The day after my husband and I got married we moved to Mexico. My husband is from Mexico and was recalled there for work. I was only there on a visitor’s visa, so I couldn’t work and didn’t know enough Spanish to have gotten a job even if I could. So for most of the first year we lived on one salary, and though it was a great salary by Mexico’s standards, it was only about $1,400 a month. Even with our little salary, we had big dreams, so we quickly had to learn how to do a lot with a little money.
And yet, it in that first year we were able to buy and spoil a puppy and visit Europe. How did we do it? A budget.
I have budgeted since I was about eight and wanted an American Girl palm pilot (for those of you who are too young to remember, that was the precursor to smart phones). The summer before my senior year of high school, I wanted buy a laptop so I made a $20 bill last through ten meals. I was no stranger to stretching a buck.
My husband on the other hand…
It was like pulling teeth to get him to implement a budget. He fought me tooth and nail for months. His expenses had (almost) always been paid by his parents or the company, leaving his income to be disposed in any way he pleased. And he was certainly pleased with all the gadgets and luxury it could bring.
Then all of the sudden, the rent had to be paid, groceries had to be bought, cell phones needed contracts, and now it was all for two. It was a hard awakening.
I tested out a lot of different budgeting apps and settled on YNAB, which we still use today. It enables me to set and balance the budget on my laptop and add expenses on my phone as soon as the money was spent. It’s a great system and one I highly recommend.
We set up six main categories and then subcategories under each of them:
- Tithing–giving, missions
- Monthly Bills–rent, car payment, electricity, gas, Netflix, etc.
- Everyday Expenses–groceries, restaurants, fuel, entertainment
- Sunny Days Fund, so named because these are the things we’re like spending our money on–family Christmas presents, birthday presents, and our “Happy Funds” this is the little bit of money that each Alan and I get every month to do with what we want
- Rainy Days Fund, so named for the things we hope won’t go wrong but probably will–emergency fund, home improvements, car repairs
- Savings Goals–yearly vacation, European vacation, new car, etc.
YNAB allows us to set the budget every month based on the money we made the previous month (which is great now as a freelancer). So we start from the top and work our way down the categories. As the month went by we would sometimes move a little money from this category to that, but mostly it stayed the same. By knowing how much was in each area we were able to not overspend. In fact, in categories like restaurants and entertainment we would try to underspend. Then at the end of the month, anything that was left over in Monthly Bills and Everyday Expenses, we would sweep out of those categories and into our savings categories.
This way we were able to put a little and a little more in the vacations fund each month. On our European vacation we were still on a tight budget–we stayed on friends couches or in hostels, spent less than $50 a day (a person) in meals, and had only $100 each for spending money. But who cares? We got to go to Sweden, Germany, and Denmark for two weeks!
I’m not going to lie. When you first start budgeting, it hurts. It feels like the budgeting is a big pain, keeping you from all those little pleasures. For a while, it will feel like it’s holding you back–from that extra meal out with friends, from those cute boots you really want, from new phone you’re just have to have right this instant–but pretty soon you’ll see it lets you get to the things you really want–a trip to Europe, a new car bought with cash, a hot tub for the backyard. It’s amazing how those 20’s here and there can turn into 1oo’s and soon 1,000’s.
When you’re just starting out, make sure to set smaller, reachable goals–like weekend trips and a fall mini-shopping spree–to keep yourself motivated. If your only goal is two weeks over seas, that’s going to take a while to get there and you may get discouraged in the process.
Every person’s income, expenses, and goals are different, so every person will work at their own pace. If you need any tips or encouragement to get started on your own budgeting scheme, just let me know. You can do a lot with a little money too! It’s made all the difference in our lives.
What big dreams do you have that you would love to save for? Do you budget? What’s your method? Have you tried an failed budgeting before? How can I help you succeed this time?