budgets

Why should you budget?

Basically you either figure out how to live within your means -  you spend less than you earn - or you go into debt.


That's it.


It doesn't matter how much money you make - if you spend more than you make you are at a deficit - borrowing money. I live in San Fransisco and I know folks who make alarming amounts of money and spend more each month than they make. And yet when I made $30,000 a year - an extremely low amount here in SF, mind you - I was able to save toward my retirement, save into my savings account, and pay off my student loans. So even though I knew people making 4 times more than I made - and even more - I was actually in a better financial position than they were due to my frugal ways. That's right - I was in a better financial position than people making three or four  times what I made.

So how do you do it?

Some people are really good at living within their means.  They may not have savings goals but they may have an aversion to debt - my husband was like this when I met him.  And this is great if this is  you too! He had a big savings and no debt - a perfect place to be. If you are this way you may still want to draft a budget and get some savings goals down on paper - to buy a house, retire, pay for your kids college, etc. Just to get you excited about saving. Another sort of 'lives within their own means' person grew up poor - like me - so they developed really cheap hobbies and they think eating beans for dinner multiple times a week is totally normal. Again - this is great! Unlike my husband I tend to spend to the limit of my income, but not over, unless I have some actual savings goals. A budget really helps me see my goals and how I can get there simply by the choices I make about how to spend my money.

If you are living within your means - but only just - you are at risk. If anything happened- to you, your car, your house, your job - you wouldn't have a cushion to fall back on. You would need to borrow money. You need to have a savings in case of emergency at the very least, and to save for big items like vacations, a home, a car, etc.The general rule of thumb is to have 3 - 6 months living expenses in your savings account, in case of one of these emergencies.

So lets create our budget and start saving today!


Creating a Budget

So you are ready to budget - that's great! Yay! Let's think of something we want ot save for. Emergencies. A home. A vacation. Something because a goal helps.

First up, it does help if you have some idea about what you spend your money on right now, so try to keep track for a month. Computer savvy & do most of your spending on a debit or credit card? Hook your bank accounts and credit cards up to Mint and you can see what you spent your money on last month. Otherwise download from your bank. And add in all the ATM withdraws under miscellaneous.

Shocked?! If you are like a lot of people you just discovered you spent a car payment on coffee shop coffee last month and a mortgage payment on your debt. Never fear - knowing whats going on money wise is half the battle. If you see some spending you are not happy with, change it. I know it seems hard, but it is doable. Bring your own coffee. Get a small regular coffee instead of a big fancy coffee drink. Bring your lunch. Buy groceries and start to cook at home. Small changes add up to big bucks! But I digress!

What do you need to create a budget? A spreadsheet is great, excel or google docs are wonderful. But honestly, a piece of paper works just fine.

So, starting:

List everything you spend money on in one column
List the amount, monthly, in another column

 
Here is a good list to start with:

• Rent or Mortgage
• Renters or Homeowners Insurance
• Debt: Car payment
• Car insurance
• Electricity and Gas
• Garbage
• Water
• Groceries
• Restaurants
• Debt: Credit Cards
• Debt: Student Loans 
• Gifts
• Entertainment (movies, bands, books, Amazon Prime, Netflix, etc)
• Coffee Shops 
• Miscellaneous

Total it up.

How much is it? More that you make? Less? Are you including everything?


( Expert budget maker? Add in a monthly amount for annualized costs like car registration,or other annual membership costs like AAA. )


Now, the budgeting part is figuring out how much you want to spend on each thing and then reducing your spending to get there. This is where handy tricks come into play!

Lets say you want to radically reduce spending - so go from $400 a month on lunches out at work to $0. You need to break the habit - spending, and get a new habit: making and bringing lunch.That's hard. But you can do.

First: plan ahead and buy lunch stuff. Keep it simple:

Lunch menu: PB&J, fruit, water

• Bread
• Bananas or other fruit
• Peanut Butter
• Jelly

   
Next make lunch the night before.
Bring it to work.
Repeat for the week.

Now, how to not go to lunch with your friends? How to actually DO IT? That's hard but not impossible.   

• Trick one: Have no other options. Leave your money and ATM/credit cards at home. Once you get used to the new habit you can start bringing your cash or ATM / credit cards again.

• Trick two: Remember your goal: print out a picture of what you are saving for: a house, a bicycle. a vacation. Put the picture where you can see if at your desk.

• Trick three: Enlist a buddy. Get a buddy at work to also bring lunch or have a savings contest with a friend. 

• Trick four: Replace the habit. Learn to make super gourmet lunches from scratch. Or use the lunch time to take an awesome walk and call a friend. Go knit somewhere. The key is to replace the spending habit with a new habit that you like. 

• Trick five: Spending or Savings Made Visible: keep real paper money - the amount you have decided you can spend on something - in an envelope. Only use that money for that expense. So put your grocery money in an envelope and use it to buy groceries. No ATM/credit cards allowed. Seeing the actual money as you spend it is a great motivator! Conversely see your savings by putting your average lunch costs (15$) into a jar each day you don't spend it.

