How Our Budget Empowers Us to Live on One Income and Still Find Wiggle Room for Home Projects
Talking about money can be a bit taboo, but owning a home and doing all of these decorating/home improvement projects takes cash. Since writing about how I track expenses during a home project, a reader asked how to find money to allocate to those projects in the first place when your budget is tight. This is a fair question, and one that I want to discuss today.
For myself personally, finding money for home projects isn’t easy. But improving our home and beautifying the place we spend so much time in is important to us, so we make it a priority. We currently live on one income, so there’s not a lot of wiggle room for expensive decor and remodeling projects. That’s why I tackle our home one project at a time, and why you’ll see me doing so many DIY projects. I’m thrifty by nature, so I’m always on the lookout for ways to cut costs and do things myself. But in order to have any money set aside for home projects, we have had to get serious about budgeting.
My goal today is to share how we manage our money and save for future home expenses and projects. Every situation is different, and our way is certainly not the only way to manage money. We’re not perfect nor are we the experts, but we’ve gotten into a groove that’s been working so well for us that I wanted to share with you today with the hope that it will motivate you to take a look at your budget and find a way to start saving some dollars for your next project.
I am far from a money expert–in fact, the thought of budget spreadsheets and numbers makes me cringe. I’m simply a novice budgeter that’s finally found a budgeting method that’s working for my family. So if you’re not satisfied with your current budgeting method or if you’ve given up budgeting altogether, read on to learn how my budgeting mindset has completely shifted this year.
Thank you to my budget-loving friends at You Need A Budget for sponsoring this post. My favorable opinion of their helpful budgeting software is 100% my own. For more information, see my disclosure policy here.
Our Budgeting Story
Every financial story is different, so let me quickly tell you where we’re coming from.
Two years ago, we opened a retail business in our small town. To set our new business up for its best chance of success, my husband left his full-time job to manage our store. Along with a change in jobs came a loss of income since we’ve chosen to reinvest the money in the business rather than paying ourselves wages. While we don’t have kids yet, we do have a home to maintain and care for which makes budgeting a necessity.
Living on one income has challenged us to watch our spending closer than ever. We’ve been married almost four years, and have used a budget off and on during our marriage. We’ve gone back and forth from Mint.com to various spreadsheets, with many months in between where we haven’t followed much of a budget at all.
Budgeting felt like a bad diet that we never stuck to. It felt restricting and impossible. And, month after month, we failed to follow it.
At the beginning of this year, I went in search of a budgeting tool that worked for us. I was determined to find a way to track our spending and manage our money more carefully. We wanted to get serious about paying down our debt and building our savings, but there just didn’t seem to be anything left in our budget at the end of the month. We needed a system for tracking every penny that went in and out of our bank account, a system that would help us save toward our goals.
In January, I read a blog post about YouNeedABudget.com. After reading reviews and stories about how You Need A Budget, or YNAB for short, had changed the way people manage their money, I was eager to give it a try. Nothing we’d tried before had worked, but I held out hope that their approach to budgeting would be the ticket.
I signed up for the 34-day trial and discovered the power of a flexible budget. A huge weight was lifted off my shoulders when I could finally get a true picture of our finances. Our budget was no longer some lofty goal on paper, but a flexible thing that could be adjusted as we lived life each month. I was hooked. We scrounged up $50 to pay for the annual subscription and have been using YNAB consistently for six months now. And I no longer feel like we’re failing at this budgeting thing.
How We Budget Using YNAB
YNAB has turned out to be the best thing I’ve done to get our budget under control. My relationship with budgeting has completely changed in the last six months, so much so that I now eagerly wait for the next paycheck to hit our bank account so I can go into YNAB and start organizing our money.
If you’ve been around this blog very long, you know I’m a huge advocate for creating systems to stay organized. YNAB’s budgeting software makes so much sense to my organizing brain, and it takes the stress our of budgeting.
YNAB aims to be a different kind of budgeting software — one that will help you break the paycheck to paycheck cycle, get out of debt and save money, and ultimately helping you reach your financial goals. It is a web-based tool with mobile apps that make it super easy to consult your budget whenever you’re out shopping or wondering if you have enough money to eat out for lunch.
It is a zero-based budgeting tool where you budget out each penny of income you have, but only after it’s been deposited in your bank account. Unlike traditional budgets that have you predict your income and spending in advance, YNAB doesn’t let you count your chickens until they hatch. For this reason, it’s a very helpful cash flow management tool when things are tight. You can’t allocate future money, only money that’s actually in your possession. Whenever we have new income, we log into our budget and decide what it should be spent on. We move that money into the appropriate budget category so it’s ready to be spent whenever that expense occurs.
With our past budgets, it was always difficult to see how our spending actually compared to the budget we set back at the beginning of the month. Since YNAB is tied to cash, it’s easy to keep track of how we’re doing on our spending for the month.
