My reluctant budgeting continues.
The first time I met with my budget mentor Pat, we talked about the benefits of the cash system. Money can seem theoretical when it’s electronically zipping out of your debit card. A few dollars here and a little stop at the store there, and you’ve unknowingly blown your budget.
So we’re working on the cash system. Not for everything. We’re not taking dollars and exact change to the mortgage company, but we are using cash for everything except bills, charitable giving and gas for our cars. It’s divided into five categories:
- Groceries – food, cat stuff, toiletries, household cleaning supplies
- Clothes & Makeup – including my more expensive hair-care products
- Entertainment & Eating Out – this how we feed our Thai food addiction.
- Play Money – a little pocket money for The Professor and me during the week.
- Gifts – Because we have a lot of nephews and nieces, we’re putting $40 back each month for gifts and hoping that this will cover birthdays all year and Christmas.
Pat told me that I needed to figure out an organization system. She said a budgeting system has to have two important elements: it must work for you and you must like it.
Translation: make it pretty.
Yes, you heard right…straight from my mentor’s own lips. Her reasoning is this: who really wants to spend all that time budgeting? But if you have to do it, it’s easier when you have created an inviting system that you can tuck into once a week. Now, I’m sure there are accountants out there who just love spreadsheets and feel at home amongst those white and black lines, but I’m not one of those people.
Being me, I couldn’t find paper and organizers that I liked. I knew I wanted things to be color coded. I knew that I needed to keep details to a minimum, and I knew I wanted thick paper. So, being me, I made my own system.
It started with a regular-sized, 1-inch binder with the clear front pocket where you can slide in a cover sheet, some plastic binder pouches to serve as money envelopes and binder dividers. (In case you long to be just like me, I put the links to the exact things I bought. You know, since everyone wants to be like me.) Then I designed my system. Each of the five categories of the cash budget has a section within the binder that contains three items.
First, there’s the cover page. This is important because this where I defined my categories. When I told Pat my grocery budget, she said it was a little high, but when I explained that it included things like cat litter, cleaning supplies and toothpaste, she said that it was actually accurate. (Score!) Having all these things lumped together works for me because I buy a lot of them in the same place. Also, I knew I needed my system to be as simple as possible, or I wouldn’t use it.
Next is the ledger where once again I kept things simple. It has three categories: date, details and dollars. I’ve simplified things further by not recording my purchases by date, but by week. I section off each month and write how much money we’ve budgeted for the category. Our grocery budget has seen an increase since my sister has moved in, so we’ve been learning how to adjust for a third eater and a second gluten-free eater.
In the details column, I write down notes. This is especially helpful if my bill was especially high. One grocery trip, I had to buy allergy medicine and supplies for a big pizza party. That will be good to remember when I’m reviewing the month. I also keep track of cat expenses, so I have a better idea what to budget for Charlie and Pippa.
Finally, each category has the cash, stored in the convenient plastic pouch from Office Max. The goal is for these envelopes to accrue cash – for us to not spend to the limit every month but to build a cushion for a rainy day (or when we want to buy rib eyes or other splurges).
I tried the cash system once before and carried all the cash with me. This didn’t work for two reasons: First, I was stressed about carrying several hundred dollars with me. But second (and the real reason), I would be like “Oh look how much money I have! I should get a coffee,” or “We can totally afford eating out again this
Another thing Pat and I talked about was deciding how much to spend on each category. She gave me the generally accepted guidelines, which I designed as part of my binder. My hope is to do quarterly check ups of our spending against this guide.
I’ve been on the system for about a month now. Here’s what I’ve learned:
- A cash system does not work if you forget to get cash before you leave the house.
I’ve had to learn to give The Professor and me our $20 of play money at the beginning of every week so that we don’t use our debit cards for little purchases. I’ve also had to make sure to get grocery money before every trip.
- I can afford things.
Before I started the cash system, I spent a lot of time being frustrated because I couldn’t afford things. I’d tell myself it was the plight of a teacher’s wife. Now that we have entertainment and play money budget categories, I’ve been able to buy little things that I want. I was at Target last weekend and saw the soundtrack to the Les Mis movie (the only movie I’ve seen twice in the theatre since high school), and rather than feeling sorry for myself, I bought it with my play money.
- I spend too much.
I’ve already pinpointed areas of over-spending, which I’m now able to address. Also, I was spending money on things I didn’t know about. For instance, I had a Weight Watchers membership. Who knew?
Pat told me that it will take about three months of doing this consistently before I’m not overspending every month. In the interim, I’m remembering to have grace with myself.
- I feel empowered!
Maybe this reluctant budgeter is becoming a little less reluctant.
Because I love all my followers and because I hope this is helpful for you, I’ve created printables so you can have a beautiful budget notebook, too!
Below are PDFs so you can create your own budget binder.
If you want to make your own modifications to the sheets, I used AlexandriaFLF Font throughout the budgeting sheets. It’s a free font you can download here.
Update: July 2013
Due to popular demand, I’ve released a series of completely customizable budget sheets! You can see them here: