Establishing and maintaining a budget always sounds like a drag, doesn’t it? Unfortunately, for most of us, budgeting is essential to our households running smoothly. For my family, it has always been about living the good life for less. I never want to feel deprived, so we focus on all we can do and have, thanks to smart budgeting.
In fact, I am so passionate about this topic that I wrote a book about it, so I want to share a few of the best tips that have helped my family achieve a rich life with a small budget. Before I begin though, I want you to know that I have been able to teach my kids so much about budgeting just by the everyday situations we encounter. It’s less about lecturing them and more about the behavior you model for them when making choices about how you spend your money that they will hopefully model someday in their own lives.
Small expenses are the ones that always seem to slip through the cracks. Author David Bach coined the phrase, “the latte factor,” in reference to small expenditures that are causing consistent slow leaks in the family budget.
We all have them, and I know exactly what my latte factor is as I sit here and type this. It’s a smoothie that I buy at the store across the street from my gym as a treat for my hard work on Mondays. Because MONDAYS.
If I avoided that weekly smoothie run, I would save myself $4.55 a week, $18.20 a month and $218.40 a year. See how that all added up? And we are talking about one smoothie a week.
What is your latte factor? Find it and address it!
It’s okay to spend—but only if we have the money and if it brings us a great amount of joy to have it in our lives.
Establish the budget
For the past 10 years, I have shopped at our grocery store with cash in hand. The old-school envelope method that Dave Ramsey swears by is a great way to stay on budget with everything from groceries to entertainment expenses, and it’s a tool I still use today.
How it works: Divide your monthly budgeted amount of cash for groceries, entertainment expenses, clothing, and gasoline into envelopes. Use that money to pay for these expenses. Once the money runs out, you can’t spend anymore, which really holds you accountable. The beauty of this system, for me, is if I go under my established budget, I use the excess for something fun to celebrate. What do you think I’m spending it on? Smoothies, of course!
Rethink your idea of entertainment
My family felt radical years ago when we canceled our cable television because no one we knew had ever done that before. Now it feels a little less drastic with the arrival of all the great devices and entertainment options for streaming shows and movies. If you are having a hard time letting go of that expense, consider a device like a Roku player or Apple TV to watch your favorite shows. Our cable bill was around $80 a month, and now we watch television for around $25 a month thanks to Hulu, Amazon Prime and Netflix.
In the same way the envelope system rewards us, we know we have saved our family $55 a month with this one switch. That $55 a month can now be put away for a family vacation, credited towards a family membership to a local attraction for the year or put toward concert tickets to see a great show. I see this savings as a chance to do something really awesome as a family. In my opinion, this is much more fun than sitting in front of a television.
It’s okay to spend (but only if you have it)
The point of family budgeting isn’t to strip your family of all the things you love. What fun would that be? We put our money toward things that aren’t necessities, but they bring us a lot of joy.
For example, I love going to the gym as a social outlet and look forward to the classes I attend every week. Having my house professionally cleaned keeps me organized and brings me a lot of peace so I can do a good job at work. The community pool membership gives me a daily destination in the summer with my kids. And reading is something my whole family loves doing, so an e-book subscription has afforded many hours of enjoyable reading time.
That said, if tough times fell upon us, I would let all of that go to keep my family out of debt. If the budget got tight, these are the things we would eliminate. We know they are luxuries, and we appreciate them, but they aren’t necessities.
It’s my motto that it’s okay to spend—but only if we have the money and if it brings us a great amount of joy to have it in our lives. Your joys might be very different from mine, but acknowledge the luxuries and know that if tough times fall, you have great places you can trim to get your family back on financial track.