How to live on a budget (without your head exploding)

howtoliveonabudgetSo now that I’m in the land of self-employment, I’ve recently updated our family budget to make sure we can cover the essentials while my income has become more intermittent.

Jumping from a decent fortnightly part-time wage to a scenario that relies on payment of invoices required me to a complete rethink of what’s necessary for us as a family and what’s not and how being more mindful with our money has lots of far-reaching benefits, that really have nothing to do with how much money is actually entering the bank account.

The fact that first got me thinking about this was when last year I took on an extra day in the office and although I had an updated budget and we hoped to whittle away a bit of savings, it really didn’t happen and we ended up living pay to pay just as we had been. What was happening was that I was so stretched in terms of time and the stress of juggling it all, that our mindless spending went through the roof – an extra day of buying lunches as I wasn’t organised at home, extra coffees at work, a few extra takeaways here and there, last minute dashes to shops. All things that I wasn’t necessary budgeting for and that were not the best use of our money. While I knew that my change to self-employment would be tough financially – at least initially – I was looking forward to getting to know our money a bit better and making it work for us, rather than the other way around. 

Now, almost a month into the new regime and I’m starting to get into the rhythm of our new budget and I thought I’d share what’s working for us and how I’m trying to make it as stress free as possible.

Creating a family budget

My first step was to create a realistic budget based on our regular income to cover our day-to-day expenses and make it all add up! I have always used an excel spreadsheet for this, but this year I decided to look around at budgeting apps for something more portable and easy to update. I found Good Budget through some googling and browsing the app store and I like how it was simple to set up and use. I set it up with our weekly income amount and then created ‘envelopes’ of budgeted amounts for each of our expenses. As the money is spent, withdrawn or direct debited from our bank account, I go into the app and withdraw the money from the appropriate envelope. It’s super simple and gives me a snapshot of what’s been paid and what’s left each week ( you can set it to whatever your pay period is). For me, it’s working a whole lot better than my previous spreadsheet system and it’s working well to keep me accountable – the next step is for Mr P to download it to his phone, so he can also check in on what’s been paid and what hasn’t yet.

Tracking your bills

The next part of my system is tracking our bills. I’ve now got a system that as soon as the bill enters the house, the amount and due date are entered into another app I found (look, I’m a bit app crazy!) called Pocket Expense. This then lists and totals the bills coming up in the next 30 days and I set a reminder for each one, so I don’t miss it. Using these two apps in tandem is working for me at the moment – as I know one is for day-to-day spending and one is for longer term bills and for us these are coming from different accounts so it seems to work quite well for now. Having one place where the list of upcoming bills sit has helped me feel more organised and plan these payments in advance.

Menu planning and grocery shopping

Mr P’s pay cycle is weekly, so I’ve moved from doing a fortnightly shop to weekly and only buy what I need for the week ahead. This has meant I now write a quick meal plan on our whiteboard and then a corresponding shopping list. As much as I loathe grocery shopping, the weekly shop is much quicker than my previous fortnightly shop and having a strict budget to stick to means I try and make the most of specials and seasonal produce. I’ve actually been enjoying cooking much more since making this change and taking into account what activities and social events we have scheduled for the week, and planning the menu accordingly, affects what menu I plan and what we spend.

Having fun on a budget

Knowing we only have a certain amount of money to spend on outings and social activities means that we look for things that are free or really cheap and the good news is that there’s heaps out there to do that doesn’t cost a cent. Our big goal this year is to spend more time outdoors with the kids and already this year we’ve been exploring national parks near home, walking and bike riding on local tracks and packing picnics to enjoy in the park. We’ve been inviting people around for no-frills barbecues that don’t require heaps of money or prep and really focusing on what matters to us – spending time with each other as a family and catching up with friends more regularly.

Keep an eye on your financial goals

A good motivator for me is what the end goal of sticking to this budget and keeping our family debt to a minimum will be. At the moment the big goal is to be able to sustain my business in its start-up stage so I can keep working for myself. This might not seem like a big goal, but for us it’s the one that most aligns with our family goals. Once my income from the business is more steady, it will be time to set a new, measurable goal. Think about what you’d most like to achieve right now? Is it reducing household debt, saving for a new car or getting a certain amount of savings in the bank? This is a good way to set your intention and motivation.

So that’s a bit of an overview of how we’re attempting to live on a budget this year – I’m sure to keep you updated with how we’re going, but for now I’d love to hear from you – what are your best tips for living on a budget? 

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