I hate budgeting. I loathe it even.
I am very good at budgeting.. I plan and create budgets all the time, and forget about them just as easily!
What I need is a system, like Babysteps, to get my money to work for me!
I've mentioned before that my first goal is to get current. In order to do that, I first need a working cash plan.
Babystep 1: Deal with the cash issue.
Those weekly things that add up so quickly - groceries, petrol, pocket money, takeout, gifts for birthday parties, a trip to the pool, something for the garden, etc, etc. I decided to go cash for these.. DH prefers cash and after a few years of trying to add up 50 plus transactions on a bank statement each fortnight, I am ready to simplify!
We've gone with an envelope (or bucket) system and a small photo album, along with an app for the iPhone, and it is working out well. DH is adjusting to keeping the receipts and I'm adjusting to entering them into the app and tossing them! I'm making a few changes this pay week to help make it run smoothly.
Be prepared to change category names and amounts while you adapt, and be prepared to suddenly be aware of expenses you never knew you had - like $15 to take green waste to the tip - which seem rediculously expensive!
I find keeping track of my cash is like shining my sink - it keeps my head in the game and provides a base to start working out the rest! There is no point budgeting everything else if you keep over spending on the small stuff! Get these small things under control, and the rest is easy!
How much to allow?
We've allowed a little less then our 'average' spend over the last few months to begin with. We will reduce costs and at least keep it the same, if not reduce it, as we tighten up in other areas as well. If you are setting up a similar system, don't try and be a hero! Your budget needs to work with where you are now!
The other option is to work out how much you have left after everything else and work from there. I didn't do that because the 'everything else' is variable as well, and, quite simply, my immediate lifestyle is going to impact me more then how much I can spend on clothes! Of course you need to make sure you have enough for the rest of your budget, but for me, it is more important to just get it under control rather then start out with a 'perfect' budget! Babysteps work for a reason.. Small changes, over time, make a huge difference - Huge changes generally lead to failure.
Issues?
One issue with cash is that electronic purchases aren't covered, iTunes, PayPal, and Amazon all come under this category. For now, I'm thinking I can mange these under 'Bills' which looks like it will be the bucket for anything that I pay out electronically.
Of course there is also the concern of being a target for theft. We only carry what we need, except for the five minutes from the ATM to home, and we have a lock box for what is at home. At the moment, the risk of us robbing ourselves is higher!
The Action Plan...
DH wakes early so on his pay day he goes to the bank and withdraws our chosen amount and it then gets divied up into 'envelopes'. I'm thinking of ditching the physical envelopes and keeping track only through the app. As I spend money, I enter it into the app and assign it to an envelope, 30secs tops, and at night I go over what DH has spent. Ultimate goal is for him to enter it himself! On Sundays I count how much we have to make sure it's all accounted for (the app keeps a running total to check against). At the end of the pay period, all the change goes into the secret kitty jar, except for the speech therapy which varies each fortnight. As we don't have speech on holidays, that also becomes our extra holiday spending money during school breaks!
After two weeks on this system, I am confident it is going to work for us long term - it's flexible, suits our spending habits, and is low maintenance!
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