expensed from past history if you can. It will give you a place to start from and then you can make adjustments. You will have to have a separate account to keep the extra money you have left over from the good months.
You have to separate your business income and expensed and you personal living expenses. If your business is not managed well financially you business could fail. Then you will really have problems. do hope you and your husband communicate with each other in both areas. It is a team effort.
I understand about your business not being that good in the past few years. I when through selling real estate back in the 1980’s then there were 15%, mortgage rates, you have no idea how much effect that had on my income. I really never took control of my financial situation until I put it all down on paper and could see the whole plan in front of me. It stopped the guessing if I could or could not pay a bill, I know exactly what my financial position was. After a while the problems were solved, I knew my financial position and worry was eliminated. Worry is a huge drain on your energy and your relationship.
The first thing I did was get a small note book that I carried with me and every time anything, even if it was only five cents, I wrote it down in the little note book. I did this form one month. The first thing I notice is that I would stop a think a moment be for I purchased anything and frequently I make a decision to not make the purchase. At the end of the month I took the little notebook out, got a tablet of paper and listed various categorized on the tablet, i.e., food, gas, utilities, entertainment, home repair, car insurance, etc. Then I took out the little notebook I have been caring all month and took each item and put the amount in the apocopate category on the sheets of paper in the tablet. From that I could figure where I spent my money that month and from that could build a budget. Sure there are things like car insurance, etc. that you pay once a year and I had to look us these expensed and divided by 12 to figure out my monthly amount for that expense. (on these types of expenses you have to have a separate place to keep this money so that when the bill does come the money is there to pay it. I save about $60 a year on my car insurance because I pay the bill when it comes and not have it broken down into smaller payments — all these savings add up.) from this information I could build a budget for a year and then divide by 12 for a monthly budget.
The important thing is that you have to start, it on paper to see exactly what your position is and then you and your husband plan to live within you budget. When I was in business I used Quicken, a free program that came on my computer to keep my checking account. I used it for my personal and business. When ever I paid a bill by check I put it in a category, like telephone, utilities, gas, etc. then at the end of the year the program would let me create an “income statement” where I could see where the money was spent and also helped with tax preparation. I still use this program, I am no longer in business, but I can easily see where I am spending my money and can compare from one year to another. You can also prepare an income statement at any time to see what your current position is. Highly recommend you use something like this.
That’s funny, I also shop at Aldis. Best prices in town. I have cable, but will be dropping it soon, two days ago I put up an antenna (Less than $100) I now get 12 stations in HD. I am currently looking at my Internet connection and looks like I may be able to cut that in half. Over two years ago I got rid of my land line and now have MagicJack phone system and my home phone now works through my Internet connection and I am paying $20 a year for my home phone. I have a cell phone for emergencies only and it costs me $100 a year.
You can do it. Just make the plan and go for it. I am 71 and live on my soc sec. I have had a wonderful life and still have. The past 20 or 25 years have been the best of my life and part of the reason is that I got my financial house in order. I now know where I stand finically and that is a good feeling. I wish I had learned how to handle my money many years earlier. The school like to stay they teach you reading. writing and arithmetic, but I think they need to add “how to handle your money”.
Yes home ownership may be of help to you in the future, but make that a goal and work towards it and don’t make any quick decisions.
I love your blog and I love this post! Thank you so much!
Sorry for my typos. I made a mistake, I did not mean to say that if you purchase a new car to keep it for 19 years, I meant to say for at least 10 years.
Shannon Brown @ GrowingSlower
19 years would be impressive! I think it would be hard for me to justify buying a new car ever again, but I’m not a car person. Give me something that will get me from here to there and I’ll be happy.
First where in eastern Washington do you live? I grew up there and my family has a ranch there as well.
Second, my husband and I are trying to do the zero budget, but where we get hung up or confused is when we have random bills like, e.r. visits, doctor copays, etc or when we need something-like new shoes, etc. How do you assign for things like that? We are going to start a small youth account for my daughter to help with random child expenditures, but are waiting until we rebuild our savings up a bit (we are buying a house right now so spent our savings to go towards that). Anyways, we have paid off about 5,000 in debt this past year-though I wish we could do more (we still have a truck payment and one small credit card). We also live on one income except when I take nanny jobs and I started substitute teaching in February. Thanks for any advice, I look forward to reading more of your blogs.
