So I used to be that mom that was hands down guilty of NEVER budgeting. I never took the time to make a grocery list, I made impulsive purchases, and I was spending money on unnecessary expenses!
My biggest financial failure to date is wasting so much time not budgeting!
I never took the time to realize how important a monthly budget is.
I am a busy full time working mom with toddlers, and I just did not take the time to sit down to see where my finances were going and how I could make some changes to save more money every month.
Finally, about two years ago, I sat down to take a hard look at my finances because I was so frustrated with myself that I never had much money left over at the end of the month to put into savings. What was I doing wrong? Where was my money going?
Today I will be discussing my financial failure in hopes it will help you see the value in budgeting sooner rather than later!
This blog post will be covering the following:
- Why A Monthly Budget is a Must
- The Monthly Spending Habits I struggled With Before Budgeting
- How I have Changed My Spending Habits, and What I do now To Budget
- How Monthly Budgeting has Helped our Finances as a Family
Why A Monthly Budget is a Must
We work hard to earn a living. We should make sure we spend the money we bring home wisely. That’s where a household budget comes in. It’s a good tool to see at a glance what we have coming in, what’s going out (and what that money is paying for) and if there’s anything left at the end of the month to put into savings.
Before we dive into exactly what a budget can do for us, let’s consider for a minute what will happen if we’re not tracking income and expenses. We may end up spending more than we’re making in a given month (or two, or three). Over time that can put us into some pretty hot water financially. We may also spend a lot more than we’d like to believe on things like eating out, going to the movies or new clothes.
Having a budget gives us more control over where we want to really spend our hard earned cash. Maybe that’s dinner and a movie, but maybe it isn’t. Wouldn’t it be nice to have an actual choice?
It Tracks Where Your Money Is Going
A budget simply tracks your money. You record where the money comes from each month (your income) and then write out everything you spend it on, starting with your regular monthly bills like mortgage or rent, car payments, utility bills etc. What’s left after all the bills are paid is your discretional income.
Helps You Identify Things You Waste Money On
Having it all in front of you in black and white helps you identify things you’re wasting your money on.
It makes you reconsider if you really want to spend well over $200 a month on Cable TV or $150 on your large cell phone plan. Or how about that yearly magazine subscription to something you no longer read? Go through your expenses and reevaluate if this is REALLY how you want to spend your pay check.
Allows You To Be Proactive About Savings
Saving money without a budget is hard. We go in with the best of intentions at the beginning of the month, but somehow there isn’t anything left at the end of the month.
A budget gives you a chance to be a bit more proactive. Set aside some money for savings at the beginning of the month, even if it’s just $20. Put it in the budget as a regular expense, just like you do with your other urgent bills. If you need to, open a separate savings account so you’re not tempted to spend it.
Ensures You’re Not Spending More Than You’re Making
Most importantly, your budget will keep you on track and help you make sure you’re not spending more than you’re making. And I don’t have to tell you that that’s pretty important for your financial wellbeing.
The Monthly Spending Habits I Struggled With
After taking the time to do some much needed research on my spending habits (and I mean research-I looked back on my finances from the past 12 months, yikes!) I found that I struggled in 3 different areas:
- Groceries
- Impulse Purchases
- Unnecessary Expenses
Groceries
A couple years ago when I first looked into my finances, grocery shopping was very tough for me. I had a toddler, and a baby, and worked full time.
Getting the time I needed to even go grocery shopping was a struggle, let a lone making a grocery list, a budget, and really planning the trip out. I know all of you moms out there can relate to this feeling!
The shopping trips had to be planned out so that they weren’t during nap time, or eating time, because we all know what a struggle that is. While at the store I was just filling my cart full of everything I thought we could have possibly needed, along with the definitely necessary and expensive items like diapers, wipes, formula, and any other baby essentials!
I was spending well over $250 a week, and I never took advantage of the awesome coupons I was receiving in the mail to help with formula and diapers. I always seemed to forget the coupons at home and never realized it until that moment I was in the checkout aisle. Convenient, Right!
Anyways, once I realized I was wasting approximately $200/month at the grocery store, I knew I needed to make some changes!
Impulse Purchases
Another area of my finances I have been known to struggle with are impulse purchases. Now I’m not saying I go out and make an impulse purchase every month, maybe just like a couple times a year give or take.
Sometimes a Mom just wants to purchase something nice for herself every now and again, right?!
Well I have probably gone a little over board with a couple of my impulse buys considering they were a treadmill, and a tanning bed!
