Saturday, September 22, 2012

Budgeting When Money is Tight: Part 2

Yesterday I posted about two ways to begin budgeting when your money is tight.  If you missed it, check it out HERE.  Today I will share two more money/budgeting tips that I believe are important and necessary to keeping track of your finances ESPECIALLY when money is tight.  I believe that regardless of our monetary situation, we should do well with managing our money, but when money is tight, we have to be that much more careful & thoughtful when it comes to our money.

#3: Keep a Money Book/Cash Journal

I am not so hard-core as to track every expense flowing from my cash envelopes, (though I'd like to be) but I do keep a "Money Book".  In my money book, I track how much money I had for envelopes, how much got placed into each envelope, the running balance of envelopes, and designated plans for any extra.  Knowing where any "left-over" money will go before you actually have any is important.  Is it going to be applied to debt?  Savings?  A special item?  Christmas?

I also track yearly/bi-yearly/quarterly envelope goals for my "sinking funds" envelopes (car registrations, healthcare premiums, hair cuts, car maintenance, etc.).  You can also use your money book to track "needs" and "wants", and write down plans for how you'll get money for those (Leftover grocery budget?  Selling items?  Babysitting?).

The final thing that I use my money book for is my list of pantry stock-up items.  I keep a master list of pantry items that I like to keep on hand.  When I have a little extra grocery money at the end of the week, it is *usually* assigned to re-stocking some aspect of my pantry (bulk flour, bulk oats, etc.).  Why do I believe my pantry items are important?  Well, when money is tight, you can always use those pantry items to home-make lots of homemade foods & meals!

You money book is just that- yours!  Use it to write down anything that may be helpful for you when it comes to money.

Try keeping a journal for a month as you try out envelope budgeting!  

#4: Define "Necessity"

I used to have a problem.  I "needed" an extra set of bed sheets.  I "needed" a new mixing bowl.  I "needed" new, better fitting, expensive jeans.  One day I realized that I didn't actually "need" any of those things.  Sure, it would have made my life more convenient to have two sets of bed sheets.  In reality, though, I learned that I could just do laundry promptly and have my sheets back on my bed within two hours.  It would just take discipline.

The items we declare to be on our "need" list, are often just wants.  Make a list of your needs, and sort through them, figuring out which needs are real, and which are just perceived.  I bet most of your "needs" will make their way to the "wants" list.  At least in my case, that proved true.

Here are some helpful questions in deciding if something is a need or want:

  • Can I function without it?  
  • Is it something to be used for health, safety, or other wellness necessity? 
  • Is there another item that I already own that can be used in it's place? (i.e. if your cookie sheet is too old to use, do you have a pizza stone you can bake cookies on instead?) 
  • Do I need this item for work, business, or another money making venture? 
  • How often would I use it?  
  • Does a friend or family member have something similar I could have or borrow?  
  • Do I have money in the budget for it?
Many people live with far less than us.  Deciphering between our true needs and wants will help to avoid needless spending.  And when our budgets are tight, needless spending must go.  

Here's and added challenge: For one week, keep tally of every time you use the word "need" in relation to stuff.  This will surely bring your attention to the amount of things that our flesh feels the "need" to have, and hopefully this challenge will encourage a change of thought in this department!

Head here to read part 3 in this series and to learn more about budgeting when money is tight!

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