Confessions From the Sorta-Budgeting Life
Paying attention to your money versus allocating every dollar.
My partner and I are the quintessential DINKS: dual income, no kids. We certainly aren’t busy in the way that people with children are, but we feel busy a lot of the time, and we allow that feeling to make us a little lazier than we should be with our money. We don’t think of ourselves as wasteful spenders, but we don’t really limit ourselves by putting dollar amounts on each spending category.
Not that we haven’t tried. When we got married two years back, we set up a Mint account along with our joint banking accounts. Mint does a fair job of automatically categorizing purchases by budget line item. Yes, you’ll have to reallocate a few transactions by hand—Mint’s allocation system isn’t perfect—but it is easy to scan a month’s worth of transactions, make sure you recognize them all, and confirm that Mint has correctly allocated them into food, travel, or utilities.
Once all the transactions are allocated or reallocated, Mint creates a monthly budget for you. You can modify Mint’s budget, but the initial numbers are auto-generated based on the status quo of how you spend your money.
Mint, for example, gave us a $460 groceries budget. Not because that was how much we wanted to spend on groceries, but because that was how much we had been spending on groceries per month. (If that seems high to you, it does to me too—I make myself feel better by remembering we throw at least one party or dinner per month, and try to supply enough food/drink for everyone.)
We review our transactions each month, and we look hopefully at the budgets, discovering that most of them are just barely under the amount Mint expects, with a few categories usually going over and turning from green to the dreaded red. We don’t impose any consequences on ourselves, though; we’ll say “we should eat at home more,” or “no weekend trips next month,” but there’s pretty much no follow-through.
Right now we’re at the halfway point in terms of tracking our money: we’ve started paying attention to how much we spend, and just doing that was enough for us to put away some savings for retirement and start saving for an upcoming car purchase. But we haven’t yet done the second half of budgeting: the part where we—not Mint—make our budget, allocate dollars to line items, and stop spending when we reach those amounts.
Why is this so hard for us? I can think of a few reasons. I don’t want to restrict what my partner does with his money, for example. What if, for instance, I spent a ton in one budget category and he was forced to cut back when he wanted to buy something? The communication required to make that work seemed like a headache, especially when we were making all our bills and in no immediate distress.
I also felt some resistance to the notion of scarcity: we aren’t operating that close to the edge, per se, so while the idea of “saving more” in general sounds good, whenever it means “skipping a friend date at the brewery,” it feels unacceptably restrictive.
Finally, I felt like most of our non-trivial purchases weren’t predictable budget line items. Car repairs, charitable donations, taxes, and insurance bills all snuck up on me, and I didn’t have a good way to allocate money to those types of expenses. One budget seemed doable, but a different budget every month? Punishing.
What we need now is a solution that makes us work a little harder, but not uncomfortably hard: something that won’t take a lot of time (because we’ll abandon it), that will force us to confront our overall excessive spending habits, and will leave us the flexibility to not allocate every dollar to a spending category.
So we’ve come up with an experiment, one last attempt, to see if we can save more money without going all the way over to the budgeting side.
Our plan is to go from leaving most of our money in our checking account all the time, to transferring any extra to savings every month as soon as my paycheck hits. It’ll look like this:
—Last day of month: previous checking balance + $2,200 (my monthly take-home)
—First day of month: $2,200 (because everything else is now in savings)
This way, we’ll be working ONLY from that paycheck. We’ll have $2,200 to spend, and that’s it. There will be no obscuring how much we’re spending and saving; every month, the number we transfer will be the amount we saved. The only snarly thing will be if we have major unexpected expenses, which we had a ton of in the beginning of the marriage, but I’m hoping we’ll get a few months without those… and we can just as easily make an emergency transfer back, if we must.
This method is intended to lay completely bare how much we’re spending each month. No more telling myself “this is an odd month” or “we won’t have to buy this next month.” Watching the account balance dwindle all month will help me, I hope, create a generalized scarcity rather than a specific scarcity: “we need to spend less money, so I’ll choose to cook tonight instead of going out,” instead of “we’ve already spent the $10 in the movie night budget, so we can’t have another Redbox film.” Those may seem similar, but to my mind, they feel like the difference between a proactive change and a reactive restriction.
If this doesn’t work, though, I think we’re converting to the real budgeting religion. I know that budgets work well, especially for people who are working with a lower income and want to stretch every dollar. It’s time for us to stop letting DINK-hood make us waste money, especially because at any time we could garner more expenses or lose an income, and I’d hate to have meager savings when tough times hit just because I couldn’t figure out my own budgeting practices.