Budget 301: Maintain Me

If this were Netflix you could skip the recap (which was a fantastic idea by the way), but since this isn’t Netflix let’s just do a quick review: in Part One of this three-part series we defined what the Budget is and why it matters.  Part Two helps you analyze your financial situation and actually create a first budget.  See, wasn’t that so fast?

In the final piece of this budget trilogy, you’re going to establish that budget habit and get into maintenance mode.  It’s amazing how quickly you can make financial progress when executing a solid plan.  You’ve got this.

Assess the budget

How did your first month go?  Easier than you thought or harder than you expected?  I’m so proud of you for dipping your toes into the budget pool.  The first month is always the hardest, especially since it’s largely guesswork in many ways.  But now that you’ve done it, things only get smoother!  Here’s what you do with your first month’s results:

• Evaluate.  In theory, you kept notes on how the budget went.  (Budget diary anyone? Tell us all your feelings.)  Whether or not that’s the case, now’s the time to decide what categories were well-suited, and what areas need some work.  Did your grocery budget meet your needs?  Did you give yourself too much leeway to eat out 4 times a week?
• Adjust.  Using what you’ve learned, tweak those categories and try again this month.  It often takes 3-4 months to really settle into the groove that works for your house, so don’t stress about doing this perfectly yet.
• Maintain.  As you customize your budget to fit your life (and vice versa when need be), start making this a habit.  That’s the point- build budget skills, make wise financial decisions, and be intentional with your spending.  We’re focused on stewardship, remember?

Keep the budget an open discussion

Crockpots are a set it and forget it tool, but the budget still needs your attention.  Once you get a good rhythm going the budget can be put on cruise control, but you still have to keep your eye on the road.  Mason and I don’t pore over every charge on the debit card, breathing heavily to make sure each one gets categorized correctly (anymore).  But we do make it a point to touch base regularly, especially since at our house one of us takes point (I’ll let you guess who that is).

• Review together at least every three months.  We have a little budget meeting approximately every quarter, or when something major is pending.  Mason is a big picture guy- he mostly cares about the progress we make toward our goals.  I tend to focus on the details that get us to the finish line.  Personally, I think you need a bit of both.
• Accountability.  Keep each other honest without fighting dirty.  That’s all.
• Watch for ways to improve.  As with any skill, you’ll develop strength over time.  I’ve learned how to coupon (lightly, I am not a crazy person), shop sales, and find money-saving tools that work for us.

Remember specialty expenses

Different seasons bring unique costs to bear.  Summer vacations, school clothes in the fall, holidays, and spring graduations are just a few.  As you make each month’s budget, make sure to set aside funds for those outside the norm expenses.  These three categories tend to cover our out-of-the-box costs pretty well:

• Christmas.  America’s credit card balances are sky-freaking-high in January due to Christmas shopping.  Don’t let this be you.  Christmas is the same day each year- plan on it.  Decide how much you’ll need for the holiday, divide the total by 12 and put that cash in an envelope so when Black Friday rolls around you’re ready.  (This concept applies to other annual costs.)
• Seasonal projects.  Every spring we plant a garden, buy grass seed, and pick up a few tools.  Instead of trying to cover it all in May, I set aside a bit of cash in March and April too.  We have the same amount of money to spend on this project, but none of the pain of a major expense.
• Gifts.  It’s easy to plan for family birthdays, but it’s a wise idea to squirrel away a little bit each month for unexpected gifts.  A coworker’s baby shower, so-and-so’s retirement, a bottle of wine for that dinner party, awkwardly reciprocating a gift to someone you never anticipated giving you anything (I hate that- don’t you hate that?).

Create a reward system

My parents used M&Ms to potty train me.  Cash motivated me toward straight As.  New clothes were my incentive to start working out.  Bottom line: I respond to the reward system.  Implementing a system of positive reinforcement can do wonders for budgetary success.  Highly recommend.

• Go for a quick win.  To gain momentum set a small goal that is attainable in the next 2 months.  For example, save $300 in the next two months, or pay off your smallest debt.  Celebrate with a fancier than normal dinner out or tickets to a local show.
• Set SMART goals.  Specific, measurable, achievable, relevant, and time-bound.  Apply this principle to your financial goals, and make sure you recognize when you meet one!
• Reward mutually and appropriately.  Make sure your reward system works for everyone involved.  A massage and pedi when we meet a savings goal is lovely , but where’s the win for Mason?  Likewise, make sure your incentives match your accomplishments.  As we were paying off our student loans, we set benchmark goals to avoid getting discouraged (I mean, this took years to accomplish completely).

25% done- Dinner and a show in downtown Denver

50% done- Dining room table to replace our garage sale furniture

75% done- Camping equipment

100% debt free- We took a vacation to Ireland (Important: we did NOT go back into debt to finance this vacation)

Well, that’s a wrap guys!  Thanks so much for powering through three months of budget boot camp with me.  I hope that some of this was useful for you.  Keep an eye out in future posts for debt-elimination strategies, budget hacks, money saving tools, and best buys.

If you have questions, comments, or success stories to share, drop a comment and encourage your fellow budgeteers!