Last Friday I talked about our household’s budgeting tool, the Fun Card. It’s a very simple idea that helps keep our day-to-day expenses in line. But, like any tool, the value comes in the use, not the having.
Homebrew Husband and I used to think budgeting was the act of making a budget. That’s like saying a marriage is the act of having a wedding. Wrong!
The one-time setting down of how much you should spend is the easy part (And there’s a bazillion sites that will talk you through the initial make-a-budget step if you need a little help.) The day-to-day grind of maintaining your budget is where the work comes in.
We’ve come to think of budgeting as a household chore like mopping: something that should be done at least weekly, might occasionally slip to monthly if your life gets really whack-a-doo, but gets pretty gross and kinda unmanageable if you let it go any longer.
We use three advanced Fun Card techniques to make sure we don’t end up with a financial sticky floor situation: The Touchbase, the Reconciliations and the Carryover.
The Touchbase: a weekly, very quick conversation that keeps everyone on the same page about the state of our joint wallet. The Touchbase sounds something like this:
Erica: “Hey, where are you on discretionary spending?”
Nick: “About $90 because of dinner last week and that thing after work. You?”
Erica: “$30 from the kid’s party and from taking Bella out to ice cream. But I bought salmon this month so I’m almost blown on grocery.”
Nick: “Yeah but I don’t think we’ll need anything at the grocery store except maybe milk for the next couple weeks because the garden’s really on.”
Erica: “You’re probably right, but let’s tighten up for the rest of the month just to be sure.”
The Touchbase is designed to keep us both on the pulse of the household finances, but it has another benefit: it makes looking at finances with a partner less scary. Nick and I found that when we began talking about our budgeting process frequently, our financial situation stopped mushrooming into a periodic Big Scary Thing that we had to figure out from scratch all over again.
The Reconciliation: At the end of the month, we do The Reconciliation. We sit down with our Fun Cards and our bank and credit card statement and we make sure we haven’t missed anything. This is also when we determine if we have underspent in any categories (hopefully our diligent use of the Fun Card prevented us from any overspending).
We deliberately set up our Fun Card numbers to be within our budget but not to represent the smallest possible budget we could swing if engaged in severe, constant deprivation. If we were constantly trying to stick to a budget that was really uncomfortable, we’d fail a lot, and that would be discouraging. We didn’t want the Fun Card to represent discouragement and failure. So, we gave ourselves a little wiggle room.
If Nick forgoes the happy hour beer between jobs and walks to the train instead of driving, and if I don’t splurge at the nursery and pass on the fancy vinegar at the YuppieHippie market, then usually we’ll have a few check boxes left at the end of the month.
Which brings us to end-of-month reward time….
The Carryover: If we have managed to underspend, we don’t “lose” those checkboxes. That would just encourage us to spend all our boxes down even if we didn’t need to (you know, the way corporate entertaining budgets and government departmental allocations are spent). Instead, we transfer the value of any check boxes not spent into a special “Fun Fund” savings account. This account funds vacations and big ticket items that are pure fun. We call this The Carryover.
The Fun Fund Savings Account is not where we save for a new washing machine or a new roof (though if washing machines and roofs happen to be really fun to you, you could, I guess.) We have another savings account we named “T.I.M.” (for, Taxes, Insurance and Maintenance) where we transfer a set amount each month to cover things like our annual home insurance bill and long-term upkeep and “surprise” expenses for our home, cars, etc.
The Fun Fund is about stuff we want to spend on: trips, experiences, garden expansion, chicken coop follies. Having that incentive to do even better than our Fun Card budget keeps on-going frugality from becoming on-going drudgery. Every month, if we keep our day-to-day expenses in line, we see our Fun Fund grow.
We do our banking online, so I really do have several different savings accounts that I transfer the appropriate amount into monthly, but you could apply this idea just as easily with a bunch of large glass jars or a simple spreadsheet: anything that gives you distinct areas of savings and a long-term way to reward yourself for a budget well-kept.
Last week my friend and reader Chris asked for a Fun Card template she could customize. Here it is in Word format. You should be able to add or subtract boxes and categories to customize this tool for you. It’s designed to print on any of the Avery-style standard size printable business cards. Let me know if you run into problems with it.
How do you reward yourself while staying true to a frugal ethic?
In honor of No Spend Month, every Friday in July I’m breaking out of my normal milieu of garden talk and musing on money topics. Since values-driven spending (or not spending) is a big part of what we’re all about here, I don’t think it’s that big of a stretch, do you?