On today’s episode of 2 Frugal Dudes, we’re talking about how we budget our money, and sharing a few ideas you can apply to your own budgeting process.
How We Budget Our Money
Kevin calls himself a lazy budgeter. All of his bills are set up on autopay, so his budgeting for extras all depends on how much is in his bank account once the initial draw is over.
Analyzing Your Budget
Getting used to what you spend every month is a better foundation for determining your budget than setting an arbitrary number. It allows you to make strategic, sustainable cuts and intentional expenditures.
Budgeting with Kids
Kevin finds that budgeting with kids is a lot different than before having a family. On the one hand, you want to be able to support your family. On the other hand, you don’t always want to say no to spending and having experiences with them.
With kids, there’s also an increased risk of miscellaneous or surprise expenses. When budgeting for the family, allow for a bit of wiggle room and save for family fun.
Time Your Budget
Take a look at your bill schedule in comparison to your pay dates. For example, if you have a mortgage payment at the beginning of the month, you’ll need to have money rolled over from the month previous. If you have to set aside money in the first half of the month, consider adding a separate account to automatically transfer them on your payday.
Have Flexible Categories
Generally speaking, only 10% of your budget changes from month-to-month. It’s still important to have the categories and allocations for everything; just reallocate as needed.
For example, Kevin has a portion of his budget set aside for clothing for his children. Many months of the year, the kids don’t need new clothing. However, during seasonal changes that budget category is very important.
So, even if you think something in your budget breakdown is only going to be used occasionally, unlike groceries, the mortgage, utilities, etc., you should still have it in there.
Budgeting in Debt vs. Debt-Free
Sean made a great point regarding budgeting tips and your personal lifestyle. If you are budgeting to get out of debt, your plan might be far more rigid than when you’re finally debt-free. To Sean, debt is an emergency situation to get out of whereas being debt-free allows you to be a little more relaxed.
When you get to a point where your debt is paid off, one of the best budgeting tips is to still be intentional in your spending. You want to get to a place where you can splurge sometimes and enjoy your lifestyle without causing undue stress.
The Best Budgeting Tip
The best budgeting tip is not a software or a method; it’s your mindset. You need to be able to use the tools and analyze your spending to make intentional decisions about how you want to spend your money. Small expenditures add up quickly. Are they adding value to your life?
Where Our Money Went
Kevin just returned from his annual mission trip to the Appalachian Mountains, where he helped people with limited resources improve their quality of life. He spent nothing while he was offline.
Sean is going through the process of finding a home to purchase in Gulf Shores, leaving the renter’s life behind, as mentioned in the previous episode. Sean and his family found a neighborhood they like, and made the huge decision to build a new home! The home will be in a developmental neighborhood, so there’s little to be done in terms of personalization and customization. Sean promises to report back on the whole process in a future episode.