Tuesday, April 12, 2016

You Need a Budget- And I Do Too!

I have to admit, budgets scared me for a long time, and to be honest, still scare me a lot. I'm going to get all emotional on you in this post and I hope you'll bear with me while I do so.

I know the importance of budgeting. I know the importance if "giving every dollar a name" as all financial gurus recommend, so that you know where each of your dollars is going and money doesn't disappear without you knowing where it went. Instead, you're supposed to decide where you want your money to go, and then you spend only that.
Its a wonderful idea, and its amazing in theory, but the thing is, a budget only works if you actually have enough money to cover your expenses. If your expenses are higher than what you are making, writing up a budget won't actually work, and all it'll do is make you feel depressed, sad, panicky, and hopeless about your financial situation. Speaking from personal experience, unfortunately.

So for years, despite knowing the importance of a budget, our family had none. I did not want to calculate how much more we were spending than what we were bringing in. I didn't think any good would come of it. That's why I'm really happy I was contacted by YNAB, a top rated budgeting app, who were interested in sponsoring this post. (Get three months free by clicking here - no credit card required!) Because it gave me the push to do something I should have done long ago. But more on that in a bit.

For years, while we weren't actually making a budget, we were doing what we can to try to spend less than we were making, in any way we could.

Classes being offered on YNAB
First by downsizing from a 968 square foot apartment to a 484 square foot one, lowering our rent by $200 a month (at first), where we've lived for the past 5 years despite it getting squishier and squishier when our family went from 4 to 6.
Secondly, I was trying to cut my grocery bills in any way possible. I was cooking mostly legumes as proteins, making everything from scratch, making homemade toiletries, etc... Over time as I discovered my family's sensitivities to gluten and dairy and my sensitivity to legumes and most grains, our grocery bills should have skyrocketed, but while they have gone up, I've made sure they stayed reasonable by foraging wild foods regularly, buying produce nearly exclusively from the reduced rack, and buying most of my dry goods at the scratch and dent stores and in bulk. For animal proteins I've done intensely insane calculations to figure out what is the cheapest type of meat, factoring in the bones, and once I figured that out, started stocking up on and making things like fish heads and chicken necks and gizzards, even if other people consider them weird, because they are cheap and protein that I can eat.
Thirdly, we spent as little as we could on everything else, rarely spending any money on entertainment or non necessities.

At the same time as trying to cut our expenses mercilessly, my husband took a new job that paid him more per hour than his last one, and started working more hours per week as well. I tried to do what I could to make money as well, to supplement our income, via this blog, teaching foraging classes, and random jobs here and there.

But no budget.

Because it freaked me out.

I mean, what's the point, I said to myself? I am already doing what I can to save money, and I'm always trying to do more, so what's the point in figuring out just how much less we make than what we spend- it won't help anything, and seeing that in black and white will just make me upset. You can't budget your money if you don't have enough to cover your expenses.

And so, that's how it's been for years. I've lived in an oblivion of our actual financial situation, and just decided to do my part of lowering expenses and making money how I could. I was aware of when we were in overdraft and when we managed to go through the month without going into overdraft, but that was the extent of the amount of knowledge I wanted to have. More than that would just make me feel hopeless, I reasoned. And anyhow, running a frugality website like this, how could I admit to anyone if I didn't practice what I preached, that our expenses sometimes were more than we made?

I did start to calculate exactly how much I was spending, though. Since January I've been tracking all my expenses meticulously so I knew how much I was actually spending, but I didn't want to compare that to our income. I just couldn't.

Recently, I was contacted by a representative of YNAB (You Need A Budget)- a personal budgeting web app (with companion apps for Android and iOS), asking me to write a review of their service, and my experience with it, on my blog, and I said yes without thinking much about it. Budgeting? Totally in line with my philosophy and what I write about here. Despite my initial hesitation when I actually sat down to do it, because, as I explained before, budgeting freaked me out, my husband and I sat down with YNAB and went over our finances, from A to Z, remembering to plug in all our sources of income and not just the obvious ones, as well as all the expenses, even the less obvious ones.

Sample budget on the YNAB app

I realized that, for the first time in forever I can actually budget and not panic about it, because our income does cover our expenses, even with a little bit to spare. Not a ton more to spare, but at least our income is greater than our expenses.

