Money: how to be better w it, and YNAB

[enchantedhome]

So, it's become pretty clear that I'm not that great at making wise purchases and handling money well, and I need some advice (gentle! kind! I'm feeling really embarrassed and ashamed).

Not entirely surprising: my dad isn't amazing at it either, and my parents spoiled me and my brother a lot, growing up. Actually, my mom continues to spoil my family now, and I think I've simply gotten used to having what we need, plus some of what would be nice to have. Comfortable, not worrying about the future, money-wise.

My DH, on the other hand, is very future-focused with money, great at investments, and never spends money he doesn't have to. I handle the day to day purchases and pay the bills, I do all the shopping for our home, family, gifts, etc, and he does the long-term stuff. That's the way it needs to be, given his job and hours and the fact that I'm at home homeschooling and able to do the actual buying.

But this week two large expenses came up, one of which could have been planned for. The cost of it caught us off guard. Basically, I should have asked questions and known what the cost would be and I didn't. It just didn't occur to me. This is very representative of how I deal with money: this thing needs to happen, it will cost what it costs, and we'll just pay it. It literally never crossed my mind to ask what the total bill would be. 😕 I do understand how bad that sounds. If I had any idea it would be as large as it has turned out to be, I certainly would have investigated further.

In any case, as DH patiently explained to me last night, we (me!) are spending our kids college money now by not making smart choices, by not saving more, and by failing to view money properly. He has been hands off of our day to day purchasing, because we are always able to pay our cc bills, we have no debt, and we're doing ok, basically. But I am not being smart. If I want a candle, I grab one. If I meet a friend for lunch I grab the bill. I say yes to good books for the kids or a treat on a sunny day. I justify haircuts and color. I'm surrounded by friends and family who spend a lot in order to enjoy day to day life. And it's rubbed off on me.

But the issue going forward is, how can I improve my relationship to money? How can I be smart about it, learn to say no "would be nice to have's"? We do live in one of the top 3 most expensive areas of the country. But my lack of discipline and carefulness is mostly what's making it hard for us to save.

I've heard YNAB mentioned here a lot and I'm wondering if it might help me to get a better hold on our money and help my DH see what and where we're spending. We looked at it last night and read some reviews, and he has said that I need to be confident this will help me manage money better before he's willing to sign off, so I need advice.

I'm super embarrassed that I've gotten this far in adult life without being intelligent with money, given how great I am at so many other things, and I'm feeling very much like I've let my DH down when he's trusted me to handle things well. He's still trusting me to get on a better path, which I'm grateful for, and luckily we aren't in dire straits.

Would love some help.

[Night Elf]

I can't help with your overall budgeting as some on this board are surely way better than I am. However, I do have one tip that helped me learn to spend less on frivolous things. I get an allowance out of each paycheck twice a month. I use that for small things like a Starbucks, books, or a meal out that wasn't planned for. Then when my allowance is gone, I can't spend anything more that pay period. I learned to budget my spending money so it would stretch out. I used to spend quite a bit on haircuts and coloring and we worked that into the monthly budget because it was important to me. I don't do that anymore though. I got tired of spending so much. :)

[HomeAgain]

I switched to cash.  Each week I take out what is budgeted for groceries and fun, and leave my debit card at home.  Watching each $20 bill disappear was better for my money view than anything else ever has been.

[RoughCollie]

One of the best books I've read on managing money is How To Manage Your Money When You Don't Have Any, by Eric Wecks.

https://www.amazon.com/Manage-Your-Money-When-Second-ebook/dp/B007IUGLYO/ref=sr_1_1?s=digital-text&ie=UTF8&qid=1476799551&sr=1-1&keywords=how+to+manage+your+money+when+you+don%27t+have+any

 

What made this book great was the discussions about how we spend money reflects our actual values. So making a budget work requires thinking about your values and getting your spending in line with them. Once that is done, staying on a budget is a lot easier.

 

The budgeting part of the book was great, but I could have written it myself (and wish I had) because I am a cost accountant.

