So, you haven’t heard much about our envelope system of budgeting over here at imperfect lately, and there’s a reason for that. We’ve fallen off the band wagon. Hard. To a certain extent, I want to justify it (We just moved, we agreed we’d spend a certain amount of money out of savings to update, etc. We took a vacation which always throws the budget off but is something we’ve agreed is worthwhile. Expenses just come up. Blah blah blah.). But what we realized is that when those “extra spending” months come up, we almost seem to say, “Oh screw it, let’s just go big” and buy things that we don’t need, or that we could save for, or creatively create ourselves. And that’s why we need to get back on track.
One of the big questions we’ve always been asked when we talk about our budget is how we budget for non-monthly expenses. Things like car upkeep, insurance, etc. We’ve done this two ways. You have to decide what will work best for your family with this, but here’s what we do.
In the beginning, when we were still working on really building up our savings and emergency funds, we divided those expenses (or projected expenses since you can’t always predict what you’ll need to put into your car in a year) into the months between payments and set that aside in our cash budget every month. We had an envelope for all of those things that rolled over month to month for when we needed it. We knew that while you can predict some things (like car insurance costs – ours is paid yearly), we couldn’t predict exactly what we’d spend in other areas. Like for example, what a car repair would end up costing. Or how much a vet appointment for Casco would run us. So we saved, knowing that sometimes we might have to dip into savings to cover the extra.
That was a good way for us to handle those expenses in the beginning of our adventures in cash budgeting, but as time went on, pulling the cash out of the bank to save in an envelope didn’t make a lot of sense to us. We started leaving any money budgeted for those non-monthly expenses in our bank account knowing that we were saving for those specific purposes. But somehow, even though we made those decisions, we were always mad at ourselves and felt like we’d failed at budgeting when we had to pull from savings (even savings we’d saved specifically for those purposes) to pay those non-monthly bills. We have finally made the decision that we can’t beat ourselves up about taking money from savings to pay for these things. We tell ourselves that by living on our budget the rest of the year, we are contributing that extra to savings to cover these expenses. So that’s what we do now, we are at peace with the idea that we can’t plan for every expense and that’s why we need to prioritize our savings, but that we also need to allow ourselves to use our savings when necessary.
To table the “Ugh, how did we spend THIS much last month?” guilt/heated discussions at the dinner table when we go over the budget, we have decided that at the end of every month, B and I are going to sit down and talk about upcoming “one off” expenses for the next month (and sometimes for the next month or two if a big event or holiday is coming up). Some of these will be upcoming expenses we will know we can use our envelopes for, but some of them are going to either use up that month’s projected savings or need to be withdrawn from our savings account. And we’ll categorize those as needs and wants, and then make decisions about what is a priority based on how the rest of the month’s expenses are looking.
Our September meeting identified these expenses for October: New tires for my car (a safety necessity), oil changes and tune-ups for both of our cars (safety necessity), and a plane ticket for Mr. B to go to his friend’s wedding back East (not a necessity, but something that we’ll make room for because it’s important to us). We both want to upgrade our iPhones and almost did last week, but with about $1200 of excess spending identified for October, we decided to hold off for another month or two on that want. It’s a good exercise for us, because we know that we can afford to do both – buy new phones and take care of necessities – but just because we can do something doesn’t mean that we should. And it’s time for Mr. B and I to tighten our belts to remind ourselves that there’s a very big difference between things we want and things that we need, and that we are very fortunate to be able to provide our family with those needs.
We’re also reeling in normally budgeted spending on our kids because Christmas is coming up and so much of what we might buy them now can wait until the holidays. Thomas and Nell both have new wardrobes for Fall that I purchased in August and September (I have a post half-written about how I budget for and save money on their clothes), so they don’t need anything there. We also like treating our kids every now and then to new things. I’ve been wanting to “upgrade” Thomas from his Strider bike to a pedal bike, but I have decided to hold off for Christmas and see what he actually asks for. Nell’s Halloween costume we already have, and Thomas and I will make his together with about $20 worth of supplies.
And we also have set some new bigger goals to save for at the house, too. We always do best at sticking to our budget when we are saving for specific things that we both are looking forward to. In the next year, we will have our house painted and a few changes made to the exterior, all of which add up quickly. We’d also like to replace the carpet in our bathroom with heated tile in the next year (or a little more). For now, every extra penny is going to the house painting fund, and when we complete that, any roll-over will go toward our bathroom remodel. Fun things to look forward to remind us why we budget!
How are your budgets going?