Looking at these number was reassuring to an extent, but also motivating- pushing me to get my act together and work more even when I feel like being uninspired, to schedule more foraging classes, both private and group ones, to post more regularly on my blog so that I can make more money from the ad networks I work with, so that our monthly income will increase. Additionally, it's also motivating me to do just a little more to save money on groceries, to not be so lazy when I am feeling lethargic, and make extra frugal meals more often by planning more in advance, and to do some more crazy calculations to help figure out which are the cheapest meals to make (hopefully to be posted within the next week or two).

I can do this, and I actually appreciate YNAB for giving me the push to actually make a budget for the first time.

While the budgeting program of YNAB is certainly terrific, and has expenses divided in logical orders- set expenses, changing expenses, and optional expenses, with the option to change the name of each category as well as the amount budgeted for it at any point, and it does the math for you automatically, the best part of YNAB is the philosophy that it teaches together with the budgeting software.

There are four rules that YNAB focuses on to help you improve your finances, and go from living paycheck to paycheck, get out of debt, and save money.
Rule One- Give every dollar a job.
Rule Two- Embrace your true expenses.
Rule Three- Roll with the punches.
Rule Four- Age your money.
YNAB teaches these rules via free online classes, handbooks, and videos. While I know much of these rules, philosophies and attitudes already, and talk about them a lot here, I can see how they can be extremely amazing for people who are beginners in frugality and budgeting.

One of my core philosophies of frugality is there are no set in stone rules (other than getting your expenses to be less than your income), but that frugality is about spending less on the things that you care less about so that you have the money for the things that matter more to you, and YNAB teaches that same idea, which I endorse 100%.

Just some of what YNAB offers.
YNAB is free for all students, and they are offering readers of PennilessParenting.com a 3 month free trial, after which they are extremely reasonably priced. To get your free trial, click here.

How do you feel about budgeting? Has anyone else put an emphasis on frugality, but not on budgeting, because budgets scared them? Why did budgets scare you? What did you do to try to overcome that fear of budgets?
How would you say budgeting has improved your life?


  1. FYI...the web-based YNAB app is relatively new...and is subscription based. There are a couple of older versions available (most recent is YNAB 4 or "Classic" YNAB) which is still available for people who are wary of software as a service or who don't like subscription fees (or having their personal data on someone else's server). Also...full disclosure...not all of YNAB's functionality is available outside of the United States, which means you may be paying for services you can't use. This is not an issue with the older versions. Penny - did you ask them about discounts on YNAB4 for your readers who may not want the new one?

  2. I kinda keep a budget. I make plenty to cover the "must haves" like the mortgage and electrics, etc. I always pay the bills first out of my check. I don't even count the money my husband brings in cos that's his money and it's not enough to even budget with once he's bought whatever it is he wants (usually car stuff).

    Where I need to budget but don't is with shopping. I'll be broke before my next check (every 2 weeks) because I kinda go into the store planning on what to buy and turn into a 9 year with A.D.D. once I see "clearance" all bets are off and I spent $200 instead of $80. I got the money, just wish I had more control so I'm not broke every other week. And I gotta stop wasting food. I live with a picky eater so it's catch-22 everyday for dinner. Some nights he ends up with a PB&J cos he didn't like dinner and it'll be something only he actually wanted and I then let it sit in the fridge until trash day rolls around cos I don't wanna eat the leftovers. Sigh.

    I hope this YNAB helps ya Penny. Your a smart woman, you'll do good with it considering how determined you are and so active.

    I won't need it, I just need to pay attention when I go to Kroger and Walmart and only buy what I need.

  3. I have a list of fixed and variable expenses for the household, so we know the minimum that needs to come in. Have never been able to budget for DH's spendthrift, spur of the moment, wanna have it now tendencies. We tried agreeing on an amount he could spend as he wished, but then he would blow it all on a big ticket item because of how much he was able to "save" on it, not really comprehending how much week was left to go on a teaspoon of gas. Sigh. So I really don't want to know, I guess. I'm pretty sure I would be pretty depressed. I do make cuts to regular expenses every time I can and just stash the difference in savings along with "extra" (ha!) income. It's an account he has been told about, just doesn't remember anymore. Makes me feel subversive. I'd tell him the balance to show the difference it makes, but last time I did, he figured that meant he could go spend.

  4. I use a financial software called Geltbox Money to stay within a budget and reach my goals. So far so good... Cheers

  5. I use Geltbox money (https://geltbox.com)- an excellent home finance planner and tracker.


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