 

This book is free with Kindle Unlimited, 99 cents for the e-book, and $9.99 for the paperback. You can have plenty of money and still benefit from this book because of the connection the author makes between one's values and one's spending and attitudes about money.

 

 

Edited October 18, 2016 by RoughCollie

[cjzimmer1]

In order to set up a useful budget you need to have some sense of how you are spending your money.  Groceries is a big one.  Some families seem to be able to get by on $500-600 others need $1200+.  But you have to go through budget item by budget item and see what your expenses are.  Some of your costs are pretty fixed insurance, mortgage/rent etc.  Those you should be able to just look up your most recent bill and have a pretty reasonable estimate. What you are going to want to focus most on are things like groceries, household items, dining out, fun activities etc because that is where you will have a lot more control on how much to spend.  Once you know what you are currently spending it will be easier to cut it down. 

 

Putting set amount of cash into each budget item is a common way of ensuring that you don't overspend.  Personally I'm not comfortable carrying much cash (there is seldom more than $20 in my purse) so I do most of my stuff on the credit card, however, I'm very good at tracking prices in my head and when I get the check out, I will be able to tell you to the penny (well except produce that you have to weigh) how much each item will cost and approximately how much my total will be.  Then it all gets tracked in Quicken and then I can easily see how much I have left to spend in each category.

 

But I really think the biggest tool in managing money is to be aware of how much things cost and how those costs add up over time.  Sure $10 for an ice cream treat doesn't sound too bad but if you do that 20 times a year it's $200, than add the $5 weekly coffee stop and that's another $250 and then add some other small treat and you are easily over $500 for the year but it's doesn't "feel" like you've spent much.

 

Edited October 18, 2016 by cjzimmer1

[Kalmia]

To understand where your dh is coming from read Your Money or Your Life by Joe Dominguez and Vicky Robin. When you and your husband work, you and he are trading your life energy for money. The things you buy with this money should be life giving goods (food, housing, clothes, heat, etc.) or goods worth the sacrifice of your time (education, practical car, etc.). If you start to see material goods as "costing" a certain number of hours from your lives, you will begin to put a lot of them back on the shelves. E.g. $15 beeswax candles = 30 minutes of dh life energy.

 

https://www.amazon.com/Your-Money-Life-Transforming-Relationship/dp/0143115766/ref=sr_1_1?ie=UTF8&qid=1476801308&sr=8-1&keywords=your+money+or+your+life

 

For practical advice look at The Simple Dollar blog archives. Here is one of several getting started posts:

 

Here is a good starting one: http://www.thesimpledollar.com/the-10-core-principles-of-the-simple-dollar/

 

Here is a link to his frugality archives:

http://www.thesimpledollar.com/category/money/frugality/

 

Edited October 18, 2016 by Kalmia

[HomeAgain]

One more thing - you may want to make a conscious effort to think about money once a week.  Watch a show like Till Debt Do Us Part, Suze Orman, read a book or article, teach financial literacy to your kids...just setting aside that time may help you make changes to help your family along.

[Carol in Cal.]

In your situation, it sounds like you have some big goals that you haven't quantified (put a dollar amount on) yet.

 

The first move I would make if I were you, since it sounds like you have plenty of income, would be to figure those dollar amounts out.  How much do you think it will cost for your kids to go to college (roughly)?  Figure that out, and then say to yourself, OK, to do that we need to save this much per month.  Say it's $300.  Then, you set up an automatic deposit into a separate bank account for that much, and (KEY!) don't ever look at it.  It's just gone to you.  In doing this, also figure out how much you spend regularly but not every single month, like for property taxes or car insurance, add those bills up, divide by 12, and put that much per month into ANOTHER account.  Try that for a while and see how it feels.  That might just naturally adjust your spending, since you are used to living within your means.

 

For the advanced course, LOL, go with "Your Money Or Your Life", because that book is absolutely lifechanging.  It's quite remarkable, because it gets at the mindset underlying all spending, and enables you to prioritize your most important goals, and line up your spending with your values.