Now I didn’t buy them close together, or even in the same year. They were purchased a couple years apart, however, they were very expensive, and although I did NOT use a credit card to purchase them, they should have had some financial planning prior to buying them.
Unnecessary Expenses
Lastly, the third area of finances I struggled with were unnecessary expenses, with the biggest one being internet.
Now, I know what you’re thinking, Internet is not unnecessary, everybody needs internet these days. And, yes, that is true, but in my situation, here’s why it was unnecessary.
We live in the country, and in our area sometimes it is difficult to get a good quality internet connection, so you have to be careful to select a good company with reliable connection.
When we first moved into our house I had the internet company all set to come out and install the internet, and I never ended up getting installed properly. Long story short, It was our fault, not the company’s fault, however, to get it working properly it was going to cost a lot of money that I didn’t want to spend.
But I was locked into a contract with this company for 2 years paying roughly $40/ month for internet I couldn’t use. (for anyone doing the math that’s $960.
Once that contract was done, I went with another source of internet was costing me $70/month, and I had a limit on the amount of data I could use.
I was in another 2 year contract, and found myself not even using this internet most of the time, and just using the internet on my phone because I was afraid of going over on the data, and on my phone I had unlimited. So, once again, after this contract was up I wasted another $1680.
I wasn’t too thrilled when I did the math on those figures, but nonetheless I knew I needed to be more careful with unnecessary expenses.
How I have Changed My Spending Habits and What I Do Now to Budget
Set Up A Monthly Budget
In order to change my spending habits I knew I needed to start setting up a monthly budget so I could track where all my money was going. At the end of every month I start setting up my budget for the following month.
I begin by writing down the amount of income I will be receiving, and I also write down what days I will be receiving the income. (I get paid salary on the 1st and 15th of every month. If you’re paid hourly estimate the amount you will bring home.)
Next I write down all expenses/bills I will have, and what dates all of them are due.
Lastly, whatever amount is left over I decide how much will go towards any loan payment, how much I have to spend on groceries every week, and how much I will be putting into my savings account.
If you’d like to read more on how to set up a monthly budget read this post where I go through a step by step tutorial on how to set up a monthly budget.
Keep Track of My Grocery Spending
Now that I have discovered where my problem spending areas are, and I have set up my monthly budget, it’s time to start tracking my problem areas.
How I keep on track with Groceries: I do most of our shopping at either Krogers or Meijers. Both stores send me monthly coupons that I find very valuable, and also I have a Kroger Plus Card which saves me money on a lot of purchases and I earn points to save money on gas. I make weekly menus for breakfast, lunch, and dinners, and I make a grocery list based on the menu. That is a great way to not buy more groceries than necessary for the week. And lastly, I take advantage of the Kroger Click List, which is where I order my groceries online, and go to the store to pick them up. This is a great option, not only because it is super convenient and fast, especially when you have little ones, but it helps me stay on budget with my weekly grocery purchases. I am able to check my grocery list and decide what is necessary for the week, and a lot of times I find myself buying extras I don’t need, so I am able to tweak my list and save myself from spending too much on groceries!
Plan For Larger Purchases
Now that I realize how hurtful large impulse purchases can be to my finances, I have started to plan for those purchases instead, making them thought out and planned purchases instead of impulse buys.
No matter how badly I might want that impulse buy right away, I know the importance of planning it out instead, which means it might take a little longer for me to get it.
I know the total cost of the item, then I decide how much I am able to put towards this purchase each month. Once I have enough saved up, then I am able to go purchase the item. So it might take me a little longer to get it, in the end I know that is the right choice in order to better my finances in the long run.
Eliminate Unnecessary Expenses
Lastly, I have been able to eliminate that unnecessary internet expense that I was paying. It was actually a pretty easy and quick fix. Once my contracts were up, I cancelled the services. Now, since I have unlimited internet data on my cell phone plan, I use my mobile hotspot on my cell phone for any internet need I have at home. I’m essentially already paying for internet I use on my phone, so why not save more money with household utilities and use that internet for our everyday needs! I know that option might not work for some families that have a lot of electronics that get used at the same time while all connected to the internet, but for us, where I’m basically the only one using the Internet right now for my computer, it works.
How Monthly Budgeting has Helped our Finances as a Family
Since I started budgeting a couple years ago I have seen some big changes and improvements in our finances with the main ones being that we have been able to put more money into our savings and retirement funds, and I was able to pay off my loan for my Ford Explorer!
