“Our life is frittered away by detail. Simplify, simplify.” -Henry David Thoreau, Walden
Mistake #4 – Overcomplicating the Budget
At the end of December last year, I thought it would be a good idea to download a new budget spreadsheet to try for the new year. I liked the spreadsheet I used at the time, but I wanted something that could be even more detailed and easy to read.
Little did I know, I was setting myself up for failure with a complicated budget. This would be my 4th mistake as the family finance manager. As soon as my second daughter was born only two weeks into the new year, I completely stopped budgeting. It was just too much with everything else going on in my life.
Why Should You Simplify Budgeting?
In my mind, a straightforward budget will help you see past the little mistakes and hiccups and focus on the overall financial goals you set. Your financial goals cannot happen overnight, but with some dedication to keeping a working budget, you will see improvements little by little and eventually you will reach those goals.
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How Can You Simplify Budgeting?
There are various opinions out there about how to simplify your budget, but here are 14 ways that I think will make the biggest difference to my life and our finances. Our number one goal with our budget (at this point in our lives) is to spend less than we earn and put away the rest for a rainy day. Simple as that.
14 Ways to Simplify Your Budget (in other words, STOP.trying.to do.so much!):
- Start from scratch
- Sometimes you have to throw out hard work in order to set yourself up for success.
- Switch to Pen and Paper or use a simple spreadsheet (all you need to know is the SUM function for Microsoft Excel)
- Hey, guess what? I don’t even have to write it out myself. I had the privilege of reviewing the workbook from The Budget Mama (Build a Budget That Works), so I just printed out the budget from the workbook.
- For some reason, when I actually write something out, it is more meaningful and I do more about it.
- Read up on how to budget. I know how to budget, but there might be something I am missing from the fundamentals that could help in the long-run.
- Make sure you and your spouse are shooting for the same goals.
- For example, one of our financial goals is to travel…a lot. Since we both want to save money for this, we are more likely to avoid buying small, frivolous items now to contribute more to our traveling budget.
- Stop using an inordinate amount of categories
- If I were single, I might even just use the categories: Spend, Save, and Give.
- Combining the “Groceries” and “Dining out” categories into “Food” might be something I’ll have to think about.
- Spend less time budgeting…more often
- This is the key. I was doing the first part really well earlier this year. I needed to at least be spending a small amount of time on the budget as often as once a week, if not daily (The Budget Mama suggests taking a money minute each day).
- Hang on to only one credit card
- Too many accounts to keep track of make it difficult to budget.
- Pay all the bills at once, on one day of the month
- Even if your bills are all due on different dates, this will greatly simplify the process.
- Use the income from the previous month to budget
- So if it’s November, use October’s income.
- This means you have to tangibly have that income in your account to budget.
- That way, you know exactly how much you have to work with for the month.
- Write down expenses – in a notebook, your phone, or what have you – the moment they happen
- My mom used to do this on the back of her checkbook.
- Keep all receipts with the notebook.
- Take screenshots of online purchases/payments when they happen.
- Do spending freezes more often
- This would mean you have less to track.
- Budget for yearly expenses every new year
- By doing this, you wouldn’t have to scramble to find money when some big expense is due (car insurance, anyone?).
- Focus on only one financial goal at a time
- Maybe your goals are to retire, build up an emergency fund, and buy a house. Do as much as you can for the more immediate goal – building an emergency fund – and then move on to the others as you reach each one.
- This doesn’t mean you can’t have numerous financial goals. Just put your energy towards one at a time.
- Implement each of the above ways one at a time, over a period of say 3 months, and you’ll be on your way to budgeting bliss
- The point of this list is not to overwhelm and overcomplicate, but rather to simplify.
You know what they say, “Less is more.”
How would you simplify your own budget?
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Linked to: Thrifty Thursday (The Thrifty Couple) and Thrifty Thursday (Living Well Spending Less)
Other posts in this series:
You Need a Bill Pay System
My Struggles as the Family Finance “Manager”
Mistake #1 – Quit budgeting
Mistake #2 – Mixed up wants and needs
Mistake #3 – Used credit cards for things we couldn’t afford
Mistake #4 – Overcomplicated our budget
Mistake #5 – Checked over our accounts less often
Mistake #6 – Saved $0
Mistake #7 – Spent bonus money
Mistake #8 – Bought low-quality appliances