 

 

[Tap]

One of the first things to do is to take 1 month and write down every single purchase. (collecting receipts makes this easier).

 

As you go through the month, sort them and log into a spread sheet (on paper or digital) of how you spent the money.  Decide what categories mean something to you. DH pays all the consistant household expenses like mortgage, insurnace, water, sewer etc.  I pay the variable expense.

 

For me it would be:

Household food and necessities

Household optional expenses (decor, new blankets, etc)

Treats (publicly purchased snacks, coffees, food not needed ie fast food when we are close to home etc)

Child care and school necessary expenses (tuition, required books, legit field trips --not callling the zoo a field trip-- etc)

Child care and school optional expenses (optional fundraisers, just for fun literature, school t-shirt, colorful seasonal pencils etc)

Presents

Expected giving (I send my mom $100 twice a year, mandatory fundraisers for school, etc)

Recreation/dining

 

Once you see where your money really goes, it makes it much easier to see where you can cut. Then you can put a budget around one area at a time and make changes which empower you, not make you feel deprived.  For me...one big expense is Starbucks.  We get it a lot at work.  I have started buying myself gift cards.  I buy my self one for Christmas, my birthday, and if I work overtime, sometimes that gets turned into coffee cards.  By buying gift cards, I see the expense as more of a present to my self.  I have less guilt about it, and spend way less because my cards run out and I have to wait to justify buying more. Lol 

[TranquilMind]

Never mind. Too much detail

Edited October 22, 2016 by TranquilMind

[Carol in Cal.]

Regarding how to save major money:

 

Build up a habit of questioning every purchase you make, even little ones.  The question is not Is this worth it, nor is it Is this something I can afford.  Those are good questions, but the BEST question, the one that transcends them, is Do I want this more than my goals?  So, in the case of college savings, Do I want this or do I want to put this money toward college MORE?  The reason that question is so powerful is that it starts to align your spending with your values, and also it doesn't come from a place of deprivation, but rather from a place of choice.  I'm CHOOSING to put these funds toward something more important than this momentary pleasure...that is a strong feeling, not a deprived one.

 

Also, once you start thinking this way, you will inevitably notice that there are big things you spend money on, and you can spend some time and energy figuring out how to save on them.  For instance, you might find that car payments are a big expense, so you start figuring out how to pick cars that last a long time, how to take care of them so that you want them to last a long time, how to buy them more inexpensively, and how to save so that you can pay cash for them.  Or, (other end of the spectrum) you might find that one thing you always pay full price on is, say, lipstick, so you figure out when the sales are, do your research in advance to see what colors you want, quietly tell a sales associate to set aside your quantities at the time of the next sale for a guarenteed large sale to you, and buy ahead at that point for the whole year.  I've done both of those things, and they have really paid off; plus I have far fewer trips to the mall so I don't have advertising dangling in my face all the time.

[TranquilMind]

Regarding how to save major money:

 

Build up a habit of questioning every purchase you make, even little ones.  The question is not Is this worth it, nor is it Is this something I can afford.  Those are good questions, but the BEST question, the one that transcends them, is Do I want this more than my goals?  So, in the case of college savings, Do I want this or do I want to put this money toward college MORE?  The reason that question is so powerful is that it starts to align your spending with your values, and also it doesn't come from a place of deprivation, but rather from a place of choice.  I'm CHOOSING to put these funds toward something more important than this momentary pleasure...that is a strong feeling, not a deprived one.

 

Also, once you start thinking this way, you will inevitably notice that there are big things you spend money on, and you can spend some time and energy figuring out how to save on them.  For instance, you might find that car payments are a big expense, so you start figuring out how to pick cars that last a long time, how to take care of them so that you want them to last a long time, how to buy them more inexpensively, and how to save so that you can pay cash for them.  Or, (other end of the spectrum) you might find that one thing you always pay full price on is, say, lipstick, so you figure out when the sales are, do your research in advance to see what colors you want, quietly tell a sales associate to set aside your quantities at the time of the next sale for a guarenteed large sale to you, and buy ahead at that point for the whole year.  I've done both of those things, and they have really paid off; plus I have far fewer trips to the mall so I don't have advertising dangling in my face all the time.

