My Fake Budget

About  a year ago, after reading Your Money or Your Life, I created my first budget.  I dutifully added up our income and averaged regular expenses.  Certain things like rent, utilities, gas, and insurance were easy to figure out.  I had to estimate other expenses like clothing, dining out, cleaning help, gifts, etc.  When all was said and done, our expenses tend to exceed our income on a regular basis.

In addition to irregular freelance income and unexpected expenses, another (major) problem was caused by estimated expenses that were basically numbers I grabbed out of the air.  Even after one year, I haven’t been diligent enough to figure out our average costs for many fun categories.  This is hard to do because we pay cash and we are not very aware of our budget.  In other words, if we budget $100, we may spend $100 jointly and still exceed that amount due to separate activities.

If we look on track to exceed our Dining Out budget by mid-month, I may send a half-hearted email to my husband and note to myself that we must watch our budget or cut elsewhere this month.  Only we seem to not do this or we get a bill that must be paid or another excuse…  The reason I am calling this my/our fake budget is that I simply INCREASE our dining out budgeted amount to match our actual spending instead of making any hard attempts to rein this in.

I know this isn’t good because some months we’re on track or under budget and I’m very happy. Then we exceed our budget the next month and I freak out.

Budgeting is hard!

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7 responses to “My Fake Budget

  1. I’m certainly not one to give out money advice – one of my goals for my time off is to get over my fear of dealing with money.

    But we don’t set a budget for our “fun” stuff. We just take out cash each week and when it’s gone, it’s gone. This doesn’t include gifts (we don’t buy them very often), but it does include all groceries, eating out, movies, museums, etc. Doing it weekly means we don’t feel too deprived when we run out – it’s only a few more days till we get more money.

  2. I don’t use cash for anything. That makes tracking easier. DH does, but generally out of his allowance.

    Before DH left his job, we didn’t need to budget because we were putting 40-60% of our income away each month. Now I’ve been playing with Mint for a few months and got an accounting of our spending more broadly before that (going through bank records). We’re just not getting our spending down below what it needs to be if we just live on my income without any summer money. I’m thinking that it will be easier for us to get more income than to cut spending. So for now we’re going to draw down on savings if we have to. We’ll re-evaluate if we run out of money.

    • We’ve dipped into savings, which is scary! When we bring in more money, we do try to bank it for rainy days but oftentimes we end up using it for semi-important needs/wants that we’ve put off, such as getting a new computer (our 2 computers are 6 and 8 years old respectively, and neither works very well!)

  3. i think increasing the amounts for some categories to match reality is a perfectly legitimate way to budget. It’s definitely the way to start–keep tweaking it until it’s true.

    Then, sure, you can say you’d like to spend less in one category so you can spend more in another. But you don’t have to. You can instead just keep it like it is until your income changes (hopefully due to a raise). Then when that happens, having a budget will make it more clear which categories you’re you’re always wishing were bigger, and you can consciously add your extra money to those categories. Then you’ll be less tempted to spend more in other categories where you don’t have trouble keeping to the budget. And so then you don’t find yourself going into more debt or losing your savings because your raise made you feel richer in every category!

  4. I know how you feel! It works for small raises, too, unless you have to use the whole thing to keep up with rising prices.

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