Confession time: I have a bad budget habit. Every month, I set aside a certain amount for groceries and EVERY MONTH, I go over budget. When I sit down before the beginning of each month, I plan to keep the grocery number as minimal as possible. At the end of every month, I find myself frustrated with how much we actually spent–we typically run out of money in that category around the third week of the month.
Why not just put more money in there? you might ask. That would be the obvious solution. But that assumes that this process is a logical one. Money is so strongly tied to emotion for me, that when there’s not enough, I feel uneasy and scared. Our goal of paying off all non-house debt is so deeply intertwined with my emotions at this point, that anything standing in the way of it feels stressful. So when I sit down to budget, I put down an optimistic number (RE: too little) for groceries, rather than a more practical one. Then when we inevitably run out of money in week 3, it starts to feel something like, oh well, we blew it. Might as well keep spending. Better luck next month. And that’s how we end up hundreds of dollars over budget.
If you are in the same boat as me, whether it’s your grocery budget, your entertainment budget, or something else, here are a few steps that we can take to set more realistic goals:
- Don’t assume next month will be the same as this month: Look at the entire month ahead. Will you need extra food for a party? Are you going out of town? Will you need to replace anything? Try to plan ahead for as many “knowns” as possible.
- Look at your spending history: If you generally spend an average of $125 a week on groceries, don’t put only $100 in the budget. Either figure out how to cut back, or make sure you have enough reserved in that category.
- Split the monthly budgeted amount up by week: I’ve found that I spend less when I take out enough cash for 1 week at a time, rather than focusing on the amount I have for the entire month.
What strategies do you have for creating a realistic budget?