What tricks do you all have for saving? For budgeting? I am always looking for new tricks!!

-daslael

spinning plates

I love the celebrating Moms and Their Choices Series that the Gooseling Moms are doing on their blog. I see so many of us Moms struggle with our choices – what is right for us, for our family, for the child. What we have to do financially, what we want to do. It’s hard. And by sharing my story here I want to say that: It’s hard! And whatever choice you make is okay. I stand with you.

So, what were my choices? I work full time out of the house and I have a daughter.  She’s 4 ½ and I went back to work from my maternity leave when she was 4 months old, I went back to work with she was 13 months old, and I went back to work when she was 3 1/2.  Why – we can get to that. But how were these experiences different?

At 4 months old I cried. I cried a lot. I cried handing my little tiny baby over to my newly laid off husband. I cried trying to pump in dark, ventilation -free lactation closets (I started commandeering my boss’s office). I cried from hormone swings. I cried when my boobs squirted milk all over my expensive dry clean only suits. I cried when my lovely pregnancy hair all fell out in clumps. And my husband cried. He’d call and ask me to come home early – crying. And the baby? She cried nonstop! Yup – we had a colicky one. Suffice it to say – the reentry was hard. I was laid of several months later. Yeah – both parents laid off within 6 months of the child’s birth. But at least I was with my baby! I cried a lot less, but I worried about money.

I got a job about 7 months later, when our daughter was 13 months old. I was so jealous that my husband was getting all the good times! Our child was no longer colicky and was so much fun! Sunny disposition! Walking, running, playing!! Work itself was easier without the pumping and the hormone swings. The contract ended after 4 months and I was once again home! I will say, returning to work with an over 1 year old was much, much easier from the ‘leaving my baby’ standpoint. But it was harder from an ‘I’m missing out’ standpoint.

My husband began working several part time jobs and started a business. This quickly morphed into a 38 hour a week job at a local East Bay science museum, a 20 hour a week job at a non-profit in Marin and working 80 - 100 or so hours a week with his business. So basically he was working all the time.  I did the stay at home mom thing – I cooked, I cleaned, I took care of our daughter. I loved it! Spending so much time with my lovely, cheerful, fun child!  And it was hard. I was lonely. My husband worked all the time and I rarely got a break. I also missed being an expert at something! At work I was an expert – I was so not an expert at the whole ‘mom-ing’ thing. I have a blog post on some ways to make friends and stay sane as a stay at home mom – and not spend too much money, if you are interested. I will say - my house was clean and I cooked lovely organic vegetable based meals. I crafted. I pinterested. I had (still have actually!) bags of all the materials for things to do on rainy days. Home made play doh – check. Paper mache – check. But I worried about money.

We live in San Francisco – it’s an expensive place, so I knew I would need to go back to work, and I was looking for work while home with my little bean. For SAHMs who are interested in returning to the work place, I found just saying I’d been home with my child right up front in the cover letter worked much better than trying to obfuscate the fact. I did also draw attention to my freelance accomplishments, schooling, and any volunteer work I’d also completed. Pro tip: do try to volunteer or work a little while home, or go to school. It will keep you sane while you are home, and if you do choose to return to a job it will make reentry into the work force much easier.

I started working full time, back at an employer I‘d worked with prior, and with a group I’d work with prior, when our daughter was 3 ½. This time it was much easier! My daughter was in preschool part time and had already been clamoring to stay full days with her friends instead of the part days. I trusted her caregivers. I’d been able to ease her slowing into school, starting with an hour a day – something I probably wouldn’t have been able to do if I’d gotten a job earlier. I am not expected to work crazy hours – I leave at 4:30 and pick my daughter up from school. I don’t get to take her to school any more, I’m at work too early – and I do miss taking her to school. Not so many tears at 3 ½ - from any of us.

I love working. My job is enjoyable, uses my skills and I like my coworkers – which is super lucky, I know. We have enough money to worry less – we can save for retirement and college and I’m vesting in my retirement plan again. I got to be home with my daughter through the early years – which I am so thankful for. I made some great new Mom friends when I was home with her, which was hard to do – making new friends while parenting! –I am so lucky to have them in my life. We survived a financially tough time as a very new family and it made us stronger.  I still worry about money – it is San Francisco!  But less, I worry less.

My house is not a clean as I would like. Not every meal is a lovingly-crafted-organic-made-from-scratch meal – and those that are my husband now cooks. I think I’d like to figure out how to work part time, I’d like my house to be cleaner, I’d like to take my daughter to school.  I know that for middle school I want to be home a lot, those are hard years, so I am trying to plan for that in 8 years. But I also want to buy a house. Retire while young. Go on vacations. Save for my daughter’s college education. So – it’s a balancing act – the mom thing. And right now I feel like the plates are spinning just right……

Wishing you all the best on your parenting journey!

- daslael