When it comes to budgeting and spending, not only is my husband an expert, but he is also extremely disciplined. This is no surprise, given that he earns a living as a financial planner. When contemplating a purchase, whether it is big or small, he takes his time deciding whether or not he truly needs the item in question, thinking about whether or not he already owns something similar, and deciding whether or not he really needs it.
I, on the other hand, haven’t always been as mindful about my spending. Don’t get me wrong – you won’t find me running to the mall every week to buy purses and shoes. Instead, I tend to buy little things here and there, a coffee at the grocery store, a magazine at the pharmacy. But, rest assured, those impulse purchases certainly do add up quickly.
Before we were married, my husband used a cash budget. Each payday, he would take a specific amount of money out of the bank, and that is what he would use for groceries, entertainment and miscellaneous expenses.
Then there was me. I had a debit card that I would use to pay for nearly all of my purchases, big or small. I didn’t really keep track of what I was spending, so I had no idea of the true cost of my groceries, lunches, or coffee splurges.
And then we got married, and everything changed.
One afternoon, we sat down and started discussing money and budgeting. We talked about the way I used to do things, and my “I have no idea how much I spend” approach to life. Then we discussed my husband’s “I keep track of every single penny” approach. We soon realized that I was ever going to be able to track every single penny, and my husband was not the type to spend money at will. So we had to compromise.
In the end, we decided that we would continue to use a cash budget system, similar to what he’d been doing before we were married. This still gave me the freedom to make small purchases of things I’d like to have, without affecting the family budget. And it made him feel more secure, knowing that I wasn’t spending hundreds of dollars at the grocery store each week. It was a win-win.
How does a cash budget work? Each week I go to the bank and withdraw our allowances for the week. I split the money into four separate envelopes, and use it in the following ways:
Personal allowances: My husband and I each get the same amount of money each payday. This money is our personal allowance, and we can spend it however we choose, without explanation. In a typical week, I use my allowance to feed my Starbuck’s addiction, to pay for visits to the hair salon, to buy clothing, beauty products, or special grocery items that I don’t want to share. (I’m not sure what my husband does with his money, but I’m pretty sure it involves comic books, CDs and ice cream). While I’ve always been an expert when it comes to spending, I’ve also gotten really good at saving, too. I am always stashing money away, because I’ve always got my eye on something new that I must have. (Right now I’m saving up for a new pair of shoes).
Grocery allowance: We pay for nearly all of our weekly groceries using cash. (Exceptions to this rule include holiday parties, bulk purchases at Sam’s Club and buying snacks for vacations and long weekends). Because I use cash to pay for groceries, I need to be diligent when it comes to planning meals and buying only what we truly need. (Click here for my top tips on saving money at the grocery store). This means that my family eats real food. I don’t buy chips, soft drinks, or packaged cookies. I buy fruits, vegetables, and milk. I’ve also learned how to make a lot of grocery items at home (like crusty artisan bread, hamburger buns and even yogurt and ricotta cheese!).
Fun Money: This allowance category has evolved a lot. In the beginning, my husband and I used fun money as our date allowance. We’d spend it on Starbuck’s, movie tickets, dinners at local restaurants. But then The Goose came along, and our definition of fun changed. A lot. Now, Fun Money is spent on activities for Fun Day Friday, to pay for school pictures, class parties, and after school events. Perhaps we should change the title from fun money to The Goose Fund.
Which brings me to my last point. When it comes to budgeting, you can’t just set a budget once and hope for the best. In order to have a budget that really works, it needs to be looked at, analyzed, and reworked on a regular basis. In our case, my husband and I both decreased the amount of money we took for our personal allowances after The Goose was born and I left my job at the bank. In the past few years, as grocery prices have increased and The Goose has begun eating more, we’ve had to increase our grocery budget a little bit. Our lives are changing, the way we spend our money is changing, and our budget needs to change, too.