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5 Ways to Simplify Your Budget

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I’m always looking for ways to make my finances behave better and I’m a technogeek at heart so I love to find cool new ways to track, manage, and view my finances. But sometimes things can get a little too complicated, and you end up spending 2 hours on something that should take 15 minutes. I know this is not a new concept and they have been discussed in many other settings, but in my experience these things really work.

So the goal here is to find some ways to simplify your budget in 2 ways. First, to simplify by downsizing, thus saving money which will allow us to get out of debt faster and give more. And Secondly, to simplify the way we practically view, track and manage our finances.

1. Spend Your Budget On Paper/Spreadsheet Before You Actually Spend it.

Stephanie and I sit down once a month for 17 minutes to figure out what next month’s budget will look like. I am the technogeek or nerd or whatever you want to call it of the family and I could probably sit down for an hour or two and discuss all kinds of things about our finances, but Stephanie would get bored real quick and it would become more of burden than a joy to manage our finances together.

So the goal here for these 17 minutes is to think of everything that will be happening next month that we need to go ahead and plan for. Sure, things come up and you have to spend money, but the object here is to minimize last minute spending by thinking of everything that you can plan for and then putting them in our budet.

Here are some examples. Next month we have:
• 2 friends are having a birthday, so lets budget $40 for gifts.
• We are going on a small trip (not vacation), so lets budget $100.
• It’s time for an oil change, so lets budget $30 for that.
• And lets say one of us has to visit the doctor, so we budget $35 for the co-pay.

Not all expenses from month-to-month are reocurring. And not every “emergency” that comes up where we go over budget is REALLY an emergency that we couldn’t plan for. If we didn’t have this meeting we would have never known that we needed to budget an extra $205. Now we can look at all of our other reocurring expenses and see where we can get this money from.

2. Reduce Individual Budgets (Eating Out, Groceries, Clothes, Spending Money)

Initially when we first started writing our budget out on paper, we looked at what we were spending on eating out, groceries, clothes, miscellaneous stuff, etc… and then decided what we wanted to bring that down to. We thought about it and thought about our goal of getting rid of debt quickly and came to an agreed upon price that we wanted to shoot for each month. This greatly reduced what we were spending on these categories and helped us save money and put more towards getting rid of debt.

So during our budget meeting each month we would look at these as well as others that were reocurring and figure out if they would work for that month. Just because they worked for the previous month, doesn’t mean they would work for the upcoming month.

3. Get rid of Credit Cards

We used to have 5 or 6 credit cards, some with smaller balances and some with very large balances. Also each of them had different interest rates. We handled this in 2 ways.

1. Took the card with the lowest interest rate and called and asked them to increase the credit limit to the total of all our credit cards. They of course couldn’t increase it that much but were able to increase it a decent amount. They were also running a promotion that was 0% interest on all balance transfers. So we took advantage of that and transfered 3 or 4 credit cards onto that card and then closed the other cards’ accounts. Then we had just 2 or 3 cards instead of 5 or 6 (which is much easier to manage).
2. For the remaining credit cards, if you call and threaten to switch your account to another credit card company as well as ask for a lower rate, then sometimes they will give you a lower rate.
4. Take 10-15 minutes once a week.

If you take 10 or 15 minutes each week and do some balancing each week, it won’t be so overwhelming at the end of the month. What I do is each week (or every 3 or 4 days) I download my internet bank statement and reconcile the transactions that happened that week. As I am doing that I update my budget in the “Actually Spent” column for every item that I budgeted for that came out of my bank account. Then I am not stuck at the end of the month overwhelmed.

5. Pay with Cash

Take 3-5 categories and take the money you budgeted for those categories out as cash and put them in seperate envelopes by category. This helps you to make yourself behave and obey the budget that YOU created. This isn’t some box that someone else is putting you and forcing you to only do a certain amount. YOU created your budget, YOU told your money what to do before that month ever started, so now YOU can pay for it with the cash that YOU told yourself that YOU would be able to live with for that month. So don’t go thinking this is someone else forcing you to do anything. YOU are just making YOURSELF behave, because when it comes right down to it, our bodies want what we want when we want it.

“I discipline my body and make it my slave, so that, after I have preached to others, I myself will not be disqualified” 1 Corinthians 9:27

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Permalink Comments (5) Adam Parker Jun 22, 2007