Shannon Brown @ GrowingSlower
Hi Josie! We’re in Spokane. 🙂
Those random bills that pop up used to seriously drive me crazy! They were always putting my budget over. My most recent post addresses that exact issue, so maybe pop over and check it out>> http://www.growingslower.com/2014/04/how-to-budget.html
Congrats on paying off so much debt! That is awesome!!
My frustration comes from beginning of the month expenses.. Let’s say in May, I allocate and “spend” all of our income accordingly. Then in June we’re starting at zero – rent is due on the first but our paycheck isn’t until a week or two later. How would you recommend working around this type of situation?
Thank you for sharing.
Zeroing is so important.
I have a wonderful hubby who supports our family and never complains but coming from different walks of life we have different views. For example my family scrimps, saves, blue collar, pay your bills, waste nothing. His family must purchase a brand new car every year sometimes twice, argues to not pay of loans, buys expensive food and throw it away, etc… Until recently we struggled every month between old, old debts and new medical bills but thanks to 2 unusual tragedies we were able to get out of debt, buy a much needed, upgraded car for cash and keep our tiny emergency fund. We had a fire and then a car wreck. When I asked God to help us be debt free, replace our car debt free and sell our old home. I never even considered those options but between my extra payments, those tragedies and good budgeting we were able to do it.
We now live on a percentage budget because I plan it all at the first of the year.
his cash, spending money goes directly in a sepereate s account. (I got tired of .99 soda charges when I was balancing the account so he just opened a separate one. I have access but I don’t have to balance it.)
He hates using cash but it is the best way I have found to stay on family budget. I prefer a handwritten ledger to anything online.
I use percentages now that we have a little foundation and because my hubby is used to some amenities. For regular bills I have a percentage secure enough to pay the bill each month and have a small amount leftover for any surprises or increases. For food, supplies, clothes, shoes, hair, date, etc… We have negotiable amounts. Most are 1%, except, supplies, clothes, and medical and when we have a new expense (now homeschooling) I pull a half percent or two from each of these and create a new balanced budget without much difficulty. I would like to save more but it takes two to make that work.
If I hadn’t lived by your method when we were in debt and making $10 an hour I would not enjoy the freedoms we have now. I am still frugal, coupon, shop sales, freezer cook, use leftovers, etc… But I can pay the van repair, eat pizza or plan a small trip without a lot of stress or scrambling for cash and it feels pretty good.
Shannon @ GrowingSlower
Thank you so much for sharing your testimony and tips! It’s amazing to see the crazy ways that God chooses to provide! Since being in the ‘debt free’ world, I have heard some really amazing ones. I think he loves showing us His power, glory, and love. We can do nothing but stand in awe. It’s also very fun for me to read your story as someone who has come out on the other side and is living a little bit more comfortably but still on a budget. We are currently saving for a house (we’ve become debt free and finished our 6 month emergency fund since I first wrote this post), so we still keep a tight budget.
After following Dave Ramsey’s podcast and books for years, we decided to jump all in and start his Financial Peace University this past New Years Day. It has been nothing short of AMAZING! Every point you made here aligns with Dave’s principles! It feels like we got an immediate RAISE and after we got this tax return, we paid of thousands in debt instead of splurging! A year from now we will be 100% debt free for the first time in 14 years.
Shannon @ GrowingSlower
Congratulations on starting your journey to debt free Leah! It really is amazing how you gain so much financial peace as soon as you get started. I pray you have continued success and are able to pay off your debt even faster than you now anticipate! 🙂
I love this!!! It has inspired me to do the same. I am excited we just put a privacy fence on a credit card with low interest but want to pay it off fast. I was concerned that we would not be able to do this due to our spending habits in the past. This post has given me hope thank you. Wish us luck 🙂
Best wishes to you!