 

Right.  I realize as I am reading the other posts, I have never written down a budget.  It is all in my head and I always know how much we have.   I don't have to think about things like how I choose to spend this money. I just rarely spend money!  I used to go to Starbucks a couple times a month, but finally stopped feeling good after I drank that chemical stuff, so I stopped. 

 

We have paid cash for vehicles for the last 20 years. 

 

I never go to the mall.  Now, thanks to Amazon, I never have to! 

 

[prairiewindmomma]

I love YNAB! My best advice is to put the app on your phone. You can check your budget before you make a purchase, and enter your purchases as you make them. Don't let your receipts pile up as it's easy to overspend that way.

 

We are finishing our first year with YNAB, and we're planning an awesome vacation to celebrate! Having a not too far in the distance tangible goal to save towards as well as our bigger long-term savings goals helped me change my habits!

[Annie G]

OP, tracking your spending is essential as a starting point.   Identify the biggest area of 'low hanging fruit',  the area where your spending is most wildly out of control. Tackle just THAT category.  Develop some discipline in that area.   Then move to another category. For a lot of people, groceries or eating out are often the easiest places to start.   If you successfully trim one category, it will give you a feeling of accomplishment and that will spur you on to tackle the next category. 

 

You have to find a balance - you want to save more money than you currently save, but you also want to enjoy life, which for you might mean lunches with friends or hair care.   Everything can be modified...lunch with friends- stop picking up the check and start paying for only your lunch. Order water instead of a a soda. Go places where lunch is inexpensive or portions are large enough to take half home for the next day's lunch.  

 

And join our weekly mindful spending thread! Nobody will chastise you for your spending but it's helpful to have that weekly accountability of how you spent money that week.  We learn a lot in that thread- such as how sometimes we go a month being really 'good' but then we have a few weeks in a row when expenses seem to go haywire. We cheer each other on.  

[FriedClams]

I'm a Dave Ramsey Kool Aid drinker. I think he's spot on with money advice including his stance on debt. I'd see if any local churches are doing his class and attend if at all possible. I'm also a huge fan of the GoodBudget app for tracking my envelopes.

[bolt.]

I think the idea of spending-tracking like you have to pinch pennies when you don't is ridiculous. Thrift is admirable. Being cheap with yourself any your family is a character flaw.

 

There is nothing wrong with spending money (that you have!) somewhat liberally on things that make you and your family members happy. That's how I live, and I am not ashamed. I'm excellent with money.

 

Drop the guilt. Like most things, there is a middle ground.

 

When spending for low priority items compromises overall goals, it puts you in a position of 'not being true to yourself'. When money goes to momentary enjoyment when other things are honestly 'more important' on a theoretical level... Just adjust the amounts, pay yourself first, and carry on.

 

Basically, I think you need to calculate an amount to put aside for each stuff-that-matters category.

 

Put aside money for college, and don't spend it. If you must spend it, consider it a "loan firm my children" and stick to a repayment plan,

 

Include "gee whiz, expensive stuff wears out at rate of approximately $600 every two years give-or-take" as a category.

 

Calculate the life of your vehicle and its approximate replacement cost.

 

Make as a bulk category for "I like to register my kids for stuff" , and "we take vacations" , and "bikes cost money" , and "gift occasions occur annually" , "cars need maintenance" , "houses need decorating" sorts of spending.

 

If you're American, you probably need to think about health costs.

 

Set an automatic transfer to get the monthly money for these items out of your main daily account into one or more not-easily-accessed accounts. (It's ok to have some accounts with more than one purpose, but maybe separate for college and car-savings.) This 'pre-fund' also becomes your 'emergency fund' -- because if you have an emergency it will probably be car, health, or a $600 object -- and if it's not, you can deplete and replenish the fund anyways.

