Saturday, January 11, 2014

Learning to Budget

Budget. It's a dirty word for a lot of us and it's taken me some time to figure out why. We're all told we should do it. All the financial advisers on TV, radio, newspapers, and magazines tell us that we NEED to budget. To not follow a budget is to commit financial suicide. And they're right, yet so many of us, yours truly included, have failed to do so.

It's taken some soul searching, but I think I may have figured out why I, at least, have failed to budget for my entire life. Much of it has to do with my misconceptions about what budgeting is and what it means. This is what I believed about budgeting three months ago.
  • A budget means penny pinching. My dad has been a churchworker most of my life and my mom stayed at home. I loved growing up with my mom at home. It was a gift and now that I am a parent with adult responsibilities I understand how much of a personal and financial sacrifice that was. But that also meant that we didn't have much money growing up. Now that I'm an adult I think it is probably safe to say that we had very little extra money growing up. To this day I am still shocked/impressed that we managed a trip to California and British Columbia when I was fairly young. I spent most of my life watching my parents carefully watch every penny that came in and out. While I am by nature a saver who does not like to spend money, once I was married and we had two full time jobs and no kids, I discovered financial freedom that I had never had before. And I married a spender. And I don't like conflict. Let's just say that all of those things were an eventual recipe for some kind of financial disaster when we moved and I wasn't working full time, we had two mortgages, a house falling apart around us, one toddler, and a baby on the way. That's not to say that all churchworker's kids struggle with finances. My cousin is a pro at this with her own website. But my form of rebellion was a lack of desire to sacrifice as much as I did growing up. I don't want to indulge my children (we say no way more than our children want to hear) but I also don't want them to hear a constant stream of "No, we can't afford it." I finally changed the way I saw budgets when I heard Dave Ramsey saying "A budget is you telling your dollars what to do." A budget doesn't have to be about pinching pennies. Instead, a budget is about controlling what those pennies are doing. That switch in thinking has made a huge difference.
  • A budget means difficult sacrifices. We all have wants. I want: a new kitchen, new living room floors, a new master bath, a trip to Australia, a trip to several countries in Europe, and the list goes on and on. All of those wants might be fulfilled someday, but not all at once and they need to be fulfilled when we have the cash to do each one. And the reality is that unless a person is a multimillionaire with money burning a hole in his or her pocket, one is going to have to make sacrifices and decisions about what one can and cannot spend money on. But they don't have to be difficult sacrifices. They just have to fit into the budget. We encountered this last month when we were trying to decide what we were going to do to celebrate our twelfth anniversary. My husband really wanted to go to the Colts playoff game. In the past the discussion would have included me saying that I wasn't sure that we had the money, my husband reminding me of his end of year bonus money, and me eventually mopishly giving in all the while uncertain if we actually had the money and waiting for that dreaded overdraft text alert. This time we looked at the budget, moved things around, and confidently bought the cheapest tickets we could, all the while certain that the money was there. A budget doesn't mean sacrifice. Instead it helps one make confident, informed decisions about the money that is there. Yes, there are things that we want that we can't have. But going on a budget doesn't mean I have to give up Starbucks Java Chip Frappuchinos. It just means I have to be selective about when I get to splurge on them. And if we stick to our budget, pay off the debt, and then make deliberate decisions about how we are saving our money, I might actually get that trip to Australia.
  • A budget is a way to control my free-spirit spender husband's spending habits. Yeah, this particular lesson was a huge thunk on the head. I'm by nature a saver. My husband is by nature a spender. He can be cheap about his spender tendencies (he is Dutch after all) but he loves gadgets. I knew that before I married him and I still married him. That doesn't mean it hasn't been the cause of headache and heartache in our marriage. When we moved nearly four years ago I tried to put a budget together to get our out-of-control finances under control. Part of the reason? I was trying to use it to tell my husband what to do. It wasn't about opening up communication and making financial decisions together. It was about telling him what we could and could not do. I set myself up for failure from the beginning. This time around the budget isn't about controlling my husband, it's about open communication and financial freedom. I make the budget and my husband approves it. Every month we get an equal monthly allowance. I get to use mine for as much Starbucks or Partylite as I want; he can save his up for a new bike jersey or gadget and I can't complain. The same thing is now true for his weekly Friday lunches. He gets the same cash amount every week. If he spends it all he doesn't have extra for the next week. If he doesn't spend it all he has more for the next week. Now I don't get irritated by him choosing to eat out at Red Lobster or Red Robin. It's his money and he faithfully ate leftovers all week so he could splurge. The same was true when he told me that he wanted to go to the playoff game next week if the Colts win tonight. I said we didn't have enough money in the entertainment budget and he reminded me that he had saved allowance money. Suddenly it shut me up. He was right. He had money. A budget isn't a control device; it is a communication device. This kind of lesson could change every marriage.
  • A budget is set in stone and any deviation means a failed budget. I love to plan. It is one of my favorite parts of teaching. In fact, the four days off last week due to snow are complicating my carefully designed AP lesson plans and trying to figure out how to make up those four days is really messing with my head. I can be flexible, I have to be flexible, but I don't like doing it. When I first worked out a budget without any guidance it was quickly blown out of the water because life happened. I failed before I even started because I didn't understand that numbers could be moved and amounts could be changed if they needed to be. This lesson was especially important since we started doing a budget in October, one month before we hosted Thanksgiving at our house and two months before Christmas. Suddenly we had to figure out how to work in two expensive events into a set budget. Add to that new winter wardrobes for the kids (including winter coats and boots) and we did a lot of number moving in those three months. That's ok. It taught me to be flexible. Now I make changes all month long depending on what comes up. But what matters is that we keep track of every expense and all money coming in and out. Budgets are made to be changed and adjusted based on life happening. And that's ok. Much like I had to learn when I was dieting and losing nearly 25 pounds, some weeks and months are going to be easier than others, but in the end it's all about making the numbers behave and making the changes necessary to ensure that happens.
And that leads us to how I got to those realizations. After nearly 12 years of marriage we decided it was time for us to get a handle on our finances. We came to that realization years ago, we just never did it. I think we were both afraid of what we would find out about our current finances and habits. I'm now to the point that I believe that all couples should take some kind of financial planning class. For us it was Financial Peace University at our church, but I've come to believe that we should have taken the class over 12 years ago when we were going through pre-marital counseling. That would have been practical. That would have saved us a lot of heartache over the last 12 years, especially over the last four years since we moved. When we moved, our finances fell apart, and we've been digging ourselves out of a deep hole caused by a combination of life happening and poor decisions ever since.

