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The Best Way to Budget Is The Way That Works For you

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The Best Way to BudgetThere are lots of ways to budget. You can save a % for retirement and then spend the rest. Another way is to calculate your fixed expenses, including retirement, and then spend the rest. You can have a detailed budget (like us) with lots of categories and budgeting down to the dollar. You can even use an app to help you out. We all have a different ways of doing things. But here is the thing. Don’t listen to anyone telling you there is a “right” way of doing things. They are wrong.

Do A Check In:

Every so often we revisit our budget to make sure it is working for us. As we are currently in the unpaid portion of my leave we are both looking forward to being a 2 income household again. With going back to work we will be encountering a new line item, daycare. Between the mortgage and daycare a LOT of money is going out the window every month. And truthfully I’m sad that I don’t have as much to contribute to our retirement savings as we use to. To counteract this feeling I was wondering if maybe we should budget in a different way. Maybe our budget isn’t correct and if we budgeted in another way we could magically save more money. We currently assign each dollar a job. I thought about saving a certain amount or just spending the rest after our fixed expenses are in. I got stressed just thinking about it and stopped while in the brainstorming mode.

It Has To Work For You:

I think that’s a big piece that we don’t talk about enough. Is your budget/money life set up in a way that works (i.e. helps you manage your financial life) but also allows you to sleep at night? Lots of financial advice out there is to help you “hack” things. Which budget will maximize your savings rate? Which method will pay down debt faster? These are all great but if they involve a lot more of your brain capacity then you feel they are worth they aren’t worth it.

Budgets are supposed to help you reach your goals. At least that’s how I see them. We have been on a detailed budget since mid-2012. Before that we did the whole focus on the monthly fixed expenses and save the rest. We were living in a basement apartment waiting for our house to be built. We had one too many expenses come up at the same time including the yearly car insurance payment, which I forgot about. This put us into a huge cash flow issue. We had the money but it was earmarked for other things. It worked out but we moved to a different budget that worked for us right away. We haven’t looked back.

Is It Ever Enough?

If I’m being honest the real reason I was thinking about changing is that I don’t think we are doing ENOUGH. We are entering the peak spending years with expensive daycare and possibly putting plans in place to grow our family. That costs money. So it is money we aren’t spending but aren’t investing it either. We are putting it aside to maybe cover future costs. So when I look at how much we can invest into retirement I’m sad. After living on 1 income going on 2 years now we don’t have very many overinflated budget categories we can cut that will move the needle without losing joy.

We Aren’t In The Same Place We Were Before:

My biggest problem is that I’m comparing my current self to that of my past DINK upper middle class income. My feeling that I wasn’t doing enough compared to my past self and what I can see others do was making me doubt something that has been working extremely well for us in the past 6 years. But this happens to all of us when we feel we aren’t doing enough compared to others. I know I’m not alone.

The Best Way To Budget Is The Way That Works For You:

If someone told me that I wasn’t budgeting correctly I would put them in their place immediately. The only way to do things is the way that actually works for you. What works for you is a combination of a lot of things. It should help you reach your goals but also provide you peace of mind and reduce stress. If having 30 different accounts to hide the money from yourself gets you closer to your goals then do it. We have 1 savings account with all of our money and we don’t get tempted to dip into it. I know that doesn’t work for everyone. You need to do what is best for you and what helps you reach your goals and gives you piece of mind. Shut down anyone and everyone who tells you otherwise.

No one can tell you what to do. They should only tell you what works for them and why they do it. Take the best and leave the rest.

Sarah

2 comments

  1. I find people either love budgeting or hate it. And the people who hate usually think it’s too restrictive or time-consuming but it doesn’t have to be either of those things. You can set out a basic budget without much effort and periodic check-ins, and building some fun money is a must. It’s like dieting, if you don’t give yourself some leeway you’ll quit much faster.

  2. NZ Muse says:

    My credit card statement is always super long, because I tend to pay things off as incurred. So instead of a lump payment at the end of the month or week or whatever, I transfer the amount we spent on groceries, the amount we spent on petrol, etc – I think it helps with my mental accounting, and also because I try to pay all our bills on it, but I then need to pull that money out of our ‘bills’ account as opposed to out of our main cheque account. It might seem weird to some but it works for me!

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