 

One your money for non-everyday stuff exits your account, life is easy!

 

Acquaint yourself with your new amount of general everyday accessible money, and assess your habits in light of the total. Be sure not to leave yourself pinched! The above category-funds should build slowly and sustainably. Your spending will naturally adjust if you check your balance and become aware of pay-day.

 

Whenever you need to deal with a not-everyday expense, transfer money from your pre-fund into your everyday account to cover it.

 

(Even though you don't buy clothes monthly, just allow some mathematical estimates for that to accumulate as the slushy-bottom of your everyday spending account.)

[idnib]

The advice I think would vary with a person's situation. Because you don't have debt, are saving for retirement, and could save for your kids' college, my advice would be to have money automatically transferred to those accounts plus a savings account (or money market) without ever even touching it. Just an auto-transfer as paychecks come in. Over time, don't allow "lifestyle creep" and as your DH gets pay increases, just add the extra to the transfer. Then enjoy what you have after the necessities are paid.

 

I also suggest a monthly financial discussion with your DH. The last Sunday of the month, for the upcoming month's unusual expenses, and an "autopsy" of the current month works well. 

Edited October 18, 2016 by idnib

[Greta]

EveryDollar is a free budgeting tool.

 

I'm in a similar situation to yours, with my husband being the financial genius of the family, and me being the one who in the past didn't think about it or plan well or budget.  So I just wanted to assure you that if I can change, anyone can!  Though some people take to it more naturally than others, it is still a skill that can be learned.  

 

I know that people either tend to love him or hate him, but Dave Ramsey has been tremendously helpful for me in changing my perspective about the role that money plays in my life.  His podcasts are free, so you can listen to those while you exercise, do household chores, etc.  I've never taken the "Financial Peace University" classes, but I have read his Complete Guide to Money which is basically the manual for that class.

 

This is also good:  Personal Finance for Dummies by Eric Tyson.

[Katy]

When I got so sick I had to stop working, I really worried about money. I read every book at the library about budgeting and personal finance because while I seemed to have a handle on normal expenses, unexpected expenses were always a crisis.   So I'm sorry, I can't quote which book, but the best idea I came across was how to handle crisis spending.  The idea was to plan out what you actually spend in each category and actually have a checking account for each expense. These days that's not necessary, it's quite simple to use integrated budgeting software like Mint, YNAB, or Good Budget on your smart phone to keep track of such things.  You can use software to try and figure it out what each category should be from what you've spent in the past, or you can just go forward based on estimated costs.

 

Now where it gets really interesting is figuring out future expenses.  For example, your roof shingles will probably need replaced in 6-10 years, and that might cost $10,000.  So you split the cost of $10K over the pay periods in the next ten years worth of pay periods, plus the cost of other anticipated expenses (water heater, insurance deductible, minor redecorating, major remodeling, etc...), and put that into a household improvements category.

 

We haven't used YNAB because DH is a spreadsheet wizard, but I think it is pretty good at anticipating budgeting needs and helping you get more financially secure that way.

 

Blow money is important.  You should have some that you don't need to account for.

 

If you're planning on sending your child to in-state public universities, you should check and see if your state has a special savings plan for that. If you treat it like a bill it's easier to budget for.

 

If you really want motivation, budgetsaresexy and mrmoneymustache are great blogs for it.  So is a reddit forum about financial independence that focuses on living on less than 50% of your family's income so you can do things like have your DH retire early to travel the world.

[Bambam]

This may or may not be helpful to you.

 

About the time we got married, my dh told me that he analyzed every purchase by figuring out how many hours he would have to work to purchase that. Now, this doesn't work for everything - houses, cars, appliances, vacations, but it does for pretty much *everything* else.  We generally purchase used cars because someone else has already taken that depreciation hit. 

 

So, before you buy that afternoon treat - how long would you have to work to pay for that? Say you could work at Taco Bell for $10/hour. Would it be worth it to you to work an hour for 3 mini shakes at Sonic that are gone in 10 minutes? Or would you prefer to buy a half-gallon of ice cream for home and be able to enjoy 6-8 home made milkshakes? Or would you be okay with no milk shakes?