And we're getting there. We have a long road ahead of us but for the first time ever we have a plan. We know where we want to end up and we know how to get there. We will slip up but we know what we have to do if we want to get out of debt and have a secure financial future for us and our kids. The biggest key to that is making and sticking to a budget. We are faithfully using You Need a Budget (YNAB) and I have learned to be flexible from month to month. I like the numbers game. It's one of the things that made losing weight last year so much fun. Not only was I losing weight but I was constantly trying to beat my numbers. I may be the English teacher but I am definitely the nerd in this household. I enjoy doing the budget and my free-spirited computer nerd of a husband is happy to let me do it as long as I don't use it to beat him over the head with it.

We're learning. It's better late than never and hopefully we will develop habits that we will pass down to our children so that they can learn to love living debt-free too. I didn't make being debt-free a goal for 2014. I would love to see that happen but I'm not completely confident that this will happen by December 31. But we will be close and that is our goal. My blog post the day that happens will not be a post to brag but instead to celebrate the first debt-free day of our marriage. And that, my friends, will be a good day indeed.

1 comment:

  1. I'm proud of you, Sarah! I'm proud that you're admitting your past mistakes, but even better, I'm proud that you're doing something about it and following your budget! It's not easy, but the end result is worthwhile! Blessings on this continued journey...and thanks for the blog shout-out! :-)