We have categories set up for all of our monthly fixed expenses like our mortgage and insurance payments. We also budget money for variable expenses like utilities and groceries. Where YNAB really shines is in its ability to help you set aside money for irregular expenses. We have categories set up for annual payments like our car registration. Now, instead of being surprised when that bill comes and scrambling to find the cash to pay it, we put money into this account each month so that it is already sitting there waiting for the bill to come.
We also set aside money every month for irregular expenses like car repairs, medical bills, computer replacement and home maintenance costs. These are things that you can’t really plan for, but you know they’ll happen sometime so it gives me great comfort to know we have some money set aside into those funds, ready to dip into when we need it. That way we’re proactively preparing for those expenses rather than dipping into our emergency fund every time.
YNAB lets you set up goals for each budget category, so you can aim to put a certain dollar amount to an account each month or you can set a total dollar goal. We have a few categories set up for specific goals we’re saving for, like vacation, and we try to put a little in them each month.
Although our budget is tight every month, we’ve gotten better at managing our spending and YNAB has helped us hold ourselves accountable. Whenever I’m considering making a purchase, I first consult the budget on my phone to make sure I have the funds set aside for it. This happens all the time for decorating projects. We set aside a little bit each month to put toward home improvement projects, and I save it up until I get to a point where I can afford to make over another room in our home. Back in May when I made over our master bedroom, I used the money we had racked up in our home improvement budget to pay for it. We can’t afford extravagant renovations right now, but we can find enough wiggle room to decorate one room at a time.
The thing I love most about YNAB is it’s emphasis on flexibility. One of the four main ‘rules’ of YNAB is to roll with the punches. And they make it easy to do. If we get toward the end of the month and have to over-spend in a budget category, we simply move extra money from another category to cover it. So rather than feeling like we’ve failed altogether, we stay flexible and reallocate funds where we need them the most.
What I’ve Learned About Budgeting This Year
1 | Flexibility is key.
The budget you create at the beginning of the month is a plan, but be prepared to adjust things when they don’t go according to the plan. If you are extra busy and spend too much money eating out this month, find other areas where you have money left, and reallocate that money to your dining out fund. Rather than feeling frustrated and giving up on budgeting because we already messed up, we now move things around and keep going.
2 | A budget is a working document, not something that only gets dusted off once a month.
You can’t set a budget and forget it. A budget is a working document, one that should be referred to often and updated as needed. You should consult your budget whenever you are considering making a purchase, which is why it’s super handy to have the YNAB app on your phone.
3 | The whole family has to be on board.
In a household where you share finances, everyone needs to be involved in the budgeting process. We now check in every week or two to evaluate the status of our budget categories, decide how to allocate new income and monitor our progress toward our financial goals. This helps us stay on the same page and makes sure we are both on board with the budget.
4 | It’s important to track your spending as it happens.
I log in every day or two to import new transactions from our bank account and categorize them, which enables us to always have an accurate picture of our finances. With past budgets, we’d sometimes go the whole month without adding up our spending in each category, which meant we had no clue if we were staying within our budget. With YNAB, we can input spending into the app the minute it occurs. I also have it linked with our bank account so I can import transactions and reconcile with our bank account.
5 | Irregular expenses shouldn’t be a surprise.
Expenses like home maintenance and car repair are bound to happen, you just don’t know when. Since using YNAB, we’ve started allocating money to these categories every month so when these irregular expenses come up, we’re prepared for them. This gives me so much peace of mind to know we have money set aside already. We use this same method to save money each month to put toward annual or semi-annual payments.
6 | It’s important to have fun money.
We enjoy eating out, so David and I give ourselves a small budget to eat at restaurants each month. We also each have our own “fun money” budget that we can spend however we wish. While these budgets aren’t nearly as large as either of us would like, we still make it a priority to set aside something for the fun things. These budgets are ours to spend as we wish, which gives us some freedom to buy things we didn’t specifically budget for without having to consult our spouse.
7 | Having a budget that works is motivating.
This budgeting thing has become enjoyable for me. Although we still have a long way to go in paying off debt and growing our savings, managing our money in YNAB has reduced my stress and helped me see that we are slowly inching our way toward our goals. Every extra cent put toward our savings goals motivates me to work even harder to follow our budget.
All in all, I can honestly say that we have finally found a budgeting method that works for us. I enjoy logging in to allocate new income and categorize our expenses. Rather than dreading dealing with those numbers, I now look forward to the time I spend organizing our money. It’s amazing how my mindset about budgeting has changed this year!
If you care about spending money, whether you have a lot or a little to work with, you should have a budget. It will help you get a true picture of where your money is going so you can start putting it toward the most important priorities in your life. Having a budget is how we are able to allot money to home projects, guilt free. Slowly but surely, we’re making progress on our improving our home while inching closer to our financial goals.
If you are interested in checking out YNAB for yourself, they offer a free 34-day trial so you can test it out before subscribing. Thanks for allowing me talk budgeting today, and please let me know what questions you have! If you already use YNAB, I’d love to hear what you enjoy most about it.
Enjoy your day!
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