 

And, quite frankly, do I need it? So many things we think we need, but we don't. 

[SereneHome]

Two things I tell people when I get asked "budgeting" question.

 

1.  Mind your business.  Do you know what you are spending on?  If you don't - you should

2.  Take emotions out of your $$$ decisions.

 

You absolutely should take a  month or two and track down your spending.  At the same time look at the big picture:  last year, last 5 yrs.  Cars, house, vacations, medical exp - look at past and potential expense.

 

Businesses budget by starting with bottom line.  They figure out how much profit they want first and then figure out their expenses.  People tend to do the opposite.  Run your household as a business.  Figure out your profit (savings) first - what do you want to save  - and then fit your expenses in the "left over".

 

One more thing - debt free  does NOT equal smart.  Leveraging your money is a good thing, when done with thought and knowledge.

 

When my savings acct was paying me 5-6% interest it would have been stupid for me to take the cash out and buy a car if I was able to finance that car at 0% or even 1.99%.    Not all debt created equal and it's certainly not the devil!

Edited October 18, 2016 by SereneHome

[SereneHome]

dp

 

Edited October 18, 2016 by SereneHome

[AK_Mom4]

We are pretty much passed the lean years these days and are looking forward in 10-12 years for retirements.  A super-itemized-highly-planned budget isn't worth the hassle these days.

 

When I am concerned about my spending habits, I switch to cash-only for MY spending. Not the groceries or monthly bills or gas for the car, but my pocket money so to speak.  I give myself an allowance each payday and use only that for what I want to buy.

 

Then - I don't sweat it.  if I want to go out to lunch and I have cash in my wallet - I go.  If I want to buy something and I have cash in my wallet - I buy it.  Then I look at how much I have left the next payday and adjust my "allowance".  This keeps me accountable for my personal spending without driving me crazy.

[Moonhawk]

So, for us, here are the big things:

1) Written budget. I like the form we found on Dave Ramsey's site, it is missing only a few categories for us and has enough space to make our own.  We make the budget for, say, October usually on the 28th/29th of  September, that way we have a couple days to go "Oh yeah, my parents birthday is coming up, I need to put aside something for that." https://cdn.ramseysolutions.net/media/pdf/forms/fpu_monthly_cash_flow_plan_forms.pdf?ictid=btxt.ny13 

 

2) Electronic budget. We use HomeBudget, updating each time something is bought.  Electronic is easier upkeep imo.  And that way you can easily see how much you have left instead of guesstimating. 

 

3)  If you have enough money for Pocket Money, and it seems like you do, include it in the budget. But be realistic on what you are going to spend; don't think you are going to get by with only $15 on the first month, if you normally spend $100. You can work on spending less each month, just keep bringing down your amount by $5 or something.  

 

4) 7 Day rule.  purchases over a certain amount that aren't budgeted for and aren't necessary, get a 7 day cool off period.  Love that book? Great! Come back next week if you still want it.  Usually you can roll this along a couple weeks, and maybe even budget for it in the next month instead.

 

5) How long would it take me to earn this? If my hourly wage is at $15, and this great purse costs $60, do I really think I want to work an extra 4 hours for it?  Or, it is worth 4 hours doing more cleaning around the house? :)  I have mostly killed my starbucks habit because I don't like cleaning the house extra, lol. 

 

6) Savings first. If your spending is actually impacting long term goals, save for the long term goals first.  Auto transfer whatever you are going to save, then use the rest of the money as you see fit, until it runs out.  Seriously, this is the only thing you really need to do if you have the money to spend, and you just want to make sure you are not holding yourself back needlessly. If the main thing that's worrying you is unexpected big expenses (or ones you could expect, but didn't think about), have a savings account set aside specifically for those incidents, that way you don't have to stop work towards other goals for a month. 

 

After writing it out, maybe working through my list backwards is the best way to go about it, lol.  

[nd293]

The very best thing you can do is go through a year of credit card and bank statements statements and work out what your specific expenses are. That's essential. If you can also figure out where the extra money is actually going, that's great, but a lot more work than the 'big bills'. You'll probably realise there's a pretty big gap between expenses (let's say food, utlility bills, gas, car repairs, insurances) and the amount coming in. It's sobering. I've always been good at tracking and monitoring spending, but at one stage dh got a substantial raise and I got lazy about tracking. After a year I went through everything and tried to account for his salary increase. We had some new furniture, had done some stuff to the house but thousands were unaccounted for. The next day I doubled the mortgage repayment (paid off now!) and made a 'virtual' envelope budget. Each expense (total for the year) is divided by the number of of pay days in the year and I 'deposit' into each 'envelope' with each pay cheque. I just use an Excel spreadsheet - it works better for me than any of the apps although I've tried a few different ones.

 

Our savings are generous enough that we can run over in a couple of categories for a few weeks, but then I make an announcement that we need to quit spending, and it's coffee in the park instead of lunch in a restaurant for a few weeks, or mostly vegetarian simple food instead of steak and caviar (!) at home until the budget categories are all back on track. If I make good decisions (like tracking gas prices to buy the cheapest) and an 'envelope' builds up an excess, I'll use that for something fun, or transfer it into the holiday fund or something.

 

I track everything. That's easy except when I use cash, so I almost always pay on card. I switched to a debit card because charges show immediately, whereas on the credit card they could take a week or 20 days to show which makes it much harder to track. I update the excel sheet every few days or every week and I balance to the cent. It can be frustrating, but it helps me keep spending under control, savings at a maximum, and I feel I'm modelling good financial values for the kids. We enjoy life, we have what we need and some things we want, but we don't have much extra stuff / clutter. It works for us!

[nd293]

What made this book great was the discussions about how we spend money reflects our actual values. So making a budget work requires thinking about your values and getting your spending in line with them. Once that is done, staying on a budget is a lot easier.

That sounds really good, I'm going to get it.

 

Another book that had a similarly powerful effect on me was "Your money or your life". The book has a specific financial plan that isn't for everyone, but what I took from it was that the stuff we buy is actually costing us the time (and stress?) of work. So that haircut and colour (or whatever) literally takes your husband away from the family for x hours. The cost isn't "just $xx", it's the opportunity cost of whatever else might have been done with the time it took to earn that money.

[Vintage81]

My husband and I got a lot of ideas from Dave Ramsey. Here is a link to his 7 baby steps to get started:

 

http://www.daveramsey.com/baby-steps/?snid=start.steps

 

I'm not sure if anyone else has mentioned this, but I think it's important to create an emergency fund. Dave recommends starting with $1000 and then eventually work up to 3-6 months worth of emergency savings.

 

We also keep a spreadsheet that tracks the budgets we set and how much we spend. Different categories we include are - bills, savings/college/retirement, then all of the variable stuff (groceries, eating out, medical stuff, pets, etc). At the end of the month, anything extra is either spent on something we're working on (we do lots of DIY stuff) or it goes into a savings account if we're saving up for something big (vacation, car, etc). Once you know what you're spending, you can make adjustments as needed or plan for upcoming things.

 

Regarding extra spending, my thought is that you don't necessarily need to be so restrictive with your spending IF you don't have any debt, are able to pay all of your bills, and put an agreed amount into savings. Yes, it's hard work to earn that money, but after all of your financial obligations have been met each month, I think it's okay to spend money on stuff you enjoy.

 

FYI - We tried YNAB, but if I recall correctly there was one thing that didn't work with our "system." So, for instance, if you budget $200 for eating out, but only spend $150, it rolls that extra amount to the next month. For us, we put that extra $50 into savings, so we'd have to go into YNAB each month and manually adjust the budgets. There may have been a fix for that, but I didn't investigate. I think you can sign up for a 30-day free trial to see how it works for you.

Edited October 19, 2016 by Vintage81